China's Evergrande files for bankruptcy in New York amidst ongoing crisis

China's Evergrande Group officially filed for bankruptcy in New York on Thursday.The company which was once China's second-largest property developer in terms of sales has been facing substantial borrowing and debt defaults since 2021. This triggered an ongoing property crisis within China.

Chapter 15 bankruptcy proceedings

As per CNN, Evergrande has filed for Chapter 15 bankruptcy protection. This legal provision enables a United States bankruptcy court to recognise and provide support for insolvency or debt-restructuring cases involving foreign entities.

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The filing of Chapter 15 bankruptcy also allows foreign creditors to participate in US bankruptcy proceedings and prohibits any form of discrimination against them.

Evergrande's losses

In a stock exchange filing, last month the firm revealed that in the years 2021 and 2022 combined, Evergrande incurred a loss of $81 billion in shareholder funds.

Moreover, the filing also revealed the company's total debts had escalated to 2.437 trillion yuan (equivalent to $340 billion) or roughly two per cent of China's entire gross domestic product, by the conclusion of the previous year.

Earlier this year, in March, Evergrande put forth an ambitious multi-billion dollar restructuring plan aimed at repaying its international creditors. This colossal debt restructuring plan was meant to tackle liabilities surpassing $270 billion and was touted as China's largest-ever initiative of its kind.

(With inputs from agencies)

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