Evergrande, one of the largest developers in China, went bankrupt

China Evergrande, a Chinese property developer, has submitted a petition for bankruptcy.

This will safeguard the firm from creditors while it is undergoing restructuring.

Two years ago, a default by the company caused a major debt crisis in China.

It was denied by Evergrande that a bankruptcy filing had been made by them.

Evergrande Group, China's second-largest property developer, has submitted a petition for bankruptcy in New York in accordance with Section 15 of the US Bankruptcy Code.

Market Watch notes that this article grants foreign companies with US assets access to US courts and shields them from claims by US creditors during the restructuring period.

Since 2021, Evergrande has been undergoing restructuring in China. In July, the company reported losses of $81 billion for the years 2021 and 2022.

By the end of 2022, Evergrande's total debt had risen to $340 billion, even after asset sales, despite having been in excess of $300 billion when the bonds defaulted in 2021.

The state of China's financial system could be drastically altered depending on the outcome of Evergrande's situation. Bloomberg estimates the industry to be worth $60 trillion, and developer issues combined with the largest restructuring in the nation's history could cause unrest.

For several months, the company has been attempting to complete an offshore debt restructuring plan. However, in April 2023, it was reported that the necessary backing from creditors to put the plan into action had not yet been obtained.

On Friday, Evergrande denied filing for bankruptcy, according to Reuters. They clarified that the application to the US court was a regular process for restructuring offshore debt, which is regulated by New York law, and had nothing to do with bankruptcy.