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Liquidators of Evergrande Group have filed a claim worth 57 billion yuan (USD 8.4 billion) against PwC, alleging negligence in auditing the collapsed Chinese real estate major. The case was presented in a Hong Kong court, where responsibility of PwC International was closely examined. Evergrande, which defaulted in 2021 and entered liquidation in 2024, had liabilities exceeding USD 300 billion. PwC’s Hong Kong and China units have already faced regulatory penalties, while a ruling on PwC International’s liability is expected within three months.
Liquidators managing Evergrande Group’s collapse have initiated a claim seeking 57 billion yuan (USD 8.4 billion) in damages from PwC, alleging negligence in its audit work related to the failed Chinese property developer. The matter was heard in a Hong Kong court, where the focus was on the extent of responsibility held by PwC International. Advertisement
Evergrande, once a major player in China’s real estate sector, collapsed with liabilities exceeding USD 300 billion, making it one of the largest failures in the country’s property crisis. The company defaulted on its offshore debt in 2021 and was ordered into liquidation by the Hong Kong High Court in 2024.
The claim has been filed by liquidators Edward Middleton and Tiffany Wong of Alvarez & Marsal against PwC International, PwC Hong Kong, and PwC’s China arm. The maximum exposure for PwC International has been placed at 38 billion yuan (USD 5.3 billion). The hearing primarily examined how much liability PwC International should bear in the case.
PwC International’s counsel argued that the global firm structure consists of separate member entities, stating that PwC Hong Kong and PwC China operate independently and are not subsidiaries. It was also submitted that PwC International had no direct communication with Evergrande and therefore owed no duty of care regarding its financial audits.
However, lawyers representing the liquidators argued that PwC International sits at the top of the global network and is responsible for maintaining audit standards across member firms.
Deputy High Court Judge Patrick Fung is expected to deliver a judgment within the next three months.
In parallel developments, PwC’s China arm faced regulatory action in 2024, including a six-month suspension and a fine of 441 million yuan (USD 65 million) imposed by Chinese authorities following findings related to Evergrande’s financial reporting. Investigators concluded that PwC Zhong Tian LLP allegedly ignored and at times condoned inflated revenue reporting and bond issuance based on misleading financial statements.
PwC Hong Kong was also penalised for serious breaches of professional duties during its audit of Evergrande. The firm was fined HKD 300 million and received a six-month suspension, along with an agreement to set aside HKD 1 billion (USD 128 million) for compensation to minority shareholders.
Creditors’ claims against Evergrande stand at around USD 45 billion, while only about USD 255 million worth of assets had been liquidated as of the latest update provided by the liquidators.
Source Reuters
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