The liquidators of China Evergrande Group are in a legal battle with the city’s market regulator over its settlement agreement with PricewaterhouseCoopers (PwC) Hong Kong, claiming that the agreement leaves creditors HK$1 billion (US$128 million) worse off, according to a court document released on Monday.

The writ filed with Hong Kong’s High Court seeks leave to apply for a judicial review of the Securities and Futures Commission’s (SFC) agreement with PwC Hong Kong and an order preventing the regulator from taking further steps to implement the settlement. The document was filed on Friday and became public on Monday.

Following inquiries by the South China Morning Post, PwC Hong Kong and the SFC said they did not wish to comment.

In April, the SFC reached an agreement with PwC Hong Kong to pay HK$1 billion in compensation to Evergrande’s minority shareholders, citing serious breaches of the auditors’ professional duties. By reaching the agreement, PwC did not admit any liability.

The liquidators – Tiffany Wong Wing-sze and Eddie Middleton of Alvarez & Marsal – wrote to the SFC on May 8, identifying their concerns over the agreement and urging the commission not to take any further steps to implement it. However, the SFC rejected the requests a few days later, the writ said.

The liquidators are seeking a judicial review because, they argued, “China Evergrande Group’s creditors are made HK$1 billion worse off by the agreement”. PwC Hong Kong’s assets are unlikely to cover both the agreement with the SFC and the separate lawsuits by the liquidators, it added.

“In entering into the agreement, the SFC failed to consider the interests of China Evergrande Group and its creditors, and specifically, did not consider whether the agreement would unfairly prejudice China Evergrande Group and its creditors,” the writ said.