Chinese property group Evergrande has filed for bankruptcy protection in the US as the crisis spreading through China’s property sector worsens.
Evergrande’s shares have been suspended since last year after it defaulted on payments of its debts of reportedly more than US$300 billion.
Filed in a New York court on Thursday, Chapter 15 protects the US assets of a foreign company while it works on restructuring its debts.
As well as substantial property assets in China and Hong Kong, Evergrande also has more than 1,300 projects in more than 280 cities in the US.
Earlier this week, the group put back the date of a meeting to vote on a financial restructuring with Hong Kong-based debt holders.
Last month, the company announced losses of US$80 billion over the past two years but hopes its problems might be an isolated case were dashed when earlier this month another Chinese property giant, Country Garden, warned first-half losses would be US$7.6 billion.
Many of the business’s developments are pre-sold meaning if work stops cash stops coming in, worsening the situation.
China’s economy has also turned down sharply over the past quarter.
Prices fell in July for the first time in two years while the government has stopped publishing figures for youth unemployment because they are so high.
Interest rates have been cut to try to stimulate the economy but that has also weakened the yuan, making mortgage costs overseas in places such as the US more expensive.
Asian stock markets reflected the growing worries. Overnight, the Nikkei 225 in Tokyo fell 0.7%, in China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was down 1.7%.