China Evergrande Group is facing a petition as an investor seeks to sue the Chinese property developer giant for not repurchasing shares of its unit.

According to Apollo News, the High Court of Hong Kong announced on its website that the investment holding firm Top Shine Global Limited had filed a winding-up petition against Evergrande.

In a winding-up petition, Evergrande could be compelled to sell its assets to repay debts if the court approves the case.

Under the petition, filed on June 24, Top Shine, a company based in Samoa in the Pacific, brought Evergrande to court as the embattled developer did not repurchase shares in its unit Fangchebao from investors.

Fangchebao is a Chinese online real estate and automobile marketplace owned by Evergrande.

As Nikkei Asia reported, Top Shine bought a 0.46% stake in Fangchebao for $95.6 million last March when Evergrande sold a 10% stake of the unit to 17 investors for a total of $2.1 billion ahead of an initial public offering (IPO).

According to Reuters, the unit planned an IPO in Hong Kong.

An executive from Top Shine told Reuters that, following the agreement, 

Evergrande would have to repurchase the shares with a 15% premium if an IPO had not materialized by April 8 this year.

In the petition, Top Shine requested Evergrande to honor the agreement to repurchase the shares.

The hearing will be held on Aug. 31.

The Top Shine executive said that the lawsuit is independent of Evergrande’s restructuring process, though Top Shine is considered a developer’s creditor.

China Evergrande has more than $300 billion in offshore debt liabilities. It defaulted in December 2021 after failing to repay some of its maturing debts. 

The developer is expected to announce a preliminary restructuring plan by the end of July.

Mainland state-owned companies are taking part in the company’s restructuring process and have taken over some of its assets to help ease market fears of a disorderly collapse.

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