The liquidators of the insolvent property developer China Evergrande have initiated legal proceedings in Hong Kong to recover $6 billion from founder Hui Ka Yan and other company executives. These legal steps, which were announced in a notification to the Hong Kong Stock Exchange on Monday evening, mark the liquidators' first public attempt to reclaim assets from Hui since the court order to wind up Evergrande’s locally listed unit in January.

The liquidators Edward Middleton and Tiffany Wong from the restructuring firm Alvarez & Marsal have initiated the proceedings on behalf of the company. They stated that the proceedings before the High Court of Hong Kong aim to recover funds including "dividends and compensations" totaling approximately 6 billion USD from Hui, former Evergrande CEO Xia Haijun, former CFO Pan Darong, and four other individuals and entities.

The demand is based on allegedly "misrepresented" financial statements of the company listed on the Hong Kong stock exchange for the financial years 2017 to 2020. Legal proceedings began in March, but were subject to a confidentiality order until this month. It was added that the proceedings are ongoing and there is no certainty that the money can be recovered.

Many of Hui's assets in Hong Kong, including three luxury villas, have already been seized or sold, while most of Evergrande's assets are held on the Chinese mainland. Monday's announcement is the latest development in a prolonged corporate collapse marked by a lack of transparency for international investors who invested approximately 20 billion US dollars in Evergrande before the company failed.

The developer, who was the world's most indebted with more than 300 billion US dollars in liabilities, became a symbol of the excesses of the Chinese real estate sector when he defaulted at the end of 2021, triggering a crisis that continues to weigh on the entire economy.

The China Securities Regulatory Commission stated in March that Hui and Evergrande's mainland business had inflated revenues by $78 billion in 2019 and 2020. Hui was fined over $6 million and Evergrande's mainland business nearly $580 million.

However, lawyers have said it is likely to be difficult for the liquidators appointed by a Hong Kong court to recover significant assets from the mainland. Evergrande's liquidators also obtained injunctions preventing Hui, Xia, and Hui’s ‘spouse or former spouse’ Ding Yumei from disposing of or diminishing the value of their global assets.