Abstract

The case “Evergrande Crisis: Trouble for Real Estate in China” talks about the financial crisis faced by China’s second largest property developer, the Evergrande Group (Evergrande), and its impact on China’s economy. The case starts off by giving a brief history of the company. It then describes the growth of the real estate sector in China. The case touches next upon the details of the crisis including the reasons for the crisis, how Evergrande got affected by it, and its impact on the company’s future as well as the future of the real estate market in China. It also highlights the views of different experts regarding the effect of this crisis on China’s economy. The case ends with the company’s plans to overcome the crisis.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the concept of restructuring and its role in managing the financial distress of a company
• Understand the relationship between capital structure and a firm’s value
• Understand the role of government policies to bring stability to the real estate market

Keywords

Debt Restructuring; Capital Structure; Financial Distress; Housing Bubble; onshore and offshore bonds; ThreeRedLines (TRL)policy; Financial Restructuring; Evergrande Crisis