Key facts
- China's financial regulator revoked the business license of Evergrande Life Insurance Co. Ltd.
- The insurer was cited for illegal use of insurance funds and transferring benefits to related parties.
- Evergrande's founder, Hui Ka Yan, was sentenced to life in prison for financial crimes.
- A bankruptcy liquidation case was accepted against Evergrande's main mainland Chinese property development unit.
- Evergrande defaulted in 2021 following government curbs on excessive borrowing.
China's top financial regulator has revoked the business license of Evergrande Life Insurance Co. Ltd. due to severe compliance failures, including the illegal use of insurance funds and the transfer of benefits to related parties. This action marks the end for the insolvent insurer, which had served as a financing vehicle for the struggling China Evergrande Group.
The move comes a day after the embattled property developer's founder, Hui Ka Yan, was sentenced to life in prison by a court in Shenzhen for financial crimes, including large-scale financial fraud, embezzlement, and bribery. Several other senior executives of Evergrande Group also received prison sentences ranging from six to 18 years.
Authorities are continuing efforts to clean up the fallout from the collapse of Evergrande's real estate empire, which defaulted with approximately $300 billion in liabilities. A court in Guangzhou has accepted a bankruptcy liquidation case against Evergrande's main mainland Chinese property development unit, which accounted for a significant portion of the group's debt. The company's collapse in 2021 was triggered by regulatory crackdowns on excessive borrowing in the real estate industry, leading to a prolonged downturn in the housing market.
Liquidators are pursuing Hui's assets, with a Hong Kong judge having previously prohibited him from disposing of his worldwide assets valued at approximately $7.7 billion. The liquidators are also seeking $8.4 billion from accounting firm PwC over its role in auditing Evergrande's financial statements prior to its collapse.