Nearly five years after Chinese property giant China Evergrande defaulted on a staggering $300 billion in total liabilities, Chinese authorities have launched the final phase of resolving one of the largest corporate collapses in global history.
On Friday, a court in Guangzhou, the capital of southern China’s Guangdong province, confirmed it has accepted a bankruptcy liquidation petition targeting Evergrande’s core onshore property development unit — the entity responsible for the vast majority of the group’s total outstanding debt. The court filing comes just one day after a Shenzhen court handed down a life prison sentence to 67-year-old Evergrande founder Hui Ka Yan, also known as Xu Jiayin, on multiple financial crime charges. Dozens of other co-defendants with ties to the embattled conglomerate, including two of Hui’s sons, were also sentenced to prison terms ranging up to 18 years. The Shenzhen court additionally ordered full confiscation of Hui’s personal assets; once ranked China’s richest person, Hui currently has an estimated $7.7 billion in global assets that have already been frozen under a Hong Kong court order.
Industry restructuring specialists say the sequence of legal actions makes clear that Chinese regulators have a clear timeline to bring the years-long Evergrande crisis to a close. “Beijing appears to already have a clear road map for wrapping up the entire Evergrande saga,” explained Foreky Wong, founding partner of Hong Kong-based restructuring advisory Fortune Ark. “These procedural steps were inevitable, but they have moved forward sooner than many market observers expected.” Still, Wong cautioned that given Evergrande’s unprecedented scale, the full bankruptcy and liquidation process will extend over multiple years.
The Evergrande collapse first erupted in 2020, when Chinese regulators introduced strict new limits on excessive borrowing among real estate developers to cool overheated housing markets. The policy crackdown triggered a sudden liquidity crisis for Evergrande, which at the time was the world’s most indebted developer, and sparked a domino effect of defaults across China’s property sector that plunged the industry into a deep, prolonged downturn. For years prior to the crisis, real estate served as the primary engine of China’s economic growth, accounting for roughly a quarter of total national GDP as recently as the late 2010s. Today, three years after Evergrande’s first default, average national home prices have fallen by roughly 20% or more, and the sector has shown few signs of a sustained recovery. Oversupply continues to plague hundreds of smaller tier cities across China, while broad domestic economic slowdown has eroded household consumer confidence and purchasing power, leaving demand far weaker than pre-crisis levels.
Back in 2024, a Hong Kong court ordered the liquidation of Evergrande’s Cayman Islands-incorporated holding company, which was listed on the Hong Kong stock exchange, after the group failed to reach a viable debt restructuring agreement with international creditors. But legal experts note that cross-jurisdictional complexities will significantly slow asset recovery efforts. Most of Evergrande’s assets and core operations are located on mainland China, which operates under a separate legal system from Hong Kong, leaving Hong Kong-appointed liquidators with very limited authority to seize and distribute onshore assets to creditors.
Jonathan Leitch, a restructuring partner at international law firm Hogan Lovells Cadwalader, noted that the Guangzhou court’s ruling has opened a host of untested legal questions that will take years to resolve. “One of the biggest open questions is how competing claims on Hui Ka Yan’s personal assets will be prioritized, between mainland authorities and the Hong Kong liquidation team,” Leitch explained.
Beyond pursuing Hui and other former Evergrande executives, liquidators have also launched legal action against Big Four accounting firm PwC, seeking $8.4 billion in damages over PwC’s role auditing Evergrande’s financial statements in the years leading up to its collapse. Regulatory investigations confirmed that Evergrande inflated its total revenue by roughly $80 billion across 2019 and 2020 through widespread financial manipulation. In 2024, mainland Chinese regulators fined PwC approximately $62 million for its audit failures, while Hong Kong regulators secured a $166 million fine and compensation settlement from the firm in April 2024.
Most industry analysts agree that Evergrande’s creditors — both domestic and international — will only recoup a tiny fraction of the total money they are owed. Wong projects that even after all asset recoveries are complete, total creditor payouts will amount to only a single-digit percentage of Evergrande’s $300 billion in total liabilities.