Xu Jiayin's family trust fund is "broken"? Hong Kong High Court ruled that the liquidator take over all his assets.

For offshore family trusts, the outside world has long considered them the "Noah's Ark" of family wealth. However, a recent highly publicized case has sparked a more in-depth discussion and reflection on this topic. In response to Evergrande founder Xu Jiayin's non-compliance with asset disclosure orders, the Hong Kong High Court recently made a key ruling, officially appointing the Evergrande liquidator as the receiver of Xu Jiayin's entire assets. This takeover is comprehensive, not only limited to Xu Jiayin's personal assets, but also, in a "piercing" manner, includes assets indirectly controlled through over a dozen offshore companies, potentially involving trust structures. Several lawyers told reporters that this move is not only an in-depth investigation into Xu Jiayin's personal asset situation but also, for the first time in such a significant case, clearly delineates the legal boundaries of the effectiveness of asset isolation in offshore trusts, declaring that "offshore" is not a lawless place. As a result, this ruling has sparked widespread discussion in the market about whether Xu Jiayin's offshore family trust has been "pierced." "The inclusion of assets potentially involving trust structures in the receiver's scope is a temporary measure in a legal sense, not a final ruling. It is for the supervision and control of Xu Jiayin's assets, not a ruling on the disposition or ownership of the property," Liu Xinyuan, chief lawyer at Shanghai Qin Bing (Beijing) Law Firm, told reporters. Huisheng International Capital President Huang Lichong told reporters that the court's actions were taken as a "supportive measure" to enforce the global asset freeze and disclosure orders against Xu Jiayin, due to the court's recognition that Xu Jiayin's non-compliance with the disclosure order was "completely non-compliant" and posed a risk of asset flight. The court appointed the liquidator as the receiver to investigate and control the structures and accounts actually controlled by Xu Jiayin, including equity holdings potentially held through companies and trusts. "This action is to preserve and ascertain assets, a penetrating investigation involving trusts. It is uncertain at this stage whether the trust assets will be pierced, but if some assets are found to be illegal and transferred to the trust, those assets may be allocated to creditors according to the relevant laws," Huang Lichong said. The Background of the Ruling: From Asset Freeze to Comprehensive Takeover Evergrande Group was ordered to liquidate on January 29, 2024, and the Hong Kong court appointed Edward Simon Middleton and Wong Wing-si as joint and several liquidators. The liquidators subsequently began global asset recovery efforts. In March 2024, the liquidators filed lawsuits in the Hong Kong High Court against Xu Jiayin, Ding Yumei, former Evergrande CEO Xia Haijun, former CFO Pan Darong, and three entities related to Xu Jiayin and Ding Yumei, seeking to recover dividends and remuneration totaling about $6 billion US dollars from 2017 to the end of 2020. On March 22, 2024, Evergrande Group sued Xu Jiayin and others, accusing Xu Jiayin of transferring assets through offshore structures. According to statistics, Evergrande accumulated a net profit of 173.388 billion yuan from 2009 to June 2021, almost distributing dividends at a high rate every year, totaling nearly 70 billion yuan, of which Xu Jiayin and his affiliates cashed out about 54 billion yuan. In June 2024, a Hong Kong court issued a Mareva injunction against Xu Jiayin, prohibiting him from disposing of assets worth up to $7.7 billion US dollars globally. Xu Jiayin was also ordered to confirm to the group within 7 days by submitting an affidavit information concerning "all assets worth HK$ 50,000 or more, whether held in Hong Kong or abroad, regardless of whose name they are held in, providing the value, location, and detailed information of all such assets." However, according to the ruling, Xu Jiayin completely failed to comply with the disclosure order. Against the backdrop of an unclear asset situation and the risk of the enforcement of the freezing order falling through, Evergrande issued a "receiver's subpoena" on April 3, 2025, requesting the appointment of the liquidator as Xu Jiayin's asset receiver. On September 16, 2025, the Hong Kong High Court ruled in support of the receiver's application, authorizing the liquidator to "identify, preserve, and investigate" all of Xu Jiayin's assets, including those indirectly controlled through over a dozen offshore companies and potentially involving trust structures; at the same time, it was specified that the receiver has no right to directly dispose of assets, can only prevent asset dissipation, and must be supervised by independent attorneys. The judge in the ruling stated, "In light of Xu Jiayin's complete failure to disclose his assets, it was necessary as a last resort to appoint a receiver, otherwise the injunction would not be able to effectively maintain the status quo." "The