Evergrande creditors owed $57 billion now face more complex path
One principle in Chinese law could in theory help, though it is unclear how that will play out in practice.
Evergrande Group's creditors, owing a staggering US$57 billion, face a more convoluted path in recovering their funds. The main reason behind this complexity stems from a recent court ruling where Evergrande founder Hui Ka Yan was sentenced to life in prison and his assets confiscated. The liquidators have been actively pursuing Hui's worldwide assets, valued at around US$7.7 billion, to recover their losses.
Foreky Wong, a Hong Kong-based insolvency specialist, highlighted that the new judgment has made the liquidation process the most intricate they have encountered. Liquidators often encounter difficulties in recovering funds from Hui's assets since their lawsuit against him has yet to be resolved. Despite the complications, Chinese law prioritizes compensation for losses and debt repayments over asset confiscation and fines.
However, the ultimate fate of offshore creditors' recovery efforts remains uncertain as the Chinese government's distribution of Hui's assets will depend on its own discretion. The developer's liquidators in Hong Kong have been caught in a tussle with the local authorities as well. A recent court hearing in Hong Kong addressed a challenge raised by the liquidators against a HK$1 billion (S$162 million) arrangement to compensate Evergrande's minority shareholders.
Deloitte had estimated a recovery rate of 3.4% for Evergrande's dollar notes in a 2023 report, with the majority of the firm's offshore bonds barely changing in value after the mainland court's ruling.
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