HONG KONG — Court-appointed liquidators handling the collapse of Chinese real estate giant China Evergrande are pursuing 57 billion yuan ($8.4 billion) from accounting firm PwC in Hong Kong court proceedings, officials revealed Monday.
The massive financial claim targets PwC International, PwC Hong Kong and the firm’s mainland Chinese operations, according to court testimony. Judges have not yet ruled on the allegations.
The real estate company, formerly among China’s biggest property developers, initially failed to meet debt obligations in 2021 and accumulated over $300 billion in outstanding debts, making it the globe’s most heavily indebted development company.
The company’s collapse created a cash flow crisis throughout China’s real estate market, leading to declining sales and property values that continue affecting the sector today.
Following a Hong Kong court’s liquidation order for China Evergrande in early 2024, appointed liquidators filed legal action against PwC citing alleged “negligence” in auditing services as they work to recover funds for creditors.
Hong Kong financial regulators announced last month that PwC would pay HK$1.3 billion ($166 million) in penalties and compensation related to its auditing of Evergrande’s financial records prior to the company’s failure, citing violations of professional responsibilities.
PwC stated last month that they recognized their Evergrande audit work “fell well below our high expectations and the expectations of our stakeholders” and confirmed implementing “accountability and remediation measures” in recent months.
This followed separate action by mainland Chinese regulators in September 2024, who imposed 441 million yuan ($62 million) in penalties on PwC for its Evergrande auditing, while revealing the developer had artificially increased revenues by approximately $80 billion in 2019 and 2020 financial reports.
Company founder Hui Ka Yan, previously ranked among Asia’s wealthiest individuals, entered guilty pleas in April to mainland Chinese charges including fraud and bribery.
