Evergrande Wins HK$6 Billion Debt Case as Court Rejects 'Fabricated' Claims
SCMP · 1 SOURCESabout 2 hours ago2 MIN
Summary
A Hong Kong court has ruled in favor of embattled conglomerate Evergrande, allowing it to recover approximately HK$6 billion from a third party after a judge found the borrower's arguments against enforcement were fabricated. High Court Judge Linda Chan dismissed an injunction application by Yingjia International Properties and also rejected a separate bid to block a winding-up petition. The debt originated from a HK$5 billion loan made in March 2021, which has since accrued interest. This judgment represents a significant development in Evergrande's ongoing liquidation proceedings.
Key Points
- State Hero Holdings, an indirect wholly owned subsidiary of China Evergrande Group, served a statutory demand on February 13 requiring repayment of HK$5.97 billion in principal and accrued interest
- The loan agreement was signed in March 2021 for HK$5 billion, repayable within two years to avoid interest, with a 4% annual interest rate triggered upon failure to meet the deadline
- The borrowed funds were transferred to Honour Best International Trade to subscribe for 183 million new shares in China Evergrande New Energy Vehicle Group
- Honour Best was acquired by Wang Kaiguo, a business partner of Yingjia International's sole owner Wang Lihua
- Judge Linda Chan found Yingjia International's arguments against enforcement to be fabricated and dismissed both injunction applications
Why It Matters
This court ruling provides a pathway for Evergrande's court-appointed liquidators to recover a substantial portion of the debt owed to the group, which has been mired in one of China's largest corporate debt crises. The judgment reinforces Hong Kong's role as a key jurisdiction for resolving cross-border commercial disputes involving mainland entities, while sending a clear signal that fabricated legal arguments will not prevent legitimate debt recovery efforts.
This court ruling provides a pathway for Evergrande's court-appointed liquidators to recover a substantial portion of the debt owed to the group, which has been mired in one of China's largest corporate debt crises. The judgment reinforces Hong Kong's role as a key jurisdiction for resolving cross-border commercial disputes involving mainland entities, while sending a clear signal that fabricated legal arguments will not prevent legitimate debt recovery efforts.