Liquidators for China Evergrande Group are seeking 57 billion yuan in damages from PricewaterhouseCoopers, accusing the auditing firm of negligence in its audit work related to the failed Chinese property developer, a Hong Kong court was told on Monday.
The potential damages claim adds to the financial and regulatory pressure already faced by PwC following Evergrande’s collapse.
The property giant defaulted with more than $300 billion in liabilities, becoming one of the largest casualties of China’s prolonged property sector crisis.
Liquidators pursue multiple PwC entities
According to court proceedings, liquidators are seeking 38 billion yuan from PwC International, PwC Hong Kong, and PwC’s China arm collectively.
The remaining amount is being sought specifically from PwC Hong Kong and PwC’s China arm.
Monday’s hearing focused primarily on the role and liability of PwC International within the global auditing network.
Richard Handyside, a lawyer representing PwC International, argued before the court that the international entity should not be included in the case.
As cited in a Reuters report, he said the Big Four accounting group operates through several separate firms and that the Hong Kong and mainland China entities are not subsidiaries of PwC International.
Handyside further argued that PwC International had no direct communication with Evergrande and therefore owed no “duty of care” regarding the developer’s financial audits.
Liquidators challenge PwC International’s position
However, Adrian Beltrami, a lawyer representing the liquidators, disputed that argument during the hearing.
Beltrami argued that PwC International sits at the top of the global network and is responsible for ensuring standards across member firms operating under the PwC brand.
The liquidators are attempting to establish that PwC International should share responsibility alongside the Hong Kong and mainland China entities involved in auditing Evergrande’s financial statements.
The case comes amid heightened scrutiny of the auditing practices connected to Evergrande’s financial reporting before the developer’s collapse.
Regulators previously fined and suspended PwC units
Evergrande defaulted on its offshore debt in late 2021.
In 2024, the Hong Kong High Court ordered the company to liquidate.
Regulators in mainland China and Hong Kong have already taken action against PwC entities linked to the Evergrande audits.
In 2024, Chinese regulators imposed a six-month suspension and a record fine of 441 million yuan ($65 million) on PwC’s Chinese arm over its audit work involving Evergrande.
An investigation by the China Securities Regulatory Commission found that PwC Zhong Tian LLP turned a blind eye to and even condoned Evergrande’s inflation of revenues and the issuance of bonds based on falsified financial statements.
Hong Kong authorities also concluded that PwC Hong Kong had seriously breached its professional responsibilities while auditing Evergrande.
PwC Hong Kong was fined HK$300 million and handed a six-month suspension.
The firm also reached an agreement with Hong Kong’s securities watchdog to reserve HK$1 billion ($128 million) to compensate Evergrande’s independent minority shareholders.
Creditors still face massive losses
The legal proceedings come as creditors continue to recover only a small portion of Evergrande’s remaining assets.
According to the company’s liquidators, creditor claims against Evergrande total around $45 billion.
However, only about $255 million worth of assets had been sold as of last August.
The case against PwC is likely to remain closely watched as liquidators seek additional recoveries tied to one of China’s largest corporate collapses.
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