ruling by the Hong Kong High Court is mainly based on the Companies (Liquidation and Miscellaneous Provisions) Ordinance and the principles of equity law. The court emphasized Xu Jiayin's non-compliance with the asset disclosure order, which constitutes contempt of court and may lead to more severe legal measures, such as the issuance of a receiver order. Non-compliance with disclosure orders not only hinders the fairness of judicial procedures but can also be seen as an attempt to transfer or conceal assets, thereby affecting the legitimate rights of creditors," Song Jingyi, a lawyer at Beijing Yingke (Guangzhou) Law Firm, told reporters. Regarding Evergrande's debt issues, the liquidator revealed in a progress report that as of July 31, 2025, they had received 187 proof of debt forms, with total claims of about HK$350 billion (US$45 billion), significantly higher than the HK$27.5 billion in debt Evergrande disclosed for its Hong Kong-listed entity at the end of 2022. However, the current realized amount is only HK$2 billion (about US$255 million), with about US$167 million in recoveries. Is the Offshore Trust Within the Receiver's Scope? The question of whether Xu Jiayin's family trust has been taken under receivership has also been addressed in the ruling. The ruling shows that Xu Jiayin had argued that the court's injunction should not cover his affiliated offshore companies, attempting to exclude potential trust assets from the scope of receivership. He pointed out that the court's injunction only targeted Xu Jiayin himself and a few named defendants, excluding the fourth defendant, XinXin (British Virgin Islands) Limited, and any other 14 offshore companies listed in "Annex 1." Therefore, the court should not appoint a receiver for the fourth defendant's assets on its own, nor appoint a receiver to investigate the affairs of the companies listed in "Annex 1" or register all or part of their assets. These over a dozen offshore companies are seen by the public as companies indirectly controlled by Xu Jiayin, controlling family trust assets. Publicly available information shows that around 2019, Xu Jiayin and his ex-wife, Ding Yumei, jointly established a single-family trust fund in the United States, with a massive scale of $2.3 billion, designating their two sons as beneficiaries. The court explicitly rejected Xu Jiayin's claim. The ruling stated that the fourth defendant and the offshore companies listed in Annex 1 had been specifically defined as "companies associated with Xu Jiayin" in the injunction's "Annex C." Therefore, the court believed that, in the complete absence of disclosure of these companies' assets, it was necessary to grant the receiver the power to review the documents of these companies to ensure compliance with the injunction. To explain the basis of the ruling, the court detailed the applicability of the "Chabra jurisdiction." This jurisdiction allows the court, in specific circumstances, to extend the injunction to third parties who are not primary defendants but whose assets are actually controlled by the defendants. The judge emphasized in the ruling that in cases involving "major international fraud," the key is not rigidly defining legal ownership but examining the "substantive reality of control." If the defendants establish an offshore company and trust network to hold the assets they control, the court will take action to prevent its orders from being circumvented by "blurry offshore trusts and companies." Furthermore, the judge explained that even if assets are placed in a discretionary trust, as long as the relevant defendants have substantial control over the assets, the court can still exercise Chabra jurisdiction. Regarding why the offshore trust was included in the receiver's scope, legal professionals point out that the key lies in reviewing "substantive control." Lawyer Liu Xinyuan told reporters that the court did not directly deny the independence of the trust but, based on Xu Jiayin's actual control over the trust assets, found it necessary to take over. This move "actually pierced Xu Jiayin's family's desire and demands to evade debt and disguise illegal gains through the trust," but did not directly negate the legal structure of the trust. Currently, the liquidator has initiated a global asset recovery process. In December 2024, the Evergrande liquidator took over an offshore entity company holding Xu Jiayin's private jet and listed it for sale. In addition, several overseas luxury homes, private jets, luxury cars, yachts, and other assets belonging to Xu Jiayin and his ex-wife Ding Yumei were frozen by the court. In the United States, the liquidator has applied to the Delaware court to revoke the $23 billion trust on the grounds of "fraudulent transfer." "It could be argued that the ruling appointing a receiver for Xu Jiayin could signal that the trust has been 'pierced,' but technically, the current measures are more accurately described as 'penetrating investigations' and 'temporary preservation,' aimed at taking control of the assets and preventing their transfer, rather than a full legal 'piercing' and disposal of