Hot search first! Just now, Evergrande responded

China Fund News, Amman

In response to the "bankruptcy protection" issue that has been circulating on the Internet, China Evergrande has just issued a clarification announcement.

On August 18, China Evergrande issued a clarification announcement saying: The company is currently proceeding with overseas workout as planned. Since the group’s US dollar bonds are governed by New York law, the company applied to the US court for recognition of the overseas workout agreement arrangement under the legal system of Hong Kong and the British Virgin Islands (BVI) in accordance with Chapter 15 of Title 11 of the United States Code, which is part of the normal overseas reorganization process and does not involve bankruptcy applications.

Evergrande’s share price tumbled

This morning, news of "Evergrande filing for bankruptcy protection in the United States" topped the hot search lists.

China Evergrande Group filed for bankruptcy protection in New York on Thursday under Chapter 15 of the US Bankruptcy Code, which allows US assets to be protected when companies make restructuring arrangements elsewhere, according to court documents.

Evergrande said in court filings that it was seeking approval for restructuring talks in places including Hong Kong, the Cayman Islands and the British Virgin Islands. Evergrande said creditors could vote on the restructuring this month and could get approval from courts in Hong Kong and the British Virgin Islands in the first week of September. Evergrande proposed a bankruptcy protection hearing on September 20.

Bankruptcy court records also show that Evergrande subsidiaries Skybase Holdings and Jingcheng also filed for Chapter 15 bankruptcy protection on the 17th.

On the morning of the 18th, Hengda Automobile and Hengda Property opened with a straight-line drop of more than 17%. Although it was approaching midday, there were gradually a lot of favorable interpretations, and as of the close, Hengda Automobile was still down 16%.

Evergrande’s property losses narrowed to about 9%.

Lawyer’s Interpretation: Filing for Bankruptcy Protection Does Not Mean Bankruptcy

The news broke, and several lawyers gave their interpretations of the relevant regulations.

Du Jinsong, a barrister practicing in Hong Kong, told the Securities Times that Evergrande’s initiative to file for bankruptcy protection was mainly to prevent potential litigation in advance. According to the listing rules, Evergrande needs to clarify or disclose as soon as possible because "any legal action in different jurisdictions has potential conflicts."

In an interview with the media, Li Haiquan, a lawyer at Shen Yihe Law Firm in Shanghai, pointed out that applying for bankruptcy protection is not the bankruptcy that ordinary people understand. "When the creditor and the debtor can no longer negotiate to solve the debt problem, or the two sides lose trust, applying for bankruptcy protection will help the debtor to help the company save itself through the bankruptcy reorganization process."

Li Haiquan said that after entering the bankruptcy process, bankruptcy reorganization, bankruptcy settlement and bankruptcy liquidation can be carried out. Enterprises take the initiative to apply for bankruptcy protection, generally seeking bankruptcy reorganization and bankruptcy settlement, and try to avoid entering the bankruptcy liquidation process.

Hu Guifen, a partner lawyer at Guangdong Facheng Huijun Law Firm, also told the media that bankruptcy protection is not the bankruptcy in the general public’s understanding. Bankruptcy protection is a legal way for debtors to seek help from the court when they are facing debt difficulties and have the possibility of workouts and other solutions to avoid assets being competed by multiple parties to exacerbate the crisis and gain buffer time. Bankruptcy protection under the context of the US Bankruptcy Law is similar to the procedures of pre-reorganization and bankruptcy reorganization in the Chinese mainland’s Enterprise Bankruptcy Law. It is one of the legal ways for enterprises to resolve debt difficulties under the auspices of the court.

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Original title: "Hot search first! Just now, Evergrande responded"

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