Key facts
- Evergrande liquidators are challenging a $128 million payout to minority shareholders.
- The liquidators argue the settlement unlawfully prioritizes shareholders over creditors.
- The settlement was brokered by Hong Kong's securities regulator.
- The legal challenge was filed in the Hong Kong High Court.
Liquidators for the collapsed developer China Evergrande Group have initiated legal proceedings to prevent a HK$1 billion ($128 million) payout to the company's minority shareholders. The liquidators are seeking a judicial review in the Hong Kong High Court, asserting that the private settlement, facilitated by the city's securities regulator, improperly places shareholders ahead of creditors.
The core of the liquidators' argument is that the settlement's terms violate the established hierarchy of claims in insolvency, where creditors are typically prioritized over shareholders. By challenging this payout, the liquidators aim to preserve assets for those to whom the company owes money. Hong Kong's market regulator is proceeding with its plan to provide compensation to minority shareholders of the failed developer Evergrande.