China's Evergrande group filed for bankruptcy in a New York court, also filing for Chapter 15 bankruptcy protection in a New York court. Chapter 15 protects a company's U.S. assets as it works to restructure its debts. The company, which failed to repay its debt in 2021, has accumulated more than $300 billion in debt.
He is considered one of the most heavily indebted real estate developers in the world. Evergrande seeks recognition of ongoing restructuring talks in Hong Kong, the Cayman Islands and the British Virgin Islands. The company, once the second largest in the sector in China by turnover, had gone into insolvency due to heavy debt, sending the entire real estate market of the Asian giant into a crisis.
The indebtedness of another Chinese real estate giant, Country Garden, is also worrying the markets. The group, once considered financially sound, was unable to repay two interest installments on its loans on Monday and faces formal default in September if it does not pay.
Brief history of Evergrande Group
The group bought the Guangzhou Evergrande soccer club in 2010 and invested heavily, and under coach Marcello Lippi they won the 2013 AFC Champions League; subsequently he also had Fabio Cannavaro and Felipe Scolari as coaches.
The group also has a mineral water brand: Evergrande Spring. Evergrande has expanded its business into other sectors: solar panels, pig farms, agro-industry and infant formula. Evergrande's shares soared 3-4 times in value in 2017, making founder Xu Jiayin one of the richest men in China and Asia.
He is number 34 in the Forbes 2020 list of the richest people in the world, with a personal fortune of $21.8 billion. In August 2021, the Financial Times reported that Evergrande Group faces a high number of lawsuits filed by contractors in Chinese courts as pressure mounts on the company's management to reduce its $300 billion in liabilities, including about $100 billions of dollars in debt.
It was reported in mid-September 2021 that the company was in danger of not being able to issue interest on the loan due on 20 September. It has been estimated that about 1.5 million customers could lose the deposits they owe for the purchase of Evergrande homes, not yet built, if the business collapses.
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