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A Hong Kong court ordered China Evergrande, the world’s most heavily indebted real estate developer, to undergo liquidation following a failed effort to restructure $300 billion owed to banks and bondholders that fueled fears about China’s rising debt burden.

“It would be a situation where the court says enough is enough,” Judge Linda Chan said Monday. She said it was appropriate for the court to order Evergrande to wind up its business given a “lack of progress on the part of the company putting forward a viable restructuring proposal” as well as Evergrande’s insolvency.

China Evergrande Group is one of the biggest of a series of Chinese developers that have collapsed since 2020 under official pressure to rein in surging debt that the ruling Communist Party views as a threat to China’s slowing economic growth.

But a crackdown on excess borrowing has tipped the property industry into crisis, making it a drag on the economy, as scores of other developers ran into trouble, their predicaments rippling through financial systems in and outside China.

Global financial markets were rattled earlier by fears an Evergrande liquidation could cause global shockwaves. But Chinese regulators said the risks could be contained. The court documents seen Monday showed Evergrande owes about $25.4 billion to foreign creditors.

“It is indisputable that the company is grossly insolvent and is unable to pay its debts,” the documents say.

About 90% of Evergrande’s business is in mainland China. Its chairman, Xu Jiayin, was detained by authorities for suspected “illegal crimes” in late September.

It’s unclear how the liquidation order will affect China’s financial system or Evergrande’s operations as it struggles to deliver housing that has been paid for but not yet handed over to families that put their life savings into such investments.

Evergrande’s Hong Kong-traded shares plunged nearly 21% early Monday before they were suspended from trading. But Hong Kong’s benchmark Hang Seng index was up 0.9% and some property developers saw gains in their share prices.

Evergrande gained a reprieve from the Hong Kong court in December after it said it was attempting to “refine” a new debt restructuring plan of more than $300 billion in liabilities. It could appeal the ruling.

Fergus Saurin, a lawyer representing an ad hoc group of creditors, said Monday he was not surprised by the outcome.

“The company has failed to engage with us. There has been a history of last-minute engagement which has gone nowhere,” he said.

Saurin said his team worked in good faith during the negotiations. Evergrande “only has itself to blame for being wound up,” he said.

Evergrande “has not demonstrated that there is any useful purpose for the court to adjourn the petition – there is no restructuring proposal, let alone a viable proposal which has the support of the requisite majorities of the creditors,” Chan, the judge, said in remarks published online Monday.

She lambasted the company for putting out only “general ideas” about what it may or may not be able to put forward in the form of a restructuring proposal. The interests of creditors would be better protected if Evergrande is wound up by the court, she said.

Evergrande CEO Shawn Siu told Chinese news outlet 21Jingji that the company feels “utmost regret” at the liquidation order. He emphasized that the order affects only the Hong Kong-listed China Evergrande unit.

The group’s domestic and overseas units are independent legal entities, he said. Siu said that Evergrande will strive to continue smooth operations and deliver properties to buyers.

“If affected, we will still make every effort to ensure the smooth advancement of risk resolution and asset disposal, and we will still make every effort to advance all work fairly and in accordance with the law,” he said.

The 21Jingji article appeared to be briefly taken down on Monday afternoon but was republished shortly afterwards.

Evergrande first defaulted on its financial obligations in 2021, just over a year after Beijing clamped down on lending to property developers in an effort to cool a property bubble.

As a former British colony, Hong Kong operates under a legal system that is separate, though increasingly influenced by, communist-ruled China’s.

In some cases, mainland courts have recognized bankruptcy rulings in Hong Kong but analysts say Evergrande’s is something of a test case.

Real estate drove China’s economic boom, but developers borrowed heavily as they turned cities into forests of apartment and office towers. That has helped to push total corporate, government and household debt to the equivalent of more than 300% of annual economic output, unusually high for a middle-income country.

The fallout from the property crisis has also affected China’s shadow banking industry – institutions that provide financial services similar to banks but operate outside of banking regulations, such as Zhongzhi Enterprise Group. Zhongzhi, which lent heavily to developers, said it was insolvent.