China’s onetime richest man has lost everything but creditors are still owed $300 billion

Chinese authorities are moving to finish cleaning up the mess left by the collapse of the Evergrande real estate empire, years after its default with some $300 billion in liabilities.

A court in southern China’s Guangzhou said Friday it had accepted a bankruptcy liquidation case against Evergrande’s mainland Chinese property development unit, which according to industry data accounted for much of the group’s overall debt.

That came a day after a court in the city of Shenzhen sentenced China Evergrande’s 67-year-old founder Hui Kan Yan to life in prison for financial crimes.

On the same day, dozens of others tied to the group, including Hui’s sons, also were sentenced to prison terms of up to 18 years.

China takes steps to wrap up the Evergrande saga The latest developments suggest that the Chinese government “may already have a road map” for wrapping up the Evergrande saga, said Foreky Wong, a founding partner at Fortune Ark Restructuring and a restructuring specialist.

“They will need to do these (steps) sooner or later,” he said.

However, he added, “Evergrande is such a big company.

Its bankruptcy proceedings will last for a while.” What remains unclear is how long it will take to get the real estate market, once a main locomotive of China’s economic boom and accounted for approximately a quarter of China’s economy as recent as a few years ago, back on track.

Evergrande collapsed after Chinese regulators cracked down on excessive borrowing in the real estate industry in 2020.

That brought on a wave of failures of other developers and a prolonged downturn in the housing market.

Home prices have fallen roughly 20% or more since 2021 and so far there have been scant signs of a solid recovery.

Supply still outstrips demand in many smaller cities, while a wider economic slowdown is weighing on people’s spending power.

Creditors may not get much of their money back Once deemed “too big to fail,” Evergrande became the world’s most indebted developer.

It’s taking years to wind up those debts.