Hui Ka-yan Receives Life Sentence as China Draws a Line Under Evergrande’s Debt-Fuelled Era

The Shenzhen Intermediate People’s Court announced the first-instance judgment on August 20, sentencing Hui to life imprisonment, depriving him of political rights for life and ordering the confiscation of all his personal assets. Evergrande Group was fined 8.82 billion yuan, while Hengda Real Estate was fined 7 billion yuan. The court also ordered the continued recovery of unlawful gains and stated that compensation for financial losses would take priority over the collection of fines and confiscated property. In related proceedings, 56 people connected with Evergrande received prison terms ranging from 18 years to one year and ten months, together with fines or asset-confiscation orders.

The court found that Hui, as Evergrande’s controlling shareholder and operational decision-maker, directed a network of companies active in property, financial services and wealth management. Between 2016 and 2021, the group used sustained and large-scale financial falsification to inflate assets and conceal liabilities. Hui and the companies were convicted of offences including illegally accepting public deposits, fundraising fraud, fraudulent securities issuance, improper disclosure of important information, unlawful lending, misuse of funds and corporate bribery. The judgment also found that Hui organised accounting manipulation and misappropriated company assets through dividend payments. These findings establish that Evergrande’s collapse was not treated merely as the result of excessive borrowing or a property downturn, but as a case involving deliberate financial misconduct.

The scale of the accounting irregularities helps explain the severity of the sentence. Regulators found that Evergrande’s onshore property business overstated revenue by approximately 214 billion yuan in 2019 and 350 billion yuan in 2020, for a combined overstatement of roughly 564 billion yuan, or close to US$80 billion at the time. Premature recognition of property-sale revenue allowed the group to present a stronger financial position while continuing to issue securities and raise funds. Evergrande’s expansion was financed through bank loans, bonds, property presales, supplier credit and wealth-management products. By 2020, annual contracted sales had reached about 700 billion yuan, but the group’s dependence on constant refinancing left it vulnerable when China introduced stricter leverage controls and homebuyers began losing confidence.

Evergrande defaulted on offshore debt in late 2021 with total liabilities exceeding US$300 billion, making it the most prominent failure in China’s property crisis. A Hong Kong court ordered the company into liquidation in January 2024, and its shares were removed from the Hong Kong stock exchange in August 2025. Asset recovery has remained difficult because most projects and operating companies are located in mainland China, where assets may already be pledged, seized or required to complete presold homes. By August 2025, liquidators had realised only about US$255 million from asset sales while receiving approximately US$45 billion in creditor claims. They have also pursued separate claims against Hui, former executives and Evergrande’s former auditor, PwC, but these proceedings remain complex and potentially lengthy.

The confiscation and restitution orders may improve the authorities’ ability to trace and recover assets, but they do not automatically determine how recovered funds will be divided between mainland claimants and offshore creditors. The court’s decision to prioritise compensation over fines is significant for investors and other affected parties, although coordination between criminal enforcement and Hong Kong’s liquidation process will remain essential. Evergrande’s creditors should therefore not interpret Hui’s sentence as evidence that substantial recoveries are imminent.

More broadly, the ruling signals the end of the debt-driven development model that enabled companies to expand by continuously buying land, preselling homes and refinancing short-term obligations. It also strengthens expectations that controlling shareholders, executives, financial institutions and auditors will face greater accountability for false disclosures and the misuse of investor funds. Nevertheless, punishment is only one part of the sector’s resolution. Restoring confidence in Chinese property will still require the completion of presold homes, transparent restructuring of developer liabilities, protection of homebuyers and a more sustainable balance between housing supply and genuine demand.