Evergrande seeks US$6 billion from Hui Ka-yan, others in dividends paid on fake accounting
China Evergrande Group is seeking to claw back about US$6 billion worth of dividends and other benefits paid to its founder Hui Ka-yan and several top executives based on misstated financial results before its financial collapse.
The bankrupt developer, now administered by liquidators, sued in March to recover the sum from former executive chairman Hui, former CEO Xia Haijun and former CFO Pan Darong, among others, according to a stock exchange filing late Monday. The High Court in Hong Kong lifted its confidentiality order on August 2.
The liquidators have since added Ding Yumei, who is Hui’s spouse or former spouse, and three entities associated with them, as defendants, it added.
The developer, struggling under more than US$300 billion in total liabilities, defaulted on about US$20 billion of offshore bonds in late 2021. Chinese authorities detained Hui and later said Evergrande inflated its sales by 564 billion yuan (US$78.9 billion) from 2019 to 2020, and fabricated its profits by 92 billion yuan in the nation’s largest corporate fraud.
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A vanishing fairyland dream: how China Evergrande rose, then crashed
A vanishing fairyland dream: how China Evergrande rose, then crashed
The High Court in January ordered Evergrande to fold after some creditors ran out of patience to recover their debts, and named Eddie Middleton and Tiffany Wong Wing-sze from consulting firm Alvarez & Marsal as liquidators. The firm had more than US$300 billion in total liabilities preceding its collapse.
Evergrande’s liquidators said they are seeking to claw back dividends and pay on the basis of allegedly misstated accounts from 2017 to 2020, the filing showed. They have also obtained injunctions to restrain Hui, Ding and Xia from disposing of their assets worldwide, up to various limits, according to the filing.
The proceedings are ongoing and there is no certainty as to whether they will be successful and as to the amount that may ultimately be recovered by the company, it added. China’s Ministry of Finance and Hong Kong’s audit regulators have agreed to cooperate in their investigations of PwC for its audit of Evergrande’s accounts.
The company’s stock has been suspended from trading in Hong Kong since January 29 following the liquidation order.
