Hui Ka Yan, the billionaire who built Evergrande into China’s most indebted developer, has been handed a life sentence. Yet the punishment does not resolve the far larger question left by the company’s collapse: who, if anyone, gets paid back.

The reckoning began in 2020, when Beijing’s crackdown on developers’ excessive borrowing helped push Evergrande toward default. The group, once considered too big to fail, amassed roughly $300 billion in liabilities as China’s housing downturn deepened and property prices fell.

Nearly five years after its first debt default, a Hong Kong court ordered the liquidation of Evergrande’s offshore holding company in 2024 after talks with creditors failed. That process immediately ran into a structural obstacle: most of the developer’s operations and assets sit in mainland China, beyond the straightforward reach of Hong Kong-appointed liquidators.

This week, the mainland process moved sharply forward. A Shenzhen court sentenced the 67-year-old founder, also known as Xu Jiayin, to life in prison for financial crimes and ordered his personal assets confiscated. Dozens linked to the group, including Hui’s sons, received prison terms of up to 18 years. The following day, a Guangzhou court accepted a bankruptcy-liquidation case for Evergrande’s mainland property-development unit.¹

To Foreky Wong of Fortune Ark Restructuring, the sequence suggests authorities have a plan to bring the saga to an end: “They will need to do these (steps) sooner or later.” But he cautioned that “Evergrande is such a big company. Its bankruptcy proceedings will last for a while.”¹

Lawyers see a parallel legal contest ahead. Jonathan Leitch of Hogan Lovells Cadwalader said the mainland ruling raises “lots of interesting legal questions,” including whether claims against Hui’s assets will compete with efforts by Hong Kong liquidators.¹ Creditors may ultimately recover only single-digit percentages of what they are owed, turning Evergrande’s punishment into a long liquidation rather than a clean ending.¹