Evergrande's US$46bil debt nightmare yields just 1pct recovery

The liquidators of China Evergrande Group have recovered a modest US$435.9 million from asset sales and loan recoveries, underscoring the immense difficulty of repaying creditors with claims totaling approximately US$46 billion. In their latest progress report following a Hong Kong court's liquidation order in January 2024, liquidators Edward Middleton and Tiffany Wong of Alvarez & Marsal indicated their intention to deliver the first interim dividend to creditors by the first half of 2027, though the exact amount remains undecided.

Once China's leading property developer, Evergrande defaulted on nearly all of its roughly US$300 billion in liabilities and emerged as a symbol of the country's property crisis affecting the world's second-largest economy. The liquidators disclosed that they had raised the US$435.9 million through the sale of assets, including aircraft, artwork, and club memberships, alongside the settlement of loan receivables.

Notably, 96 out of the 107 artworks discovered at Evergrande's Hong Kong headquarters were sold for a loss, amounting to US$28.8 million. The collection comprised pieces by renowned artists such as Picasso, Monet, Warhol, Moore, and Hepworth.

Apart from artwork sales, assets like a private jet are being auctioned, with an expected sale price of around US$12 million in the fourth quarter. The liquidators are also pursuing a US$2 million refund from a U.S. university for a donation made in 2020. They have assumed control of over 100 Evergrande subsidiaries across various jurisdictions, but expressed uncertainty about recovering assets held by mainland Chinese subsidiaries, considering such prospects remote.

In August, Evergrande founder Hui Ka Yan, 67, received a life sentence from a Chinese court, with the ruling also mandating the confiscation of his personal assets. Industry experts suggest that Evergrande's liquidation process could span more than a decade due to the scale and complexity of the group.