Evergrande shares fell by more than 20% in Hong Kong after the announcement on Monday. Trading in the shares has now been suspended.

Liquidation is a process where a company’s assets are seized and sold off. The proceeds can then be used to repay outstanding debts.

However, whether this process is followed may depend on the Chinese government and the liquidation order does not necessarily mean that Evergrande will go bust and collapse.

Ahead of Monday’s ruling, China’s Supreme Court and Hong Kong’s Department of Justice signed an arrangement to mutually recognise and enforce civil and commercial judgements between mainland China and Hong Kong.

But experts are still unsure if the change, which came into effect on Monday, will have an impact on Evergrande’s liquidation order.

The court document released on Monday said the company had asked for further three months to come up with a new restructuring plan, but it only requested it at 4pm on Friday.

Judge Chan described the new plan as “not even a restructuring proposal, much less a fully formulated proposal”.