As well as selling assets it has even resorted to borrowing money from its employers, who won't get a bonus unless they stump up.

For the last two years investors have been crossing their fingers and hoping for a government bailout, but that doesn't look likely now.

Chinese premier Xi Jinping has only offered minimal support and in any case Beijing has too many debts to add more to its pile.

None of which has much to do with the US. Indirectly, though, it could have a big impact.

Evergrande doesn’t build any properties in the US or Europe. Yet it has filed for bankruptcy in the US because Chapter 15 offers protection to non-US companies, too.

It shields businesses that are undergoing restructurings from creditors who would otherwise try to sue them or tie up assets in the US and other countries.

So it’s a defensive measure but a revealing one. It shows that Evergrande doesn't just owe money to Chinese banks and businesses, but overseas as well.

The New York filing is procedural in nature but is an obligatory part of a restructuring process under US law.

Evergrande has a hefty $31.7billion of offshore debt restructuring, which include bonds, collaterals and repurchase obligations.

It announced an offshore debt restructuring plan in March and is now gathering creditor support to complete the process.

The company’s creditors will vote on the restructuring proposal later this month. It may then seek approval by Hong Kong and British Virgin Islands courts in the first week of September.

Evergrande affiliate, developer Tianji Holdings, has also sought Chapter 15 protection.

READ MORE: China on brink of collapse - US could come crashing down next

Evergrande isn’t the first Chinese developer to file for Chapter 15 protection. The Modern Land (China) Co. Ltd, which missed payments on offshore bonds due in October 2021, has previously filed a petition.

A big worry is that Chinese developers who have been active in the US have also been flagged up as risks.

In 2021, Oceanside Holdings, China Vanke and Greenland all crossed at least one of the “three red lines” set by Chinese regulators.

So far, we do not know how bad contagion will be but many have compared this to the collapse of Wall Street bank Lehmans, which triggered the global financial crisis after going under in 2008.

With the world on the brink of a recession, a Chinese property meltdown is the last thing we need.

Beijing seems to want to make an example of Evergrande by letting it go to the wall, but it may step in at some point to protect Chinese creditors.

As for those offshore creditors, they'll be on their own.