China's Evergrande seeks bankruptcy protection from US court

China Evergrande, a big property company, money problems worsen after it asked a U.S. court to protect it from its creditors as it makes serious effort to reorganise its debts.

Evergrande financial woes are exacerbated by the fact that China, the second-biggest economy in the world, is having economic troubles after the government failed to post unemployment records in its economic data earlier this week.

According to Reuters, China’s once-top-selling developer, Evergrande, has become the poster child of the country’s unprecedented debt crisis in the property sector, which accounts for roughly a quarter of the economy, after facing a liquidity crunch in mid-2021.

Evergrande used to be a successful property developer in China, but now it’s in trouble. It has a lot of debt—more than $300 billion—and it needs to fix its money issues.

To do this, it’s using a part of U.S. law called Chapter 15 that helps companies outside the U.S. reorganise when they’re in financial trouble.

Many other property companies in China are also struggling with debt. Some have even failed to pay back the money they owe. One in particular is Tianji Holdings, which also sought Chapter 15 protection on Thursday in Manhattan bankruptcy court.