Hong Kong businesswoman Wang Lihua never imagined that a casually signed "procedural" loan agreement four years ago would turn into a nearly 6 billion Hong Kong dollar debt-collection notice.
On August 7, 2026, the Hong Kong High Court's Court of First Instance issued a ruling. Chief Judge Linda Chan dismissed all injunction applications from Eternal Glory International Properties. Not only did the company lose the case, but it was also ordered to pay the full legal costs of the opposing party at the highest Hong Kong standard. More critically, the judge directly determined that the supplemental agreement presented by Eternal Glory, which claimed the debt was not repayable, had been forged recently.
The principal of 5 billion Hong Kong dollars, plus overdue interest, ballooned to 5.97 billion Hong Kong dollars. The most absurd part of the entire affair is that Wang Lihua never used a single cent of this money. She simply agreed to help a friend "pass through an account."
Rewind to early 2021. It was a time when Evergrande's electric vehicle story was being told with the most grandiose claims. Evergrande Health had just been renamed to Evergrande Auto. The mass-production factory was still on the drawing board, and there wasn't even a real car to show. Relying on a few concept images and a slogan of "achieving 1 million units in 5 years," the stock price skyrocketed. At its peak, Evergrande Auto's market value surged past 600 billion Hong Kong dollars, overtaking BYD to claim the top spot as "China's most valuable car company."
To sustain the bubble, real money was needed to fill it. On January 24, 2021, Evergrande Auto announced a 26 billion Hong Kong dollar private placement plan. The shares were priced at 27.3 Hong Kong dollars each, with approximately 952 million new shares placed. The lineup of investors was considered luxurious: Cheng Yu Holdings, controlled by Chen Hua of Kingkey Group, invested 5 billion. Shang Yu Limited, controlled by Huang Guangmiao of Centralcon Group, also invested 5 billion. The global investment platform of Cuilin Group invested another 5 billion. Joseph Lau's wife, Chan Hoi-wan (also known as "Gambler"), invested 3 billion. Liu Minghui, the chairman of the board of China Gas, invested 3 billion. Finally, there was He Yi Rong International Trade, whose actual controller, Wang Kaiguo, invested 5 billion. The six investors snapped up all the shares, and the market was in a frenzy. No one suspected that this fundraising was riddled with irregularities from the start.
Wang Kaiguo's 5 billion investment faced a practical problem. Most of his funds were in mainland China, denominated in Renminbi. To invest in Hong Kong-listed stocks, he needed foreign exchange approval, a process that was lengthy and uncertain. Xu Jiayin couldn't wait. With the stock price at a high, the quicker the placement was completed, the more stable the market value would be, allowing for continued financing. A "precisely timed" cross-border fund scheme was devised: accounts were structured in both the mainland and Hong Kong simultaneously, receiving Renminbi in one place while disbursing Hong Kong dollars in the other, bypassing the time lag of foreign exchange controls.
The logic was simple: Wang Kaiguo would pay an equivalent amount of Renminbi to Evergrande's mainland company, and Evergrande would pay an equivalent amount of Hong Kong dollars to Wang Kaiguo's offshore company in Hong Kong, which would then use that money to complete the stock subscription. However, the scheme hit a new snag. If Evergrande directly transferred the money to the subscriber, who then used it to buy back its own shares, wouldn't that be a blatant "self-dealing" transaction? If questioned by the Hong Kong Stock Exchange, the entire placement could be jeopardized. How to erase the trail? Find a third party to act as a "firewall" and pass the money through an extra step. This third party chosen for the bridge financing was Wang Lihua and her company, Eternal Glory International Properties.
The entire operation was completed intensively between March and April 2021. First, cash was received in the mainland. He Yi Rong signed a Renminbi loan agreement with Evergrande. From April 7 to 9, 2021, a total of approximately 4.2 billion Renminbi was transferred in three installments to the account of Guangzhou Kaidi Longye Real Estate, as designated by Evergrande. At the prevailing exchange rate, this was exactly about 5 billion Hong Kong dollars. Second, the loan was disbursed in Hong Kong. Evergrande's BVI offshore subsidiary, Guoxiong Holdings, signed a formal loan agreement with Eternal Glory. The loan was for 5 billion Hong Kong dollars, with a two-year term, interest-free if repaid on time, and 4% interest per annum for overdue payments. The funds were also transferred in three installments, fully credited to Eternal Glory's account. Third, the subscription was completed. On the same day it received the funds, Eternal Glory transferred the full 5 billion to Hongchang International, a Hong Kong company controlled by Wang Kaiguo. Hongchang International then received the stock certificate for approximately 183 million new shares of Evergrande Auto.
After the whole cycle, everyone felt it was perfect. Evergrande's mainland entity received 4.2 billion Renminbi in genuine cash flow. On the offshore books, it appeared as a third-party company "independently" investing in Evergrande Auto, avoiding the compliance issue of self-purchasing shares. Wang Kaiguo didn't have to wait for the lengthy foreign exchange approval process and successfully completed the placement. Wang Lihua just passed the money through. According to the verbal agreement, the money was just for transit and would not need to be repaid. Everyone was satisfied, everyone felt the risk was not their concern. Until Evergrande imploded.
In the second half of 2021, Evergrande's debt crisis erupted fully. Evergrande Auto's stock price plummeted like a kite with a broken string, falling from over 70 Hong Kong dollars to a few cents, eventually being suspended. The 183 million shares Wang Kaiguo held became worthless, losing his entire 5 billion investment. But the worst was yet to come.
