CHINA & BUSINESS — A Chinese court in Guangzhou has accepted a bankruptcy liquidation case involving Hengda Real Estate Group, the main mainland property unit of China Evergrande Group, marking another major step in the unraveling of one of China's biggest property empires.
The Guangzhou Intermediate People's Court said the liquidation application was submitted by Guangzhou Rural Commercial Bank because Hengda Real Estate was unable to repay its debts and did not have sufficient assets to cover its liabilities.
Another Blow to Evergrande
The court's decision comes just one day after Evergrande founder Hui Ka Yan was sentenced to life imprisonment by a court in Shenzhen for multiple financial crimes.
Hui was found guilty of crimes involving financial fraud, misuse of funds, illegal fundraising, securities fraud and bribery. His personal assets were ordered confiscated.
The timing highlights how the legal and financial consequences of Evergrande's collapse are continuing years after the developer defaulted on its enormous debts.
Why Is Hengda Being Liquidated?
The Guangzhou court said Hengda Real Estate could not repay debts that had become due and that its total assets were insufficient to cover its liabilities.
Bankruptcy liquidation is intended to identify and dispose of the company's remaining assets and distribute whatever value can be recovered to creditors according to Chinese bankruptcy law.
For creditors, however, the process does not guarantee that they will recover all the money they are owed.
Evergrande's Debt Crisis
Evergrande became the world's most indebted property developer before defaulting on its obligations in 2021.
The company had more than $300 billion in liabilities, making its collapse one of the largest corporate debt crises in China's history.
The failure sent shock waves through China's property market and contributed to a prolonged downturn that affected developers, banks, suppliers, investors and homebuyers.
From Property Giant to Liquidation
Evergrande once stood at the centre of China's extraordinary property boom.
The company expanded rapidly by borrowing heavily, acquiring land and selling large numbers of homes across China.
But tighter restrictions on property developers' borrowing, weakening property demand and mounting financial obligations eventually exposed the risks behind the company's growth model.
Evergrande was ordered to liquidate in Hong Kong in 2024 after restructuring efforts failed.
Hengda Was at the Heart of the Mainland Business
Hengda Real Estate was Evergrande's major mainland property subsidiary and played a central role in the group's Chinese operations.
Its financial problems were therefore closely connected to the wider collapse of Evergrande.
The company had previously faced regulatory action over financial reporting. Chinese authorities found that Evergrande had inflated revenues by recording property sales prematurely, contributing to a much larger picture of financial manipulation.
The Supreme People's Court said the Evergrande group and Hui Ka Yan engaged in large-scale financial fraud between 2016 and 2021, including inflating assets and concealing liabilities.
Creditors Face Another Difficult Process
The liquidation process will determine which assets remain available and how creditors can make claims against the company.
Because Hengda's liabilities exceed its assets, creditors may ultimately recover only a portion of what they are owed.
This is one of the biggest consequences of Evergrande's collapse: even after years of restructuring and legal proceedings, much of the company's debt may never be fully recovered.
China's Property Crisis Is Still Not Over
Evergrande's downfall became a symbol of China's broader property crisis.
Several other developers have also experienced defaults, restructuring or liquidation as China's housing market weakened.
The sector remains important to the Chinese economy because it is closely connected to construction, household wealth, local government finances, banks and employment.
The continuing liquidation of Evergrande-related companies shows that the consequences of the property boom are still working their way through the financial system.
Why the Guangzhou Decision Matters
The decision is significant because Hengda was not a minor subsidiary. It was one of the most important operating companies within Evergrande's mainland property empire.
Its liquidation indicates that the group's restructuring has moved beyond attempts to preserve the original business and increasingly toward dismantling its remaining corporate structure.
It also provides another indication of how difficult it has become to rescue businesses whose liabilities substantially exceed their available assets.
Hui Ka Yan's Fall Adds to the Significance
The bankruptcy case comes at a particularly dramatic moment for Evergrande.
Hui, who once became one of China's wealthiest businessmen, has now been sentenced to life imprisonment.
The Shenzhen court also fined Evergrande 8.82 billion yuan and Hengda Real Estate 7 billion yuan.
The sequence of events illustrates the extraordinary reversal of the company and its founder.
What Happens Next?
With the bankruptcy case accepted, the court-supervised liquidation process will determine the company's remaining assets, liabilities and creditor claims.
Liquidators will be responsible for managing the company's property and financial affairs during the process.
The ultimate recovery for creditors will depend on how much value can be extracted from Hengda's remaining assets and how those assets are distributed under Chinese bankruptcy rules.
Our Perspective
Hengda's bankruptcy case is not simply another corporate failure. It represents the final stages of the collapse of a business model that once appeared unstoppable.
Evergrande demonstrated how aggressive borrowing can fuel extraordinary expansion, but also how quickly that expansion can reverse when financing disappears and property demand weakens.
The lesson is brutal: a company can become enormous without becoming financially resilient. When debt grows faster than the underlying ability to repay it, size becomes a liability rather than a strength.
Conclusion
A Guangzhou court has accepted the bankruptcy liquidation case of Hengda Real Estate Group, Evergrande's main mainland property unit, after a creditor petitioned on the grounds that the company could not repay its debts and lacked sufficient assets to cover its liabilities.
The decision comes immediately after Evergrande founder Hui Ka Yan was sentenced to life imprisonment, adding another dramatic chapter to the company's collapse.
Evergrande's failure, which involved more than $300 billion in liabilities, has already reshaped China's property sector and damaged confidence in the country's real estate market.
Hengda's liquidation now shows that the Evergrande crisis is moving deeper into its final phase: the empire is no longer being rebuilt, but dismantled piece by piece as courts and creditors attempt to recover whatever value remains.
Daily Touch Insights Editorial Team
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