the trust assets," Liu Xinyuan said. Huang Lichong also told reporters that the receiver's authority is bounded by court orders and is primarily for identifying, controlling, and preserving assets, rather than immediately disposing of the trust assets. Based on the global freezing order, the court granted the receiver, under Section 21L of the High Court Ordinance, the power to identify, control, and investigate the assets and information held by carriers (including offshore trusts) controlled by Xu Jiayin, in cases when Xu Jiayin's disclosure failed (was dishonest), and there was a risk of asset flight. The receiver can request records and control rights from trustees and third parties based on this information to provide evidence for future lawsuits in the US. The probability of the trust being revoked/pierced in the US? Huang Lichong believes that if a substantial amount of funds were contributed during a period of debt default or insolvency and there are clear links to associated companies and personal substantive control, and the lawsuit can be filed within the "4 years + discovery period" timeframe, with the achievement of Chapter 15 recognition or equivalent relief, the chances of success can be "moderately high" (around 40% 60%). If the primary contributions were made before the window period and the governance of the trust and evidence of trustee independence are solid, then the odds are not great. Liu Xinyuan also stated that the US trust legal system is mature, and state trust legislation reduces the uncertainty of a trust being pierced. There are clear time limit provisions for fraudulent transfers, and piercing is not easy. However, the US and China are not in conflict in terms of trust judicial spirit. If there is sufficient evidence to demonstrate fraudulent transfers and activities that seriously harm the interests of creditors, the US court could recognize and enforce the cross-border judgment. Offshore Trust Legitimacy and Independence are the Bottom Line Several legal professionals have pointed out that this ruling is not just about the handling of individual cases but also sounded the alarm on the structure and management of offshore trusts, clearly revealing the legal boundaries of the effectiveness of asset isolation in family trusts. Bai Wenxi, Chief Economist of the China Enterprise Capital Alliance, emphasized that the security of a trust is not absolute but is based on the independence of the structure and the legality of the establishment's purpose. Achieving true "asset case isolation" must meet several core prerequisites: the legality and cleanliness of the trust's fund sources; the depositor must completely relinquish control; and the trustee must have independent and regulated qualifications. "If the fund source is not legal, it is not surprising that the trust account has been 'pierced,'" commented a legal professional. Bai Wenxi told reporters that this ruling epitomizes the judicial principle of "substance over form," meaning that regardless of how complex the assets are placed within offshore or discretionary trust structures, as long as the court deems that the defendants have substantial control over the assets and that the purpose of their establishment is suspected of harming creditors, the court can exercise jurisdiction to conduct a penetrating investigation and receiver. As the judge emphasized in the ruling, regardless of how complex assets are placed in discretionary trusts, if there is substantial evidence that the defendants can control the trust's operation, the court can enforce a freezing order. Analysts pointed out that this case has implications for high-net-worth individuals and the wealth management industry. The ruling highlights that "offshore family trusts" are not foolproof "safety deposit boxes," and offshore trusts are not lawless territories. Wealth protection must be built on a foundation of legality, integrity, and compliance, and any attempts to evade debt obligations or regulatory oversight through technical structures could be penetrated by the judiciary. "This case may cause some groups to worry, but in reality, there are no lawless territories in the world," said a senior executive at a wealth management firm. Lawyer Song Jingyi believes that such rulings may to some extent weaken the blind faith in the asset isolation function of trusts and prompt a comprehensive upgrade in compliance reviews of trust structures and evidence preservation standards for independence when setting up trusts in the future. Several lawyers believe that, as a complex cross-border case, the fate of Xu Jiayin's family offshore trust will depend on the subsequent investigation results by the receiver and the cooperation and negotiation between Hong Kong and US courts in cross-border judicial cooperation. However, in any case, the Hong Kong High Court's ruling has already refreshed the market's understanding of the security of offshore trusts with its strong penetrating power, and its subsequent development will be closely watched. This article was originally published by "Cai Lian She," author: Li Jie; GMTEight Editor: Feng Qiuyi.