In pictures: China Evergrande Group files Chapter 15 bankruptcy in New York

Embattled developer China Evergrande Group has filed for protection from creditors in a US bankruptcy court as part of its debt restructuring process, as anxiety grows over China's worsening property crisis and a weakening economy.

The company sought protection under Chapter 15 of the US bankruptcy code, which shields non-US companies that are undergoing restructurings from creditors that hope to sue them or tie up assets in the United States.

The filing is procedural in nature, but the world's most indebted property developer with more than $300 billion in liabilities has to do it as part of a restructuring process under US law, two people familiar with the matter said.

Evergrande announced an offshore debt restructuring plan in March, expecting it to facilitate a gradual resumption of operations and generation of cash flow. It is now gathering creditor support to complete the process.

Evergrande's creditors will vote later this month on its restructuring proposal, with possible approval by Hong Kong and British Virgin Islands courts in the first week of September.

An affiliate of the developer, Tianji Holdings, also sought Chapter 15 protection on Thursday in Manhattan bankruptcy court.

In a filing in the Manhattan bankruptcy court, Evergrande said that it was seeking recognition of restructuring talks underway in Hong Kong, the Cayman Islands and the British Virgin Islands. The company proposed scheduling a Chapter 15 recognition hearing for September 20.

In June last year, another Chinese developer, Modern Land (China) Co. Ltd, which missed payments on its offshore bonds that were due in Oct, 2021, had filed a petition for recognition under Chapter 15 of the bankruptcy code in New York.

Trading in China Evergrande shares has been suspended since March 2022. Shares of Evergrande Services plunged more than 12 per cent, while China Evergrande New Energy Vehicle Group dropped 8 per cent on Friday.