One of China's largest corporations accused of defrauding billions of US Dollars

Nobody's too big to fail

China may be one of the largest economies in the world, alongside the United States, but the Asian superpower has just suffered a major blow.

Not exactly spare change

The BBC reports that Chinese megacorp Evergrande, and its founder Hui Ka Yan, have been accused of inflating revenue by an amount equal to 78 billion US dollars.

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Tell it to the judge

In early January, a Hong Kong court has ordered Chinese real estate behemoth Evergrande to liquidate its assets, Reuters reports.

Over 300 billion in debt

Evergrande has been labelled the most indebted developer in the world, owning more than 300 US billion dollars in liabilities and no feasible way to pay it back.

Two years to come up with a plan

Hong Kong Justice Linda Chan’s ruling was influenced by Evergrande’s inability to come up with a restructuring plan two years after defaulting on its debts.

Projects in 280 cities

According to The New York Times, Evergrande was once China’s biggest real estate corporation, with the company website claiming over 1,300 ongoing projects in 280 Chinese cities, plus unrelated venues such as an electric vehicle company.

A bad day at the stock exchange

The court ruling was felt immediately in the Hong Kong stock market, with Evergrande’s stock losing 20% of its value before trading was halted, fearing bigger repercussions.

Liquidating assets

Now Evergrande’s real estate empire will be dismantled piece by piece, as liquidators start the long, arduous process to figure out what to sell to repay debtors.

Beijing weighs in

However, the BBC remarks that it’s unlikely that Beijing will halt ongoing construction projects, including many apartments which have already been paid for.

The Hong Kong question

The BBC highlights that there’s also the question of how Mainland China will handle the court-ordered ruling from a Hong Kong court. 90% of Evergrande’s assets are housed in Mainland China.

Boom and bust

For many, Evergrande has come to represent the biggest example of the boom and bust of the Chinese real estate industry, which saw skyrocketing success in the 2000s, only to slow down in the late 2010s.

China's economic woes continue

What is true is that the collapse of Evergrande seems to be another sign that China’s economic woes are far from over.