Photo: VCG

Embattled property developer China Evergrande Group said its recent application to the US court is "a normal process in proceeding with offshore debt restructuring" and does not involve filing for bankruptcy, according to a filing the company sent to the Honk Kong bourse on Friday.

It comes after media reports said on Thursday that the developer had filed for bankruptcy protection in the US, which would allow it to "protect its assets in the US as it works on a multi-billion-dollar deal with creditors."

In response, Evergrande claimed that because its dollar-denominated debt is under the jurisdiction of New York, it has filed for chapter 15 bankruptcy in New York, which would recognize and give effect to the offshore debt restructuring arrangement in Hong Kong Special Administrative Region and the British Virgin Islands.

The debt-ridden real estate company has been negotiating with offshore creditors on a restructuring deal after it defaulted on debt payment in 2021, the Wall Street Journal reported. It announced an offshore debt restructuring plan in March.

In June, a Hong Kong court said it will decide in September on an offshore debt restructuring plan, Reuters reported, which could allow creditors to recoup up to one-quarter of what they are owed.

According to a financial report the company released in early August, it posted a combined loss of $81 billion in 2021 and 2022. Its total liabilities amounted to 2.4 trillion yuan last year, an increase of 23 percent from 2020, while total assets were worth 1.8 trillion yuan, down 20 percent.

Although strains in China's property sector persist, observers said that the country won't see a "second Evergrande," as multiple new policies are being introduced to boost confidence in the industry. They said that China's property sector could gradually recover in the second half as restrictive policies are eased in multiple cities following a key leadership meeting in July.

The meeting convened by the Political Bureau of the Communist Party of China (CPC) Central Committee in July called for adaptation to the new situation, as major changes have taken place in the relationship between supply and demand in China's real estate market.

"Real estate policies should be adjusted and optimized in a timely manner," the meeting said, adding that the policy toolkit should be utilized with city-specific measures to better meet residents' essential housing demand and their need for better housing, and to advance the stable and sound development of the real estate market, Xinhua News Agency reported.

Global Times