China Evergrande has become the most indebted real estate developer in the world, with a series of debt defaults occurring since the end of 2021. It has filed for creditor protection in a US bankruptcy court.
The company is seeking protection under Chapter 15 of the US Bankruptcy Code to prevent creditors from suing or seizing its assets in the US. This move comes against the backdrop of a real estate crisis in China, leading to a wave of debt defaults, with Evergrande's debt recently amounting to $330 billion.
When China Evergrande Group (HK:3333) resumed trading on Monday, its stock price plummeted by 86.7%, after being suspended for 17 months due to having "fully complied" with all the guidelines issued by the Hong Kong Stock Exchange. Its Hong Kong-listed shares fell to as low as HK$0.22, shrinking its market value to HK$32 billion ($4.08 billion).
Trading of the stock had been suspended since March 21, 2022. Its Hong Kong-listed subsidiaries, China Evergrande New Energy Vehicle Group and Evergrande Property Services Group, have both resumed trading in the past month after a 16-month suspension.
Evergrande is seeking to negotiate restructuring in Hong Kong, the Cayman Islands, and the British Virgin Islands, and plans to hold a hearing on September 20. Meanwhile, its electric vehicle subsidiary, China Evergrande New Energy Vehicle Group, has also proposed its own debt restructuring plan.
The resumption of trading for these three subsidiaries is crucial for the Evergrande Group, as its foreign debt restructuring plan includes converting some of its debt into company equity.
If the suspension reached 18 months, Evergrande would face the risk of delisting. Before the resumption of trading, the developer reported in a Sunday report that its net loss for the first half of the year had narrowed due to increased revenue.
