Court in Hong Kong orders liquidation of Evergrande, massive property company

China's troubled property firm Evergrande has been ordered by a Hong Kong court to liquidate after failing to produce a restructuring proposal. The company has been a symbol of China's real estate crisis, burdened with over $325 billion of debt. The announcement of the liquidation order caused Evergrande's shares to fall more than 20% in Hong Kong. Liquidation involves seizing a company's assets to repay its debts, but it is unclear whether this process will be followed and whether the Chinese government will intervene to prevent Evergrande's collapse. The case was brought by an investor who claimed that Evergrande had not fulfilled its agreement to repurchase shares. Most of Evergrande's debts are owed to lenders in mainland China, who have limited legal options to recover their money. Foreign creditors have more freedom to take legal action, and some have chosen to file lawsuits in Hong Kong. It remains to be seen how the liquidation order will be executed and whether it will impact Evergrande's construction projects. The company may also face challenges in controlling its subsidiaries. Unsecured creditors are unlikely to recover the full amount of their claims, and foreign creditors may have to wait until mainland creditors are paid. Although the Hong Kong court's orders may not be enforceable in China, they provide insights into the challenges faced by developers and creditors in the country. Judge Linda Chan, who issued the liquidation order for Evergrande, has also ordered the liquidation of other defaulted developers. Evergrande has been working on a new repayment plan and previously filed for bankruptcy in the US to protect its American assets.