The Zhuhai municipal government has attempted to seize a 42 per cent stake in Hong Kong-listed Zhu Kuan Development by enforcing a share charge its bank creditors suspect was illicitly created.
The stake - worth about $118 million - is a key asset of Zhu Kuan Group, a window company of the Zhuhai government subject to a winding-up petition filed by disenchanted creditors seeking to recoup $4.49 billion.
Provisional liquidators have been appointed by the High Court to protect the 42 per cent stake amid questions over the validity of the share mortgage the Zhuhai government claims to have. No evidence has been produced to show there was an underlying debt, according to creditor banks.
The registered owner of the 337 million shares in Zhu Kuan Development is Pioneer Investment Ventures, a wholly owned subsidiary of Zhu Kuan Group.
Liquidation proceedings were taken out against the group last month after years of debt restructuring negotiations with at least 28 creditor banks broke down. Provisional liquidators from RSM Nelson Wheeler were appointed by the High Court to seize and protect assets.
Investigations into the affairs of Pioneer had been stymied by a dearth of books and records on the company, creditor sources said.