Was once the richest real estate company, today the empire is in ashes: Life imprisonment to the founder of Chinese company Evergrande, today the court approved the bankruptcy.

Hui Ka Yan, the fugitive founder of China’s giant real estate company ‘Evergrand’, has been sentenced to life imprisonment in several serious cases including fraud.

There was a time when Hui Ka Yan, a poor boy from a village in China, became the richest man in the country by becoming the merchant of ‘urban dreams’ of crores of people. He built a huge empire named ‘Evergrand’, which built skyscrapers and bought football clubs.

The model was simple – buy land, sell the entire flat on paper even before the foundation is laid and start the next project with the advance money received from customers. But the foundation of this palace made of cards was based on huge debts. When the government closed the credit taps, the empire collapsed.

Evergrande finally got buried in the pages of history, leaving behind 1,300 incomplete projects spread across 280 cities and a mountain of debts of $300 billion i.e. about ₹28 lakh crore. Founder Hui Ka Yan was sentenced to life in prison for financial fraud and the next day a Guangdong court ordered the company’s complete closure.

Hui Ka Yan, founder of China Evergrande Group, standing at the Intermediate People’s Court of Shenzhen, Guangdong province, China (Photo: Shenzhen Intermediate People’s Court, August 20, 2026)

Understand 10 important questions and answers related to this biggest estate crash in China:

Question 1. Why did the court accept the petition for bankruptcy process against Evergrande?

answer: The Guangzhou court gave this decision on the petition of Guangzhou Rural Commercial Bank. The Court held that the company was completely unable to repay its debts and its total assets were much less than its liabilities. With this, the legal process to completely shut down the company started.

Question 2. What action has been taken against Evergrande founder Hui Ka Yan and the company?

answer: Hui Ka Yan, 66, was sentenced to life imprisonment after being convicted of fraud and financial irregularities. All their political rights have been taken away and all personal property has been ordered to be confiscated. Apart from this, Shenzhen Court has also imposed a heavy fine of 8.82 billion yuan on parent company China Evergrande and 7 billion yuan on Hengda Real Estate.

Question 3. What does it mean to be delisted from the Hong Kong Stock Exchange (HKEX)?

answer: Evergrande shares were delisted from the Hong Kong Stock Exchange on 25 August 2025 after trading was suspended for 18 consecutive months. Delisting means that Evergrande has ceased to exist as a publicly traded company. The value of the shares of Evergrande, once the world’s most valuable real estate company, has now fallen to almost zero.

Question 4. How big a company was Evergrande and how did it grow?

answer: Evergrande became big riding the wave of China’s urbanization. The urban population in China has increased from 20% in 1980 to 66% today. Evergrande adopted the model of “take loan, buy land, sell the flat in advance booking and start the next project with the same money”.

In 2017–2018 it became the world’s most valuable real estate company. Its value was close to 400 billion dollars. As of today, it is around Rs 4.90 lakh crore.

A model kept in the sales office of ‘Ten Mile Bay’ project of Country Garden in Nantong, China (Photo: 19 August 2023)

Question 5. How did the real beginning of the decline of this giant company begin?

answer: The main reason for the collapse was the ‘Three Red Lines’ policy of the Chinese government, which was introduced in 2020 to stop developers from taking excessive loans. Due to this, the cheap loan available to Evergrande was stopped. The company was working only on the basis of advance money for new flats. As soon as loans stopped and home sales declined, the company’s entire cash flow came to a standstill.

Question 6. How much debt does Evergrande have and what is the status of recovery?

answer: According to Bloomberg, Evergrande had a debt of more than $300 billion in 2025. Alvarez & Marsal, the firm handling the liquidation, had sold assets worth about $255 million in 18 months, while creditors had submitted claims worth $45 billion (₹3.75 lakh crore).

Question 7. Are the houses of common people hanging in the balance due to the sinking of Evergrande?

answer: Yes. When the company collapsed, more than 1,300 of its projects in 280 cities in China were lying incomplete. However, the Chinese government has prioritized the interests of its local citizens over foreign lenders and has instructed builders to complete only those incomplete projects.

Question 8. Can Evergrande be compared with the American ‘Lehman Brothers’ crisis of 2008?

answer: Experts believe that this is not ‘China’s Lehman Moment’. The collapse of Lehman Brothers in 2008 caused an earthquake in the entire global banking system because its debt was linked to international banks. In contrast, the Chinese government handled the Evergrande crisis very slowly and under control, thereby averting the global financial crisis and keeping China’s banking system stable.

Question 9. What impact has this crisis had on China’s entire economy?

answer: Real estate accounted for about one-quarter (25–30%) of China’s GDP. The sinking of Evergrande slowed construction, causing demand for steel and cement to fall. Local governments’ income from land sales stopped. The trust of common Chinese was also broken.

Question 10. What is the lesson for the world and India from this whole story?

answer: This case proves that the growth model based on excessive debt sooner or later collapses. The era of China’s debt-driven estate growth is now over.

The lesson for Indian real estate and regulators like RERA is how important strict rules for escrow accounts and timely project delivery are to keep common buyers’ money safe.

Knowledge Box – What were the ‘Three Red Lines’?: