China Evergrande’s liquidators are seeking 57 billion yuan ($8.4 billion) in their lawsuit against PricewaterhouseCoopers International Ltd. and its mainland China and Hong Kong affiliates, among the largest corporate claims ever sought in the city.
Of the total amount, liquidators are seeking 38 billion yuan from all three — PricewaterhouseCoopers International, the umbrella entity for the firm worldwide, and the two local affiliates, lawyers from both sides said. They’re also seeking 19 billion yuan solely from the Hong Kong and mainland entities.
The case centers on PwC’s auditing work for Evergrande, an emblem of China’s property crisis since it defaulted in 2021. Liquidators launched the proceedings in 2024 claiming “negligence” and “misrepresentation” in PwC’s auditing work. Depending on the outcome, the case could help define how much auditors can be held liable for their work with companies accused of fraudulent accounting.
PwC International is looking to extricate itself from the case, which originally focused only on the affiliates, and strike down liquidators’ claims against it. Even if that effort succeeds, liquidators could still pursue the case against the local entities.
PwC already faced regulatory pressure over its audits of Evergrande. Its Hong Kong entity separately agreed last month to pay HK$1.3 billion ($166 million) in fines and compensation to settle investigations into its work for the collapsed developer.
The proceedings are also critical to liquidators’ years-long effort to recover at least part of creditors’ investments. Evergrande’s debt burden is larger than previously estimated, reaching HK$350 billion, according to court-appointed liquidators. They have said asset recoveries to date have been “modest,” at about $255 million.
Edward Middleton and Tiffany Wong of US turnaround firm Alvarez & Marsal, acting as liquidators for Evergrande’s creditors, filed the original case in March 2024, about two months after the developer was ordered to be wound up. The lawsuit relates to PwC’s audit reports on Evergrande’s financial statements for 2017 and the first six months of 2018, according to the filing.
PricewaterhouseCoopers International doesn’t practice accountancy or provide services to clients, according to its website, and is “liable only for its own acts or omissions.”
Photograph: Residential buildings under construction at China Evergrande Group’s Riverside Palace development in Suzhou, Jiangsu province, China; source: Bloomberg
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