Liquidators for China Evergrande Group have challenged Hong Kong’s Securities and Futures Commission (SFC) in court, seeking to block a settlement it reached with PricewaterhouseCoopers (PwC) Hong Kong. The deal requires PwC to set aside HK$1 billion ($128 million) to compensate Evergrande's independent minority shareholders for alleged accounting fraud in 2019 and 2020. The liquidators accuse the SFC of overstepping its authority by brokering a deal that prioritizes shareholders over creditors, who are typically paid last in liquidation cases.
The liquidators are seeking HK$57 billion from PwC entities in a separate lawsuit, one of the largest corporate claims ever sought in Hong Kong. They argue that PwC's assets may not cover both the SFC settlement and their claims, leaving creditors at a disadvantage. They claim the SFC's agreement makes Evergrande Group's creditors HK$1 billion worse off and that the SFC failed to consider their interests.
The SFC, in its defense, argues it has broad powers under the Securities and Futures Ordinance to settle disciplinary actions and a duty to protect independent investors. It views the liquidators' challenge as driven by a grievance that minority shareholders were allowed to "jump the queue" for compensation. The High Court's Mr. Justice Russell Coleman has reserved judgment on the case. The case highlights a battle over seniority in winding-up cases and could influence creditor recovery.
