<a href="https://www.thenationalnews.com/business/2021/09/29/fitch-downgrades-evergrande-and-subsidiaries/" target="_blank">China Evergrande Group</a>, the property developer whose default two years ago hastened a broader property debt crisis in the country, has sought Chapter 15 bankruptcy protection in New York. The move protects it from creditors in the US while it works on a restructuring deal elsewhere. The <a href="https://www.thenationalnews.com/business/2021/09/20/explainer-the-evergrande-crisis-and-why-it-matters/" target="_blank">Chinese home-builder’s</a> Chapter 15 petition, filed on Thursday, references restructuring proceedings being carried out in Hong Kong and the Cayman Islands. International debt-restructuring deals sometimes require a Chapter 15 filing in the course of finalising a transaction. Last year, Beijing-based developer Modern Land China also filed for Chapter 15 bankruptcy after failing to repay a $250 million bond and said it would go forward with an offshore debt restructuring deal. <a href="https://www.thenationalnews.com/business/2021/09/20/evergrande-poses-limited-risk-of-economic-crisis-in-china-bank-of-singapore-says/" target="_blank">Evergrande</a>’s fate has broad implications for <a href="https://www.thenationalnews.com/business/banking/2021/09/24/china-injects-71bn-into-banking-system-amid-evergrande-crisis/" target="_blank">China’s $60 trillion financial system</a>, and could send ripples across banks, trusts and millions of home owners, in what would be one of the nation’s largest restructurings. The sheer size of its liabilities of more than $300 billion mean that the process is sure to be long. Sentiment towards Chinese markets has been shaken this month after one of the country’s biggest property developers, <a href="https://www.thenationalnews.com/business/property/2023/08/11/chinas-country-garden-shares-sink-to-record-low-on-loss-forecast-and-restructuring-fears/" target="_blank">Country Garden Holdings</a>, lurched towards a possible first default, amid record debt failures by builders. The situation worsened in recent days when financial conglomerate Zhongzhi Enterprise Group raised alarm after affiliated companies missed payments on some investment products. China’s <a href="https://www.thenationalnews.com/business/property/2023/08/11/chinas-country-garden-shares-sink-to-record-low-on-loss-forecast-and-restructuring-fears/" target="_blank">property debt crisis</a> is rapidly deepening, as it heads into its fourth year. Developers accustomed to taking on debt to fuel development sprees experienced the first inkling of change in 2020. That is when authorities laid out “three red lines” that set leverage benchmarks builders had to meet if they wanted to borrow more money. Chinese junk dollar bonds, largely issued by developers, have fallen into distress, with average prices now at about 65 cents, according to a Bloomberg index. Evergrande has been working for months to wrap up an offshore debt restructuring plan. The company disclosed in April that it was yet have the level of creditor support needed to put the plan into effect. In July, it received court approval to hold votes on the deal. The company said earlier this week that it had rescheduled “scheme meetings” for creditors until August 28. Evergrande first defaulted on a dollar bond in December 2021 after months of uncertainty about its finances. The company’s struggles helped to set off the initial wave of concerns about China’s property sector that has kept growing. Evergrande’s electric-vehicle unit agreed to sell a stake of about 28 per cent to Dubai-based start-up NWTN, sending the car maker’s shares soaring earlier this week on expectations the deal could keep it in business. NWTN will invest $500 million in China Evergrande New Energy Vehicle Group in exchange for shares and a majority of seats on the EV maker’s board, the companies said on Monday. Evergrande’s debt plan could be helped by the developer’s disposal of the stake, Bloomberg Intelligence analysts Daniel Fan and Adrian Sim said. NWTN could become the largest shareholder upon full exchange of the unit’s mandatory exchangeable bonds, and the EV unit’s funding access would help the value of those securities in Evergrande’s debt plan, as well as normalise production of its Hengchi 5 EVs, they said. A bankruptcy lawyer for Evergrande did not immediately respond to a request for comment. Its Scenery Journey unit also filed for Chapter 15 protection, along with affiliate Tianji. The case is China Evergrande Group and Jimmy Fong, 23-11332, US Bankruptcy Court for the Southern District of New York (Manhattan).