China property giant Evergrande seeks to recover $6B

China Evergrande Center in Hong Kong, on Dec. 11, 2021. Photo by AFP

Evergrande was once China’s biggest real estate firm, a powerhouse in a sector that helped propel the country’s rapid economic growth during recent decades.

But its spiralling debt became emblematic of a prolonged crisis in the real estate sector, and, struggling to repay creditors for years, it defaulted in 2021.

Evergrande is seeking to recover “among other things, dividends and remuneration in an aggregate amount of approximately US$6 billion paid by the Company”, the firm said in a statement published on the Hong Kong Stock Exchange, where it is listed.

The amount is claimed for the damage caused by alleged misrepresentations of the group’s financial position between 2017 and 2020, it said.

In addition to company founder Xu Jiayin, also known as Hui Ka Yan, “his spouse or former spouse” Ding Yumei, former chief executive Xia Haijun and former chief financial officer Pan Darong, as well as three other entities associated with Xu and Ding, were named as defendants, according to the statement.

Xu is said to be under house arrest, according to press reports dating from last year, but Evergrande has never confirmed or denied the reports.

Chinese regulators said in March that they would ban him from the securities market for life on grounds of financial fraud.

The liquidators obtained injunctions restraining Xu, Ding and Xia “from dealing with, disposing of, or diminishing the value of, their worldwide assets up to various prescribed limits”, according to the statement issued on Monday.

Trading in Evergrande’s shares has been suspended since January and “will remain suspended until further notice”, it added.

A Hong Kong court that month ordered the liquidation of the firm.

The legal proceedings “are ongoing and there is no certainty as to whether or not they will be successful and as to the amount that may ultimately be recovered”, the company statement said.