CREDIT: Bloomberg
China Evergrande Group’s financial troubles are proving deeper than originally disclosed, with court-appointed liquidators now estimating the developer’s debt load at around HK$350 billion (US$45 billion). This figure, revealed in a recent progress report, is substantially higher than the HK$215 billion (US$27.5 billion) liabilities listed in the company’s December 2022 financial statement.
The report, issued by liquidators Edward Middleton and Tiffany Wong of Alvarez & Marsal Inc., notes that Evergrande faces 187 separate debt claims — a number that could grow as further claims surface. Since taking control in January 2024, the liquidators have been working through complex corporate structures, assuming control of more than 100 related entities valued collectively at about HK$27 billion.
Evergrande’s scale is immense, encompassing roughly 3,000 legal entities across multiple jurisdictions, along with 1,300 property projects in over 280 cities. The group’s default in 2021 triggered a crisis in China’s real estate market from which it has yet to recover.
Creditors are paying close attention to Evergrande Property Services Group Ltd., its Hong Kong-listed property management arm, which the liquidators described as a “very substantial potential source of value” and a top priority in the process.
To date, asset recoveries have been limited — around US$255 million — with US$167 million linked to Evergrande. However, due to complex ownership structures, there is no guarantee these funds will be available for creditor repayment.
Meanwhile, Evergrande’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd., continues to seek strategic investors after its earlier ambitions to rival Tesla collapsed under the weight of the wider debt crisis. No viable investment proposals have been received so far.
The liquidation process is further complicated by the challenge of securing mainland China-based assets for offshore creditors. One of Evergrande’s key mainland subsidiaries, Guangzhou Kailong Real Estate Co., is already undergoing onshore bankruptcy proceedings. Kailong holds a 60% stake in Hengda Real Estate, Evergrande’s main onshore property unit, which has faced allegations of inflating more than 560 billion yuan (US$78 billion) in revenue. Chinese regulators fined Hengda 4.18 billion yuan in 2024, further depleting resources available for offshore creditors.
With hundreds of legal actions in motion and assets tied up in complex jurisdictional disputes, the road ahead for creditors appears long and uncertain.
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IMAGE: Reuters
