A Hong Kong court on Monday ordered the liquidation of Chinese construction company China Evergrande Group, after it failed to reach an agreement with creditors to restructure debt issued across borders.

Evergrande, which has accumulated liabilities of almost 330 billion dollars, defaulted two years ago after suffering a liquidity crisis due to China's restrictions on financing highly indebted construction companies.

Judge Linda Chan said that Evergrande's liquidation was appropriate given the company's "lack of progress in presenting a viable restructuring proposal".

A report in the Portuguese news portal Visão states that the liquidation order is likely to have an impact on China's financial system, at a time when the authorities are trying to halt a sharp correction in the Chinese stock market.

Evergrande's liquidation is also likely to dampen confidence in real estate, which has been falling as developers struggle to meet their obligations following a campaign launched by Beijing to curb excessive indebtedness in the sector.

In December, Evergrande got a brief respite after saying it was trying to "perfect" a new debt restructuring plan.

Fergus Saurin, a lawyer representing a group of creditors, said on Monday that he was not surprised by the outcome.

"The company hasn't engaged with us. There has been a history of last-minute compromises that have led nowhere," he said.

Saurin said that his team has been working in good faith throughout the process and that Evergrande "can only blame itself for being liquidated".

Evergrande, the world's most indebted real estate developer, is one of many companies that ran into trouble when Chinese regulators took action against excessive debt in the real estate sector.

The company defaulted on its financial obligations for the first time in 2021, just over a year after Beijing restricted lending to real estate developers in an effort to cool a property bubble.

The real estate sector drove China's economic boom, but developers borrowed heavily as they transformed the country's cities. This has contributed to increasing the total debt of companies, the state and households to the equivalent of more than 300% of annual economic output, an unusually high figure for a middle-income country.

Other real estate developers, including Country Garden, China's largest property developer, have also run into problems, with their situation having repercussions on financial systems inside and outside China.

The consequences of the real estate crisis have also affected China's shadow banking sector - institutions that provide financial services similar to banks but operate outside banking regulation, such as the Zhongzhi Enterprise Group.

Zhongzhi, which granted huge loans to real estate developers, filed for insolvency on January 5th.