Explainer | How China Evergrande’s Hui Ka-yan is saving his property empire from sinking under US$340 billion in liabilities

Debt-laden developer enters a critical make-or-break third quarter, as restructuring awaits approvals from courts, voting by offshore creditors

Saddled with US$340 billion in total liabilities, founder Hui is fixing US$20 billion of defaulted offshore bonds, claims and obligations in first act of survival

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The Evergrande Mingdu residential complex is seen in Huai‘an in eastern Jiangsu province in December 2022. Photo: Getty Images

Published: 10:02am, 20 Jul 2023Updated: 10:16am, 20 Jul 2023

China Evergrande Group, once China’s biggest property developer, is entering a critical quarter as chairman and founder Hui Ka-yan rolls out plans to prevent his debt-laden empire from becoming one of the nation’s largest-ever business failures.

The Shenzhen-based group is seeking approvals from courts in Hong Kong and Cayman Islands later this month, and from a host of creditors some time in August or September, to reorganise the most urgent portions of its 2.44 trillion yuan (US$340 billion) of liabilities.

Hui, who built his property flagship in Guangzhou from scratch in 1996, topped Hurun’s China Rich List in 2017 with US$43 billion of assets. The crisis has decimated 93 per cent of his personal fortune to US$3 billion by January 2023.

Hui Ka-yan (centre), seen at the 18th Session of CPPCC’s 12th Standing Committee meeting in October 2016. Photo: Handout

Here’s a look at Evergrande’s latest financials, and how the 64-year old Hui is trying to save his empire from China’s corporate graveyard.

What do the latest financial report cards show?

Evergrande recorded a net loss of 105.9 billion yuan for the year ended December 31, 2022, after incurring a 476 billion yuan deficit in 2021. It earned 8.1 billion yuan of profit in 2020. Revenue fell to 230.1 billion yuan in 2022 from 250 billion yuan in 2021 and 507 billion yuan in 2020.

It had only 4.3 billion yuan of unencumbered cash on December 31, 2022.

How much does Evergrande owe banks and creditors?

The group had 2.44 trillion yuan in total liabilities on December 31, 2022. The largest category was trade and other payables, totalling 1 trillion yuan.