Hong Kong Court Allows Evergrande Liquidators' Claim Against PwC International

A Hong Kong court has cleared the way for China Evergrande Group's liquidators to pursue a negligence claim against PwC International, dismissing the firm's application to be removed from the case.

The liquidators are seeking damages of 57 billion yuan (approximately $8.48 billion) from PwC International, PwC Hong Kong, and PwC's China arm, alleging negligent auditing work. The maximum liability sought from PwC International alone is 38 billion yuan.

In a ruling on Wednesday, Deputy High Court Judge Patrick Fung stated that PwC International did owe a duty of care to Evergrande. He noted that not all facts are known and that document discovery and interrogatories could shed more light on the matter, adding that the plaintiff should not be denied a trial.

PwC International had argued in May that it should not be a party to the case, claiming the Hong Kong and China entities were not its subsidiaries and that it had no communication with Evergrande.

The liquidators welcomed the decision, noting it does not determine the ultimate merits of the claims. They said they will continue investigating Evergrande's affairs and pursue recoveries for creditors.

The Hong Kong High Court ordered Evergrande to liquidate in 2024 after the property developer defaulted on most of its $300 billion in liabilities. Edward Middleton and Tiffany Wong of Alvarez & Marsal were appointed as liquidators.

Last week, Evergrande founder Hui Ka Yan was sentenced to life in prison by a Chinese court, which also ordered confiscation of his personal property.