On November 28, Evergrande Property announced that it "has received a notice from the court to officially accept the case on November 28, 2023." The responsible parties, including China Evergrande, were required to repay the amount of about 19$9.6 billion and provisional interest of about 15.2 billion yuan. ”
Evergrande Property recovered a huge amount of money, which involved inside and legal disputes of Evergrande Group.
Text: Recently, Evergrande Property, a subsidiary of China Evergrande, issued an announcement announcing that it had not received a notice of litigation filed by the relevant court against its subsidiary Jinbi Property. The lawsuit arose out of a legal dispute with China Evergrande Group between December 28, 2020 and August 2, 2021, when six subsidiaries of Evergrande Property pledged deposits for third-party financing through eight banks. China Evergrande said in the announcement that it has not received the notice of litigation and will consult legal advice to protect the company's legitimate rights and interests.
The core of this case involves 13.4 billion yuan of certificate of deposit deposits, of which 2 billion yuan is the first group of recoveries filed by Jinbi Property, while the other two groups are 8.7 billion yuan and 2.7 billion yuan respectively. This incident has also become one of the important reasons for the long-term suspension of Evergrande. In December 2022, Evergrande Property stated that the recovery plan was mainly offset by the transfer of assets from China Evergrande Group to Evergrande Property. However, as of August this year, after the resumption of trading, Evergrande Property said that it had not reached a repayment plan with Evergrande Group and fully provided for "13.4 billion receivables".
In this regard, the market is generally concerned about Xu Jiayin's role in this incident. Bai Wenxi, chief economist of IPG China, pointed out that there were contradictions between Evergrande Property and China Evergrande in the announcement. Generally speaking, if Evergrande Property has filed a lawsuit and formally filed a case, China Evergrande should be notified subsequently. According to the explanation of legal expert Wang Yuchen, there may be a time difference between the plaintiff and the defendant in the formal case filing process, and the court will usually serve a notice of acceptance on the plaintiff after the review is passed, and then serve the defendant's defense time.
However, among the six executives involved in this case, Xu Jiayin, the chairman of Evergrande Group, is not involved. According to the preliminary findings released by the Independent Investigation Committee, Hui claimed that he had not reviewed the documents related to the pledge and did not clearly identify the approval documents related to Evergrande Property. Although one of the people involved in the case claimed that Xu Jiayin was involved in the pledge arrangement, Xu Jiayin was not responsible for the company's finances and funds during the critical period and relied on senior executives to handle relevant matters.
The findings of this investigation have sparked concern in the market, as Xu Jiayin's role has been the focus of this incident. Although he claimed that he did not review the documents during the critical period, there is a view that as the founder and actual controller of Evergrande Group, it is difficult for him to completely get rid of his association with Evergrande Property. Xu Jiayin holds about 51% of the shares in Evergrande Property71%, holding about 70% of the shares in China Evergrande.
In addition, the operating conditions of Evergrande Property have also attracted much attention. After a suspension period, Evergrande Property successfully resumed trading, but its financial situation is still worrisome. As of the end of the first half of this year, Evergrande Property's total assets were 761.3 billion yuan, with total liabilities of 836.2 billion yuan, net assets of -74.9 billion yuan. Despite the decrease in the debt ratio, the company remains insolvent.
Faced with this situation, Evergrande Property has adopted several rounds of personnel changes, adjusted the senior management team, and tried to make a breakthrough on the road of independent development. However, due to the relevance of China Evergrande, the business ties and personnel crossover between the two make it impossible to completely cut off the relationship and karma. Under the current insolvency situation of China Evergrande, even if Evergrande Property wins the lawsuit, there are still challenges in obtaining effective enforcement. This also makes Evergrande Property a lot of concern in this legal and financial game.
Behind the legal and financial dispute between China Evergrande and Evergrande Property, we see the twists and turns and waves in the company's operation. The incident involved large sums of money, the responsibilities of company executives, and the complexity of the legal process. Evergrande Property tried to protect its rights and interests by recovering huge sums of money, and Xu Jiayin became the focus of public attention in this incident.
Regardless of the final court decision, however, the dispute raises more questions about corporate governance and internal management. Companies need to be more cautious and transparent in their operations, and senior managers need to be more vigilant about key issues such as corporate finances and funding.
For Evergrande Property, the road to independent development is still full of challenges to get rid of the influence of China Evergrande. Although the asset-light model of the property business has brought it continuous cash flow, the close relationship with Evergrande Group makes it difficult to completely separate the two. The company's efforts in personnel adjustment and independent development may be a step towards a more stable operation.
Overall, this legal turmoil not only allows us to witness the controversial role of entrepreneur Xu Jiayin in the company's internal affairs, but also reminds the industry and investors of the importance of corporate governance and transparency. In today's ever-changing global business environment, this incident may become one of the cases for Chinese entrepreneurs and investors to ponder.