Evergrande Wins HK$6 Billion Debt Recovery in Hong Kong Court

China Evergrande Group has won a significant legal victory in Hong Kong, with the High Court ruling in its favour to recover approximately HK$6 billion (US$764.7 million) from Yingjia International Properties. The judgment, delivered by Judge Linda Chan on Friday, dismissed Yingjia’s claims against enforcement of the loan as “fabricated.”

Loan Agreement and Dispute Origins

The debt traces back to March 2021, when Evergrande’s subsidiary, State Hero Holdings, agreed to lend HK$5 billion to Yingjia International. Under the terms, the loan was to be repaid in full within two years to avoid interest, with a 4 per cent annual interest penalty for late repayment. The funds were transferred in April 2021 to Honour Best International Trade, which used the money to subscribe for 183 million new shares issued by China Evergrande New Energy Vehicle Group (NEV).

Court Rejects Yingjia’s Injunction Attempts

Yingjia International had sought to block State Hero from presenting a winding-up petition against it, filing two separate injunction applications. Both were dismissed by the court, including a bid to delay the petition pending a possible appeal. Judge Chan’s ruling clears the way for Evergrande to proceed with its debt recovery efforts.

Controlled by Liquidators Amid Financial Struggles

State Hero Holdings, the entity at the centre of the case, is an indirect wholly owned subsidiary of Evergrande, which is now under the control of court-appointed liquidators. Earlier this year, State Hero issued a statutory demand to Yingjia International, requiring repayment of HK$5.97 billion, including the loan principal and accrued interest.

Implications of the Ruling

This legal victory comes as Evergrande continues to grapple with its broader financial crisis, which has seen the property giant face mounting debts and liquidation proceedings. The HK$6 billion recovery offers a potential lifeline for its ongoing restructuring efforts, particularly as the company navigates its obligations to creditors and stakeholders.

Source: South China Morning Post