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China Evergrande Group and its liquidators are seeking to recover $6 billion in dividends and remuneration from seven defendants including the developer\u2019s founder Hui Ka Yan, a formal step toward recouping at least a fraction of creditors\u2019 investments in the property giant.\u00a0<\/p>\n
The amount is based on allegedly misstated financial statements of Evergrande for each of the financial years ended December 2017 to 2020, the company said in a stock exchange\u00a0filing<\/a>\u00a0on Monday. Other defendants include former chief executive officer Xia Haijun, former chief financial officer Pan Darong and Hui\u2019s ex-wife Ding Yumei, according to the filing.\u00a0<\/p>\n The moves come six months after a Hong Kong High Court gave a\u00a0winding-up order<\/a>\u00a0to Evergrande, which set the stage for one of China\u2019s biggest liquidation cases. The court then\u00a0appointed<\/a>\u00a0two managing directors of restructuring consulting firm Alvarez & Marsal Inc. as liquidators.\u00a0<\/p>\n It symbolizes the \u201cfirst formal step\u201d for liquidators to recoup assets for creditors, said Andrew Chan at Bloomberg Intelligence. However, creditors may face a challenging path even as liquidators go after Hui and other executives, Chan cautioned.\u00a0<\/p>\n \u201cHui and others could have offshore assets stashed away that couldn\u2019t be seized onshore, and it\u2019s unsure how much is left,\u201d Chan said.\u00a0<\/p>\n Hui, once Asia\u2019s second-richest person with a $42 billion net worth, lost most of his fortune as Evergrande slid into financial distress.\u00a0<\/p>\n The liquidators have obtained injunctions restraining Hui, Ding and Xia from dealing with, disposing of or diminishing the value of\u2014up to prescribed limits\u2014their assets around the world, the company said in filing. The details were previously under confidentiality orders issued by Hong Kong\u2019s High Court, which were lifted on Aug. 2, it said.\u00a0<\/p>\n Hui has been subject to \u201cmandatory measures<\/a>\u201d suspecting of committing crimes since September. Bloomberg News reported that Hui was taken away by Chinese police and put under so-called residential surveillance, a type of police action that falls short of formal detention or arrest. Caixin reported that Xia and Pan, who both oversaw Evergrande\u2019s financing businesses, have also been held since last year.<\/p>\n The\u00a0ex-wife<\/a>\u00a0Evergrande\u2019s founder Hui, Ding Yumei, holds a 5.99% stake in Evergrande shares, according to its filing in August last year. Ding has been listed as a \u201cthird party independent\u201d since then, suggesting she and Hui separated. But it\u2019s unclear how the two divided their fortune, and whether the wealth is significant enough to affect Evergrande\u2019s liabilities.\u00a0<\/p>\n In February, Ding filed a\u00a0rare lawsuit<\/a>\u00a0against Hui\u2019s second son, who was taken into\u00a0custody<\/a>\u00a0last year, over HK$1 billion in loan payments.\u00a0<\/p>\n The defendants were chased by Chinese regulators too. Onshore, China\u2019s securities watchdog in May formally\u00a0announced<\/a>\u00a0it would impose a 4.18 billion yuan fine on Evergrande\u2019s onshore unit Hengda, citing the unit\u2019s fraudulent bond issuance and violations on information disclosures.\u00a0<\/p>\n Evergrande said the proceedings to recover assets are ongoing and there\u2019s no certainty over any amount that may ultimately be recovered. The company\u2019s shares will remain suspended from the Hong Kong stock exchange.<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n