Liquidators of China Evergrande have warned PwC partners in Hong Kong that they could be pursued personally for any shortfall in damages over audit failures. The firm has sued PwC for at least $8.5bn, citing “negligence” and “misrepresentation” in the audit of the group that defaulted in 2021, sparking a crisis in China’s property sector.

In a letter dated 30 June, the liquidators told equity partners who worked on the audit from 2017 to 2020 that, while PwC should meet any monetary judgment, they may be held personally liable if the firm does not pay in full. They cautioned partners against taking steps to “shield assets from execution of judgment, including by divorcing spouses or placing assets in the names of other family members.”

Evergrande’s collapse left the developer with more than $300bn in liabilities and sent shockwaves through the country’s financial system, where households largely hold wealth in property. Founder Hui Ka Yan pleaded guilty in April to charges of bribery, embezzlement and fraud. PwC’s mainland China business was fined Rmb441mn ($62mn), while Hong Kong regulators ordered the firm to set aside HK$1bn ($128mn) for minority shareholders, with an additional HK$300mn penalty imposed by the Accounting and Financial Reporting Council.