The matter concerns a $7.7 billion asset freeze order.
Recently, news about Xu Jiayin's overseas family trust being "pierced" has attracted widespread attention and circulation. Topics such as "Xu Jiayin's family trust defense line has been pierced" and "Xu Jiayin's $2.3 billion can no longer be hidden" have topped Weibo trending searches.
These reports mainly stem from a ruling made by the Hong Kong High Court on September 16th. However, the actual content of the judgment is far less "rich" than the online information suggests, and it is premature to conclude that Xu Jiayin's overseas family trust has been "pierced" based solely on this ruling.
The judgment shows that this ruling was made in response to an application submitted by Evergrande Group to the Hong Kong court on April 3rd, 2025. The application sought an order appointing the group's liquidators as receivers and managers of all of Xu Jiayin's assets and business. The judgment resulted in Evergrande Group's victory, with the court granting this "receivership order."
Within the scope of receivership, the judgment does not explicitly mention Xu Jiayin's alleged overseas family trust. Trust-related content mainly appears when the judge cites previous case precedents and legal basis. However, many legal professionals believe that offshore family trusts frequently generate public discourse due to "piercing" issues, and there are many misconceptions that need to be addressed, particularly requiring attention from high-net-worth individuals.
What Did the Hong Kong High Court Ruling Say?
The background to this Hong Kong High Court ruling is that China Evergrande Group was ordered to be liquidated in January last year, and in March of the same year, it filed a lawsuit against eight defendants including Xu Jiayin. In response, the Hong Kong court issued a Mareva injunction against Xu Jiayin in June last year, prohibiting him from disposing of assets worth up to $7.7 billion worldwide, and issued a disclosure order as auxiliary relief.
The disclosure order required Xu Jiayin to report relevant information to Evergrande Group and confirm through affidavit within seven days, disclosing the value, location, and details of all assets with individual values of HK$50,000 or above (whether located in Hong Kong or overseas, whether held in his name or not, whether owned individually or jointly).
However, Xu Jiayin completely failed to comply with this disclosure order, leading Evergrande Group to apply for the appointment of group liquidators to take control of his assets to ensure enforcement of the aforementioned injunction.
This 33-page judgment's core content can be divided into three parts: first, whether to appoint receivers, involving issues of necessity and applicable legal principles; second, the scope of receivership covering which of Xu Jiayin's assets; third, who to appoint as receivers.
The scope of the "receivership order" is the core content of external concern. According to the judgment, under the injunction, Xu Jiayin's assets under receivership include properties and assets corresponding to a company list, and funds corresponding to a bank account list. Among these, the companies in the company list are all 100% actually owned by Xu Jiayin; some accounts in the bank account list are not held in Xu Jiayin's name but are held by certain limited companies.
Under this "receivership order," the receivers gained powers to access documents of these companies, know the whereabouts of corresponding assets, and other information-gathering and asset-preservation powers, but do not have the authority to dispose of these assets.
What Trust Content Was Mentioned?
As can be seen, in the above judgment, the judge did not explicitly mention Xu Jiayin's alleged offshore family trust in the receivership scope. In this section, the judgment mentions "trust" 16 times, but all were mentioned when the judge cited past precedents.
Specifically, when responding to some arguments from Xu Jiayin's side, the judge mentioned various legal precedents and principles regarding trusts, including references to cases involving "bare trust," "discretionary trust," and principles about piercing corporate veils and fraudulent transfers. These references were part of the legal reasoning but did not directly address Xu Jiayin's specific trust arrangements.
Saying Trust Is "Pierced" Is Premature
So, if Xu Jiayin established an offshore family trust and the trust was included in the scope of this "receivership order," would this mean the trust has been "pierced"? Has the overseas family trust "firewall" really failed?
In the view of many legal professionals, the answer to this question is clearly: no.
First, this is a procedural ruling regarding a "receivership order" aimed at ensuring enforcement of the "injunction." Both the "receivership order" and "injunction" are temporary preservation tools that do not involve substantive issues and do not affect asset ownership. Determining that a trust has been "pierced" requires a substantive judgment, where the trust is deemed invalid or revoked, and related assets consequently become executable assets.
"The Hong Kong court only imposed asset freeze orders on Xu Jiayin and his wife, among others, without involving disposal of substantive rights. For creditors to pursue his offshore trust property, they would need to pierce the corporate veil of offshore companies thousands of kilometers away to substantively seize and execute relevant properties," noted Wiseway Global Family Think Tank, believing that Xu Jiayin's offshore trust is far from being pierced.
However, because receivers can obtain information about relevant assets through the "receivership order," some legal professionals believe this will provide important assistance for creditors' next steps in asset tracing and property preservation. Whether Xu Jiayin's alleged family trust will ultimately be "pierced" depends on multiple factors, including trust structure design, contract content, applicable law, judicial jurisdiction, property location, etc. Most critically, it depends on whether Xu Jiayin engaged in fraudulent disposal, retained actual control, or established trusts with illegal assets.
Second, "piercing" caused by major defects in the family trust product itself does not mean trust products are useless or that the "firewall" has failed. In recent years, similar controversies have occurred with family trusts of multiple "celebrity" entrepreneurs, and the public still has cognitive misconceptions about this.
Wang Wenxing, Senior Vice President of Haibang International Consulting Group and renowned international tax law expert, explained that family trusts' ability to function, especially their property isolation function, has multiple prerequisite conditions, involving factors including the timing and purpose of trust establishment (such as whether there is subjective debt avoidance purpose), legitimacy of property sources, determination of (spousal) joint property and whether there was informed consent.
Offshore family trusts, due to their more flexible and diverse structure design and legal applications, face more complex situations in determining "piercing" issues. Focusing on the legal basis of Hong Kong courts on related issues, multiple industry professionals mentioned principles such as fraudulent transfer and substance over form.
The timing of asset injection into trusts is crucial, according to Wiseway Global Family Think Tank analysis.
Procedural compliance is also an important influencing factor. Wang Wenxing identified two common scenarios of family trust "piercing": first, the settlor using trust account property through some means, i.e., intentional "piercing"; second, "piercing" caused by missing necessary professional processes, which is also the most common type of "mis-piercing."
Li Hanlei, a lawyer from Beijing Yunting Law Firm, previously stated that in recent years, the main problems exposed by Chinese "wealthy" family trusts are not in the trust product structure itself, but rather that relevant parties have not properly used trusts as genuine "governance mechanisms."
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