China Aoyuan Files for Bankruptcy Protection in US Court: "For Restructuring, Not Liquidation"

Aoyuan, a real estate developer ranked within the top 30 in China, has filed for bankruptcy protection in a New York court.

According to local media including China's Pengpai News on the 21st, Aoyuan, a real estate developer listed on the Hong Kong Stock Exchange, filed for bankruptcy protection under Chapter 15 of the U.S. Bankruptcy Code in a New York court. The company explained, "This is not a bankruptcy liquidation process, but a court procedure to promote overseas debt restructuring."

Chinese real estate developer Aoyuan (Photo source= China Baidu)

'Chapter 15' is an international bankruptcy procedure that foreign companies use to protect assets in the U.S. while undergoing restructuring in another country. In August, another Chinese real estate developer, Hengda, also filed for bankruptcy protection under Chapter 15 in a New York court.

Earlier, on the 29th of last month, Aoyuan announced that its overseas restructuring plan was progressing smoothly and had been approved through voting at creditors' meetings held in Hong Kong and other locations. The company is reportedly reviewing alternative financial instruments to replace its overseas debt amounting to $6.1 billion (approximately 7.92 trillion KRW).

The company emphasized, "We will ensure the successful resolution of overseas debt," adding, "This procedure does not affect the company's independent operations and is unrelated to the group's domestic corporate debt." It further explained, "There will be no impact on the group's domestic creditors and debt relationships or normal operations," and "At the same time, this is a measure to protect the interests of all the company's creditors."

Aoyuan's performance has sharply deteriorated since the spread of COVID-19. In 2021, sales dropped 26.2% year-on-year to 50.022 billion yuan (approximately 9.092 trillion KRW), and last year's sales plunged another 62.6% to 18.711 billion yuan. The total deficit over the past two years (2021?2022) reached 40.918 billion yuan.

This content was produced with the assistance of AI translation services.