China unexpectedly cut several key interest rates this week in a bid to prop up struggling activity and is expected to cut prime lending rates on Monday, but analysts say the moves so far have been too little, too late, and too late. Much stronger action is needed to stop the downward spiral of the economy.
Once China’s top-selling developer, Evergrande has become the symbol of an unprecedented debt crisis in the country’s real estate sectorwhich represents about a quarter of the economy, after facing a liquidity crisis in mid-2021.
The company filed for protection under Chapter 15 of the United States Bankruptcy Codewhich protects non-US companies undergoing restructuring from creditors seeking to sue them or freeze assets in the United States.
Although the step is considered to be of a procedural nature, it indicates that the company is nearing the end of its restructuring process after more than a year and a half of negotiations with creditors.
Evergrande said in a filing with the regulator on Friday that it will ask the US court to recognize the relief schemes under the overseas debt restructuring for Hong Kong and the British Virgin Islands, as their dollar bonds are governed by New York law.
“The application is a normal procedure for foreign debt restructuring and does not imply (a) bankruptcy petition,” it said in the filing, adding that it is moving forward with its foreign debt restructuring.
The company proposed to schedule a Chapter 15 recognition hearing for September 20.
Evergrande’s offshore debt reorganization involves a total of $31.7 billion, which include bonds, warrants and repurchase obligations. He will meet with creditors later this month on his restructuring proposal.