Breaking News: China Evergrande Representative Company Files Lawsuit in Hong Kong Court to Pursue $6 Billion Dividends and Compensation
In the latest update, China Evergrande’s liquidators, on behalf of the company, have formally filed a lawsuit in the Hong Kong High Court to pursue $6 billion in dividends and compensation from seven defendants including Xu Jiayin.
On the evening of August 5th, China Evergrande announced on the Hong Kong Stock Exchange that the company is pursuing legal action against its executive director Xu Jiayin, former CEO Xia Haijun, former CFO Pan Darong, and seven defendants, including Xu Jiayin’s spouse or former spouse Ding Yumei, seeking approximately $6 billion in dividends and compensation.
The legal proceedings commenced on March 22, 2024, when China Evergrande’s liquidators, on behalf of the company, officially initiated the lawsuit in the Hong Kong Special Administrative Region High Court. Initially, the lawsuit targeted Xu Jiayin, Xia Haijun, and Pan Darong. Subsequently, Ding Yumei was added as a defendant, along with three related entities of Xu Jiayin and Ding Yumei.
The amount China Evergrande is seeking to recover pertains to dividends and compensations wrongly paid due to “misreporting” in the financial statements between December 31, 2017, and December 31, 2020. The liquidators aim to rectify the errors and recover the related funds.
Of note, the liquidators, in the name of Evergrande, have obtained multiple injunctions in the lawsuit to restrict Xu Jiayin, Ding Yumei, and Xia Haijun from disposing, selling, or reducing the value of their global assets beyond certain limits to prevent asset transfers during the litigation.
These injunctions were first issued in Hong Kong on June 24th against Xu Jiayin and Xia Haijun, and Ding Yumei was subsequently included. Court documents and Hong Kong injunctions related to the lawsuit were previously subject to a confidentiality order by the Hong Kong High Court, which was lifted on August 2nd.
The announcement stated that due to the ongoing nature of the lawsuit, the possibilities of successful recovery and the final amount to be recovered are “uncertain.”
On January 29th, 2024, China Evergrande faced a winding-up petition from overseas creditors in the Hong Kong High Court. Judge Chan Jingfen issued a winding-up order against China Evergrande that same day. In the afternoon, two managing directors of Alvarez & Marsal Inc., Tiffany Wong and Edward Simon Middleton, were appointed as China Evergrande’s liquidators.
Following the financial crisis, China Evergrande halted trading on January 29th, 2024, at 10:18 am and will remain suspended until further notice.