Mr. Hui—whose name in Mandarin Chinese is Xu Jiayin—was also reportedly transferring his family’s assets overseas during this time in moves allegedly involving his ex-wife, Ding Yumei. Meanwhile, his son Peter Hui has also been arrested, as have other Evergrande executives.
Ms. Ding’s previous public capacity was as the chairperson of the board of directors of Evergrande. She had a net worth of $2.4 billion in 2019. According to the Hong Kong Companies Registry, she holds Chinese and Canadian passports. The Chinese regime does not recognize dual citizenship.
The arrest of the 68-year-old Mr. Hui had been widely speculated after Evergrande’s failures two years ago. Mr. Hui seems to have been prepared for the potential risk of losing family assets when Evergrande ran into financial trouble, and he divorced Ms. Ding quietly this year, sometime before June.
Where’s the Money?
According to Evergrande’s public data, from 2016 to 2020, the group’s annual dividends totaled 93.933 billion yuan (about $13.42 billion). Among them, in 2020, the dividends were 57.779 billion yuan (about $8.25 billion), accounting for 61.5 percent of the total.Most of that money is technically now in the pocket of the “ex-wife”.
This questions whether Ms. Ding is now financially immune from Evergrande’s liabilities. According to Article 1064 of the Chinese Civil Code, debts incurred by both husband and wife under their joint signatures or by one of the spouses in retrospect during the marriage are joint debts of the husband and wife. Therefore, according to this provision in Chinese law, Mr. Ding, even if divorced, cannot be excluded from her joint debt with her former husband.
Evergrande and Ms. Ding did not respond to The Epoch Times’ request for comment.
Hui’s US Bankruptcy Filing Stalled
Evergrande’s financial report in July showed that the company was already insolvent. As of the end of 2022, total liabilities amounted to 2.44 trillion yuan (about $348.6 billion), and total assets amounted to 1.84 trillion yuan (about $262.9 billion).Mr. Hui previously used a variable interest entity (VIE) structure to transfer Evergrande’s shareholding to the Cayman offshore company, and then, through the VIE, he indirectly controlled Evergrande while dodging substantive legal responsibility. That is to say, when Evergrande fails in China, it would be difficult to hold Mr. Hui accountable.
In 2018, Mr. Hui spent his own money to buy Evergrande’s U.S. dollar bonds issued outside China, with a coupon rate of 13.75 percent and went from a shareholder to a creditor of Evergrande.
Meanwhile, Evergrande’s assets were transferred overseas by Mr. Hui and his close associates, leaving the company full of debt in China. The only way for Mr. Hui to avoid being held liable for his China debts is to get protection against bankruptcy in the United States, which first involves restructuring the company.
Evergrande’s reorganization must be voted on and approved by its creditors. This is the only way for the U.S. court to approve protection against bankruptcy. Since Mr. Hui’s family members bought Evergrande’s U.S. dollar bonds, they are the company’s creditors. So, as long as they approve the restructuring plan, the U.S. court is likely to approve the bankruptcy petition.
Since Chinese authorities made their arrests in September, Evergrande aborted its debt restructuring meetings. Without a restructuring plan, the company’s future may be liquidation, leaving Mr. Hui’s bankruptcy filings in the United States in jeopardy. Evergrande had planned to work out its next step in its debt restructuring meetings, but with the arrest of Mr. Hui, these meetings have been aborted.
Shares trading was suspended again on Sept. 28 following the news that Mr. Hui was placed under police watch. They resumed trading in Hong Kong on Oct. 3.
The Epoch Times were unable to contact Evergrande or Evergrande’s creditors for comment.
