In a historic development for the bankruptcy-shy China, on Monday, a Hong Kong court ordered China Evergrande - once the country's largest real estate company - to be liquidated, opening a new and unpredictable phase in the collapse of the world's most indebted property developer. The liquidation order comes more than two years after the company's official default, which triggered a cash crunch for Chinese developers that has crippled what was once the world's largest asset class, and is still hobbling the world's second-largest economy.

Hong Kong High Court Judge Linda Chan issued the order on Monday after the developer failed to come up with a last minute restructuring plan to satisfy international creditors despite lengthy negotiations.

"It would be a situation where the court says enough is enough," Chan said. "I consider that it is appropriate for the court to make a winding-up order against the company, and I so order.

A previous deal between Evergrande and international investors fell apart in September after Chinese authorities failed to grant some regulatory approvals. Evergrande's chair Hui Ka Yan was placed under "mandatory measures" days later on suspicion of "illegal crimes", authorities said at the time. The winding-up lawsuit was filed in 2022 by offshore creditor Top Shine Global, which said Evergrande had failed to honor HK$863mn (US$110mn) worth of claims.

Today's historic decision to liquidate a Chinese property giant will test the reach of Hong Kong courts in the Chinese mainland, where foreign claims are widely seen to hold little sway and the property slowdown has become one of Beijing's biggest political challenges.While Evergrande is listed in Hong Kong, almost all of its assets and the vast majority of its more than $300bn in liabilities are in China. Authorities have so far prioritised the completion of unfinished projects by developers.