[Hong Kong] Liquidators can target PwC globally over property giant’s collapse

Hong Kong / New York, Aug 27, 2026

Liquidators of the collapsed Chinese property group Evergrande can pursue PwC globally for audit failings, a judge has ruled, in a case that will test the big four accounting firms’ partnership network model.

A Hong Kong judge this week allowed Evergrande’s liquidators to pursue their negligence case against PwC International, the network’s global umbrella organisation, alongside its Hong Kong and mainland China affiliates, which were responsible for auditing Evergrande.

A security guard at the headquarters of China Evergrande Group in Hong Kong in October.

A judge has rules that liquidators of the collapsed Chinese property group Evergrande can pursue PwC globally for audit failings. AP

“It is at least arguable that . . . [PwC] International did owe a duty of care to [Evergrande],” deputy High Court judge Patrick Fung wrote.

“It is crucial that there should be discovery of documents and interrogatories administered, which I believe will throw more light on the case.”

The liquidators are seeking about $US8.4 billion ($11.7 billion) in damages from the three entities after several regulators found PwC auditors in Hong Kong and mainland China failed to meet professional standards when they signed off on Evergrande’s financial statements.

The ruling is a victory for Eddie Middleton and Tiffany Wong, the liquidators from Alvarez & Marsal who have focused much of their legal attention on pursuing PwC for negligence, given the difficulty of recovering Evergrande assets in mainland China for creditors.

Evergrande, which was one of China’s largest property developers, defaulted in 2021 with about $US300 billion in liabilities. It was later found to have fraudulently inflated revenue in the run-up to its collapse.

In April, PwC Hong Kong agreed to pay $HK1.3 billion ($230 million) to settle Evergrande-related claims with local regulators. Its mainland affiliate in 2024 paid a 441 million yuan ($91 million) fine after the finance ministry in Beijing found PwC staff had “concealed or even condoned” fraud at the property group.

Court ruling a threat to PwC network

Unlike traditional multinational companies, the big four accounting firms use a network structure that keeps national audit firms legally separate. They are co-ordinated by a global umbrella organisation that maintains the brand and imposes common standards.

The system is designed to comply with differing national audit regulations and to shield each member firm from legal liability due to audit failures in other countries.

The Hong Kong ruling threatens to export financial and legal risks to the rest of the PwC network, where the largest member firms, including those in the US and the UK, shoulder most of the funding costs for PwC International.

The umbrella organisation does not typically make profits or hold significant assets.

Evergrande’s liquidators have argued that PwC International should be held liable for the failings of its member firms in Hong Kong and mainland China, which allowed the property group to pay out $US6 billion in dividends between 2017 and 2020 despite its financial situation.

The liquidators are pursuing PwC International for $US5.6 billion.

PwC International argued that it should not be party to the case because Evergrande was not its client.

The big four’s network structure has successfully kept most audit scandals isolated to individual member firms, but there have been exceptions.

In 2009, a US court ruled that Deloitte Global could be sued over fraud at dairy group Parmalat, a client of its Italian member firm. In 2011, PwC International was part of a settlement of investor claims related to the collapse of India’s Satyam Computer Services.

Evergrande’s liquidators welcomed the court’s decision and said they would continue to “pursue recoveries for the benefit of creditors”.

A spokesperson for PwC’s global network said they disagreed with the court’s decision and were “evaluating our legal options”.

“[PwC International] is the co-ordinating entity within the PwC network and has never provided any services to Evergrande or had any relationship with the company,” the spokesperson said. “[PwC International] is confident that the claims against it have no merit.“

[Australian Financial Review]