Hui Ka Yan, the Founder and Chairman of Evergrande, is currently in the spotlight. Recent reports indicate that Chinese authorities have detained him amidst ongoing criminal investigations against him. The Wall Street Journal disclosed on Monday that Hui is suspected of moving assets overseas while the debt-laden property firm is on the brink of bankruptcy. Hui seems to be a sort of China’s Sam Bankman-Fried. A fallen corporate superstar!
The US$20 billion debt resolution plan of China Evergrande Group is teetering on the brink of collapse, especially with the recent detention of its founder, Hui Ka Yan. Official documents indicate that Hui, along with his offshore entity Xin Xin (BVI), are the main backers of the restructuring agreements with a committee comprising global hedge funds and distressed-debt investors.
On September 28, Evergrande disclosed in a statement that Hui, who celebrates his 65th birthday on October 9, has been subjected to “mandatory measures” by Chinese officials for undisclosed offenses. This phrase is commonly understood in local regulatory terms to mean house arrest or monitoring of movements, among other restrictions.
Evergrande‘s efforts to gain approval from creditors for restructuring its foreign debt hit a snag last week. The company revealed that it couldn’t issue fresh debt due to a probe into its primary Chinese division. The situation for the beleaguered developer further deteriorated when it announced on Friday that its chairman was under police surveillance for alleged undisclosed offenses.
Last week, Reuters stated that a consortium of foreign creditors intended to petition the court for the developer’s liquidation if a revised debt restructuring proposal wasn’t presented by October’s end. With outstanding debts exceeding $300 billion, Evergrande symbolizes the debt crisis engulfing China’s real estate sector, which accounts for nearly a quarter of the nation’s economy. Hui Ka Yan‘s strategy was straightforward: borrow funds to purchase land, pre-sell homes on that land, and utilize the proceeds to repay lenders and fund subsequent property ventures.
By September’s conclusion, a significant faction of Evergrande‘s foreign creditors is considering petitioning the court for the company’s dissolution if a new debt restructuring proposal isn’t introduced by the forthcoming month, as per Reuters.
Recent media coverage led to the suspension of trading for Evergrande and two of its subsidiaries following reports of Hui’s detention by the police and his subsequent confinement to a specified location.
