Image: Christian Lue via Unsplash
China Evergrande Group announced on Monday that its liquidators are seeking to recover approximately $6 billion from seven defendants, including founder Hui Ka Yan, and have secured injunctions against three of them, Reuters news agency reported.
In January Hong Kong high Court ordered to liquidate Evergrande, the world’s most indebted property developer with liabilities exceeding $300 billion, after it failed to present a concrete restructuring plan for its $23 billion offshore debt.
In a recent filing, according to the report, the liquidators disclosed that they initiated legal proceedings in late March against seven defendants, which include former CEO Xia Haijun, former CFO Pan Darong, Hui’s former spouse Ding Yumei, and three entities linked to Hui and Ding. Injunctions have been obtained to prevent Hui, Ding, and Xia from disposing of or diminishing the value of their worldwide assets within certain limits.
Confidentiality orders on the injunctions and proceedings were lifted by the court on August 2. Joint liquidators Edward Middleton and Tiffany Wong from Alvarez and Marsal stated, ‘The proceedings are ongoing and there is no certainty as to whether or not they will be successful and as to the amount that may ultimately be recovered by the company.’
The liquidators are aiming to recover $6 billion in dividends and remuneration paid to the seven defendants, allegedly based on misstated financial statements from 2017 to 2020.
Earlier this year, the China Securities Regulatory Commission discovered that Evergrande’s onshore flagship unit, Hengda Real Estate, had overstated revenue by 564 billion yuan ($78 billion) over two years through 2020. The regulatory body accused the company’s founder Mr. Hui, once ranked as China’s richest man, of directing personnel to manipulate company metrics.
Evergrande’s massive debt, which exceeds $300 billion, led to the company’s default in late 2021 and triggered a ripple effect that impacted other developers and the broader economy.
Evergrande announced on Monday that its shares will remain suspended until further notice.
