Hui Ka Yan, founder and former chairman of Chinese real estate giant Evergrande, was sentenced to life imprisonment by a Chinese court for financial crimes related to the company's collapse, in one of the most significant court cases stemming from the country's real estate crisis, according to the Argentine newspaper La Nación.
The ruling marks one of the most significant chapters in the crisis that led to the collapse of Evergrande, one of China's largest real estate developers, whose high level of debt exposed the sector's vulnerabilities and generated strong repercussions for the Asian giant's economy.
According to La Nación,the Shenzhen Intermediate People's Court determined that Hui Ka Yan and Evergrande participated in a large-scale financial fraud scheme between 2016 and 2021. The alleged crimes included misuse of funds, fraud related to fundraising, and illegal collection of public deposits.
In addition to the life sentence, Chinese authorities ordered the confiscation of Hui's personal assets and stripped him of his political rights for life. Evergrande Group and its subsidiary Evergrande Real Estate Group were also fined a total of approximately $2.35 billion.
The court announced sentences ranging from six to eighteen years in prison for five other high-ranking officials, including Zhen Litao, former president of Evergrande Real Estate, and Ke Peng, former executive chairman of Evergrande Group, Forbes Central America highlights.
From billionaire to life sentenced
Hui Ka Yan founded Evergrande in 1996, during a period of rapid urbanization in China, when millions of people were moving from rural areas to cities.
The growth of the housing market allowed Evergrande to expand rapidly, becoming one of the country's leading real estate players. The company also diversified its operations into sectors such as soccer and electric vehicles.
In 2017, Hui's fortune was estimated at around $45.3 billion, according to Forbes Central America, making him one of the richest men in Asia.
However, Evergrande's rapid expansion was accompanied by a heavy reliance on debt. For years, the company relied on loans and other sources of financing to sustain its growth and develop numerous real estate projects.
The debt that brought down the real estate giant
The situation began to worsen when Chinese authorities implemented measures to limit the level of debt that real estate companies could take on, with the aim of reducing the financial risks associated with an expansion considered excessive.
For Evergrande, whose model relied heavily on constant access to new resources to maintain its operations, these restrictions represented a major blow.
In 2021, the company entered a deep crisis and accumulated more than $300 billion in debt, becoming one of the largest cases of corporate indebtedness recorded in the world.
The financial downturn had consequences beyond the company. Homebuyers, employees, banks, suppliers, and investors were also affected, while numerous real estate projects were put on hold.
In 2024, a Hong Kong court ordered the liquidation of Evergrande after the company failed to present a debt restructuring plan deemed viable.
A crisis that transcended Evergrande
The Evergrande case highlighted the risks of a real estate model based on high levels of debt, advance sales, and accelerated expansion.
The company's collapse also contributed to prolonging the slowdown in the Chinese housing market and affected the confidence of buyers and investors in one of the sectors considered key to the country's economy.
The sentence against Hui Ka Yan represents one of the main legal outcomes stemming from the collapse of Evergrande, as the consequences of the crisis continue to reverberate through the real estate market and other sectors of the Chinese economy.
The trial also included convictions against 56 other people, including two of Hui's children, with sentences ranging from 22 months to 18 years in prison.
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