On January 29, 2024, China Evergrande was ordered to be liquidated by the Hong Kong High Court. A professional liquidation team stepped in and began a comprehensive review of all of Evergrande's overseas assets and claims. They would pursue every recoverable cent. As they sifted through the records, they came across this 5 billion Hong Kong dollar loan from Guoxiong Holdings. In the eyes of the liquidators, the matter was straightforward: a formally signed loan agreement existed, along with complete bank transfer records. The borrower was Eternal Glory International Properties, and it was overdue. It was a valid and enforceable debt. As for where the money ultimately went, what was bought with it, or how much was lost, that was irrelevant to the loan relationship itself.
In May 2025, Guoxiong Holdings formally demanded Eternal Glory International repay the principal plus interest, totaling nearly 6 billion Hong Kong dollars. Wang Lihua was stunned. She couldn't accept this. In her mind, this was purely a bridge loan for transit, something everyone understood implicitly. How could it become a real debt? She took the case to the Hong Kong High Court, seeking an injunction to prevent the liquidators from filing a winding-up petition. The most intriguing aspect of the entire litigation was how Eternal Glory's defense arguments changed several times. Initially, they claimed the loan agreement itself was a sham transaction without legal effect. Then, they changed their story, arguing there was a complete set of financial arrangements behind it, and it wasn't a genuine loan. Finally, they produced a "supplemental confirmation letter," claiming there was a verbal agreement that the money was just for transit and Evergrande would not actually pursue repayment.
The presiding judge, Linda Chan, directly characterized this "verbal supplemental agreement" as a recent fabrication. The judge's reasoning for dismissing the case was solid. The company could not provide the location of the agreement's signing, the negotiating personnel, or the consultation process. It also failed to produce contemporaneous emails, communication records, or meeting minutes as evidence. In all communications between the parties over the years since the loan matured, there was never any mention of a debt waiver agreement. It was only when the debt repayment notice was served and the liquidation process was about to begin that this document suddenly appeared. Even the submitted stamped confirmation letter showed clear signs of having been created after the fact. The final judgment was inevitable: all of Eternal Glory's claims were dismissed. The company was not only liable for the nearly 6 billion Hong Kong dollar debt but also had to pay the opposing party's full legal costs at a high standard. It lost the case and had to pay an additional sum.
With the verdict, the fates of the three involved parties formed a real-life capital market farce. The mastermind, Xu Jiayin, is already in prison. However, the 4.2 billion Renminbi received in the mainland long ago entered Evergrande's cash pool, used to plug other holes. He designed the entire game, set the rules, and had others bear all the risk. Wang Kaiguo, the one who actually put up the 5 billion, ended up with worthless stock and a total loss of his investment, paying the price for his own judgment. The most unfortunate was Wang Lihua. She never touched the funds, probably didn't even receive a significant fee. She just couldn't refuse a friend's request, agreed to help with a transit transaction, and signed a contract she didn't take seriously. Now, that contract, which she thought was just a formality, has become a nearly 6 billion dollar bill.
Theoretically, she has one last chance for a reversal: produce a debt offset agreement signed by all the involved companies, proving the money was indeed just a bridge financing arrangement. But the reality is that Evergrande is in dire straits, Xu Jiayin is imprisoned, and Wang Kaiguo has lost everything. No one will step forward to acknowledge this debt on her behalf. The chance of a reversal is slim. This case serves as a harsh lesson for everyone navigating the business world. Many people think "bridge financing" and "pass-through accounts" are standard industry practices, handled with verbal agreements, with contracts just being a formality. However, under Hong Kong's common law system, companies are independent legal entities. The validity of a written commercial contract is far superior to any verbal understanding. You think you are helping a friend, but legally, you are the debtor. You think it's just a process, but in the eyes of a liquidator, it's a real and recoverable asset.
More intriguingly, this is likely just the tip of the iceberg within Evergrande's vast capital maze. Did other investors in that 26 billion Hong Kong dollar placement have similar arrangements? How many more such "bridge loans" or "nominally debts, actually equity" transactions exist within the Evergrande system? No one knows the answer. The liquidation continues, and old debts are being unearthed one by one. Behind each debt is someone who thought they could walk away unscathed, only to end up broken. As of May 2026, the liquidators have disclosed asset recoveries of only about 255 million US dollars. The total claims filed amount to approximately 45 billion US dollars. The recovery rate is less than 1%. The liquidators are now targeting a broader scope, seeking to recover approximately 6 billion US dollars in dividends and remuneration from Xu Jiayin and former executives, and suing PricewaterhouseCoopers for 57 billion Renminbi in damages. This 5.97 billion Hong Kong dollar debt is just one link in this recovery network. Given Evergrande's total liabilities of about 2.4 trillion Renminbi, even if the full 6 billion is recovered, it's only a drop in the bucket. The real signal being sent is that the easily identifiable and saleable assets are nearly exhausted. The next phase of Evergrande's liquidation will no longer just involve selling buildings or equity. It will entail a thorough re-examination of every receivable, every large fund transfer, and every transaction that could potentially involve liability, built up over the past decade. In the game of capital, there are no free favors, and no free pass-throughs. Those seemingly cost-free shortcuts all have a price tag attached. Some people just don't realize it until the bill hits them directly.