China Evergrande's liquidators begin court proceedings Monday against PricewaterhouseCoopers International, testing auditor liability limits for insolvent companies. The lawsuit stems from PwC's auditing work for Evergrande before its 2021 default, which became synonymous with China's property crisis. Liquidators added PwC International to their original claims against local affiliates.

PwC International argues it should be removed since it doesn't provide client services, according to its website. Even if successful, liquidators can continue pursuing the Hong Kong and mainland affiliates. The case could establish precedent for how much auditors owe when companies face fraud allegations. A financial ruling would compound existing regulatory pressure on PwC, whose Hong Kong unit already paid HK$1.3 billion ($166 million) in fines last month.

Liquidators Edward Middleton and Tiffany Wong of Alvarez & Marsal filed the case in March 2024, targeting PwC's 2017 and early 2018 audit reports. With Evergrande's debt reaching HK$350 billion and recoveries totaling just HK$255 million, the outcome carries major implications for creditors waiting years for compensation. The proceedings represent one of the largest auditor liability cases emerging from China's property sector collapse.

The litigation arrives as global accounting firms face heightened scrutiny over Chinese client audits, with regulators demanding greater transparency and accountability for financial statement accuracy.