<\/p>\n
A Hong Kong court is set to hear arguments on whether a deal that set up a fund to compensate China Evergrande minority shareholders is valid.<\/p>\n
The city\u2019s Securities and Futures Commission struck the deal with PricewaterhouseCoopers\u2019 Hong Kong affiliate in April to settle investigations into the firm\u2019s auditing work for the developer, whose downfall was emblematic of China\u2019s property crisis.<\/p>\n
The builder\u2019s liquidators then asked for a judicial review of the HK$1 billion ($127.6 million) compensation deal, saying that the SFC lacks the statutory authority to enter into a settlement with a non-regulated entity like PwC HK, arguing that responsibility lies with the city\u2019s accounting watchdog. They are seeking to have the SFC\u2019s decisions, including the fund, declared \u201cunlawful, void and\/or invalid.\u201d<\/p>\n
The SFC said in June that it was proceeding with its plan, despite the legal challenge.<\/p>\n
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The case will test whether a Hong Kong court is willing to quash a regulator\u2019s decision after legal pushback from creditors. It also underscores the battle over seniority in winding-up cases, and could affect how much money creditors are eventually able to recover.<\/p>\n
Liquidators say the SFC\u2019s deal to compensate shareholders priorities them over creditors. Under Hong Kong law, shareholders are paid last in liquidation cases and only if there is any surplus after all creditors are satisfied.<\/p>\n
According to liquidators\u2019 assessment, Evergrande\u2019s liabilities will far exceed any assets recovered, so \u201cthere is no possibility\u201d shareholders will receive any payout. Evergrande\u2019s debt burden is larger than previously estimated, reaching HK$350 billion, they have said.<\/p>\n
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Different parties are seeking to extract funds from PwC. The firm is already under significant financial and regulatory pressure due to its audits of Evergrande. Its mainland China affiliate was previously fined 441 million yuan for its role in auditing the Chinese developer.<\/p>\n
Evergrande liquidators are seeking 57 billion yuan ($8.4 billion) in a lawsuit against PricewaterhouseCoopers International Ltd. and its mainland China and Hong Kong affiliates, among the largest corporate claims ever sought in the city.<\/p>\n
Meanwhile, some partners at PwC\u2019s local affiliates are exploring strategies to safeguard their personal assets, in case the escalating legal and regulatory challenges facing the firm ultimately translate into financial or legal liabilities for them individually.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Evergrande #liquidators #challenge #Hong #Kong #watchdog #court<\/p>\n","protected":false},"excerpt":{"rendered":"
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