The trading of shares for China Evergrande was suspended after a plunge of over 20% at the opening of Monday's session, following the decision of a Hong Kong court to order the liquidation of the once-giant construction company.

This decision comes amidst an escalating debt crisis in the country. China Evergrande, once one of the country's largest real estate development companies, has been hit hard by Beijing's debt crisis in recent years.

The Wall Street Journal reported earlier that Evergrande's foreign creditors failed to reach a restructuring agreement over the weekend, which could mean imminent liquidation for the real estate development company.

Evergrande is the world's most indebted property developer, which defaulted in 2021 and announced an offshore debt restructuring plan last March.

Last week, the People's Bank of China and the Ministry of Finance announced measures to help strengthen the liquidity available to property developers. The measures, which will be in effect until the end of this year, will help mitigate the prolonged cash crisis for Chinese builders following Beijing's crackdown on the sector to address inflated debt levels in real estate.

The Evergrande crisis sparked fears of contagion that problems in China's real estate sector could spread to other parts of the world's second-largest economy. Country Garden, also one of China's largest builders, is struggling to repay its debt.

The decision to liquidate the world's most indebted builder with total liabilities over 300 billion dollars was taken by Hong Kong judge Linda Chan, who noted that Evergrande was unable to provide a specific restructuring plan despite months of delays.

"It's time for the court to say, enough," she emphasized.

Evergrande, which has assets of 240 billion dollars, led to a recession in a troubled real estate sector when it defaulted on its debt in 2021, and the liquidation decision is likely to further shake the already fragile Chinese capital and real estate markets.

"The liquidation of Evergrande is a sign that China is willing to go to extremes to quash the real estate bubble," said Andrew Collier, Managing Director of Orient Capital Research, to Reuters.

"This is good for the economy in the long term, but very difficult in the short term."