Evergrande, once China’s top property developer, was found in 2021 to be struggling with more than $300 billion in liabilities, as it came under intense pressure after officials tightened scrutiny of the real estate industry.

The company’s woes have come to symbolize the growing crisis in China’s sprawling property sector, which accounts for a huge portion of the world’s number two economy, that many fear could spill over globally.

Several major developers have been hit in the unfolding drama as they fail to complete housing projects, triggering protests and mortgage boycotts from homebuyers.

In the latest filings in New York, Tianji Holding and Scenery Journey — of which Evergrande is the ultimate holding company — filed for Chapter 15 protection, which provides mechanisms for dealing with insolvency cases involving more than one country.

Evergrande has worked on an offshore debt restructuring agreement for months and unveiled a proposal earlier this year.

The plan offers creditors a choice to swap their debt into new notes issued by the company and equities in two subsidiaries, Evergrande Property Services Group and Evergrande New Energy Vehicle Group.

Evergrande first defaulted on its bonds in 2021, fanning fears of contagion.

The latest court documents referenced restructuring proceedings in Hong Kong.

Yan Yuejin, research director at E-house China R&D Institute, told AFP that Evergrande’s latest filing was an “equivalent to seeking a better debt restructuring”.

“In fact, Evergrande’s business is certainly still operational. After all, it has a huge responsibility of ensuring deliveries of presold homes,” he told AFP.

In July, Evergrande reported a net loss of more than $113 billion in 2021 and 2022.

The group’s liabilities stood at almost $340 billion at the end of 2022, with $85 billion of borrowings. The developer had about $2 billion in total cash at the time.

Housing reform in China during the late 1990s unleashed a boom in the real estate sector, spurred by social norms that consider owning property a prerequisite for marriage.

But the massive debt accrued by the industry’s biggest players has been perceived by Beijing in recent years as an unacceptable risk for China’s financial system and overall economic health.

To reduce the sector’s indebtedness, authorities have gradually tightened conditions for developers’ access to credit since 2020, drying up sources of financing for firms already in debt.

A wave of defaults followed — notably that of Evergrande — which undermined the confidence of potential buyers and reverberated through the industry.

Fellow Chinese property giant Country Garden now risks defaulting on its bond payments next month, after the company said there were “major uncertainties in the redemption of corporate bonds”.

Beijing has recently sought to bolster the sector by cutting mortgage rates, slashing red tape and offering more loans to developers.