Evergrande The Facts

So by now we have all seen the Evergrande(China's No. 2 Private developer) filing bankruptcy article posted 1,000 times. Here are the facts to simply read and understand.

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What is chapter 15 bankruptcy:

• It shields non-U.S. companies from creditors that may try to sue them while they undergoing restructuring.

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The Facts:

• It is the world's biggest debt restructuring. The debt involves $31.7 billion.
• The company overall has about $300 billion in liabilities
• China attempted to fix the issue, but it was too late. They lowered interest rates and cut prime loans.
• China is cutting trading costs and supporting share buybacks as another measure to revive the market.
• Country Garden, China's No.1 private developer is also having a cash crunch(they have already missed two payments on their multibillion-dollar debt. They employe 300,000 people.
• Since mid-2021 companies that account for Chinese home sales have be defaulting, most of them being private developers.
• China has also seen a fall in exports and imports by about 13% each.

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Summary:

If other developers go bankrupt it could lead to a work recession and financial crisis. With such large companies unable to pay their debts coupled with the amount of pre-purchased homes they have sold. it would cripple Chinas economy and spread world wide. definitely something to watch as this was foreshadowed years ago and has been building ever since with little assistance from the Chinese government. We could end up in a true recession if there is no intervention or improvement.