Key facts
- Hong Kong's High Court rejected a request to use HK$1.2 million in funds controlled by liquidators for legal costs.
- Evergrande founder Hui Ka Yan was sentenced to life in prison and had his personal property ordered confiscated by a Chinese court.
- Liquidators are pursuing Hui for $6 billion in dividends and remuneration.
- Liquidators are also seeking 57 billion yuan in damages from PwC for alleged auditing negligence.
Hong Kong's High Court has rejected a request from the lawyer representing Evergrande founder Hui Ka Yan to use HK$1.2 million in funds controlled by liquidators to cover legal costs.
The liquidators, who are also receivers of Hui's personal assets, are engaged in efforts to recover approximately $6 billion in dividends and remuneration previously paid to him and other former executives.
Evergrande, once China's largest property developer, has defaulted on a substantial portion of its over $300 billion in liabilities, becoming a symbol of the ongoing crisis in China's property sector.
Last week, Hui, who was previously Asia's richest man, received a life sentence from a Chinese court, which also ordered the confiscation of all his personal property. Hui's lawyer informed the Hong Kong court that she had not yet received the full Chinese judgment and was uncertain how the confiscation order would impact the Hong Kong proceedings. She also stated that Hui is prohibited by authorities from discussing his assets.
Following the sentence in China, offshore creditors expressed concerns that the confiscation of Hui's assets could hinder their debt recovery efforts and complicate the liquidation process. However, Xinpeng Zhu, a lawyer at Shanghai Rongying Law Firm, suggested the impact would likely be limited, noting that creditors' rights typically rank higher than criminal fines in liquidation proceedings.
The Hong Kong High Court ordered Evergrande's liquidation in 2024 and appointed Edward Middleton and Tiffany Wong of Alvarez & Marsal as liquidators. In a separate legal action, the liquidators are seeking 57 billion yuan ($8.5 billion) from PwC, alleging negligence in the firm's auditing work.