A Hong Kong court ordered Evergrande, the world’s most indebted property developer, to liquidate after years of turmoil

Evergrande is one of China’s largest property developers with thousands of projects across hundreds of Chinese cities

The company has also expanded into other industries, including electric vehicles, making it one of China’s largest companies and its founder and chairman one of Asia’s richest individuals

In the years leading up to 2020, Evergrande borrowed aggressively to fund development projects, racking up $300B in debt in the process

In 2020, though, China’s government cracked down on how much debt real estate developers could hold, pushing Evergrande into a crisis

It defaulted on a loan a year later, triggering fears of weaknesses in China’s real estate market

Evergrande is listed in Hong Kong but does most of its business in mainland China

In 2022, an investor filed a lawsuit against Evergrande in Hong Kong, arguing it had failed to honor millions of dollars worth of claims

Evergrande has since negotiated with the court to try to create a plan to restructure its business

Those attempts repeatedly failed, though, and amid the company’s struggles, Chinese authorities began investigating its chairman for “illegal crimes”

On Monday, the Hong Kong court ordered Evergrande to liquidate

That means ownership of the company passed to liquidation managers who will either restructure the company or sell off its assets to compensate investors

The decision, which Evergrande could appeal, means the company will officially shut down

Although Hong Kong is part of China, it has its own political and judicial system, meaning it is unclear if mainland China will honor Hong Kong’s liquidation order

Because a vast majority of Evergrande’s assets are held in mainland China, investors will likely receive little or no compensation unless China’s government also approves its liquidation

Evergrande’s collapse revived fears of a real estate bubble that could push China into a crisis

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