Once China’s most prolific property developer, China Evergrande may soon be its biggest and messiest corporate breakup.

In a Hong Kong courtroom on Monday, a bankruptcy judge could force Evergrande to liquidate and pay back creditors who are owed tens of billions of dollars.

It would mark an end to two years of limbo for investors who lent Evergrande money in Hong Kong and have tried to negotiate for a piece of the debt-saddled corporate behemoth that defaulted in early December 2021.

A liquidation of Evergrande was once unimaginable. For two decades it was a model of China’s embrace of capitalism. It was one of China’s most successful companies and at the heart of the real estate industry, which drove one-third of the nation’s economic growth. But years of overexpansion left it financially precarious and when it defaulted, it had more than $300 billion in overdue bills.

Evergrande’s default plunged China’s housing market into crisis, pushing other developers into trouble and leaving many Chinese households despondent about housing, the main store of wealth for most families. As Evergrande’s financial position has gotten progressively worse in recent months, investors have come to expect little back.

Many questions would remain after the Hong Kong court decision — for the hundreds of thousands of buyers who paid in advance and are still owed their homes, for the many workers who built and sold its apartments and haven’t been paid, and for the Chinese banks and investors who lent it money.

In Hong Kong, lawyers for Evergrande and one group of its creditors have argued for more than a year over how to settle billions of dollars in debts that the company owes them. They are expected to gather before Judge Linda Chan for the seventh time to make their final appeals in a small and stuffy room on the 12th floor of the High Court in Hong Kong’s business district.

Judge Chan has signaled that this time might be the last. At a hearing on Oct. 30, a lawyer for the creditor who first lodged the lawsuit expressed exasperation over the lack of progress, telling Ms. Chan, “enough is enough.” While Ms. Chan adjourned court then, she said it was “highly likely” the last reprieve for the company.

There is a small chance that Evergrande could live to see another day. Last-minute negotiations could lead to Evergrande presenting a new restructuring deal or a concrete plan on Monday for a new deal. If the creditors agreed to it, the hearing could be put off yet again.

On Friday, one group of creditors issued a statement in support of Evergrande’s main company onshore, Hengda, and said it opposed any form of bankruptcy for the company. None of the players in China with a financial stake in Evergrande, from customers to suppliers, would benefit, the group said, from what it called a “multiyear, value-destructive bankruptcy process.”

The group acknowledged that China’s property sector and economy was struggling but added that it appreciated the “extensive efforts of the Chinese government” and the company’s management to “resuscitate the business and the sector for the benefit of all stakeholders.”

China’s property market has been in a downward spiral for several years. While the authorities have tried to stem falling sales with measures like easing requirements for buying a house and lowering interest rates, the efforts haven’t made much of a difference.

Despite the grim outlook for housing, this summer the company had worked with offshore creditors on a repayment plan but it suddenly spiked the deal in September when Evergrande’s founder and chairman, Hui Ka Yan, was detained by the authorities.

A liquidation, which would be overseen by a specialist firm named by the judge, would be messy and could take years. Evergrande has a tangled business structure. There are three companies listed outside of China’s jurisdiction on the Hong Kong Stock Exchange, including its holding company. It also has thousands of subsidiaries in China and more than 1,000 real estate projects — assets that would probably be out of reach to investors in Hong Kong.

Ultimately, a liquidation would be a litmus test of how the Chinese Communist Party plans to treat foreign creditors of property companies. Under a mutual agreement in 2021 between Hong Kong and Beijing, a mainland Chinese court could recognize the liquidator to allow creditors to take control of Evergrande assets on the mainland.

“It will the biggest test yet of whether the mainland courts are prepared to provide recognition under the cross-border protocol,” said Jonathan Leitch, a restructuring partner at Hogan Lovells.

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