Two years after its default marked a key moment in China’s property crisis, the world’s most indebted developer may be heading for another bleak milestone: liquidation.

China Evergrande Group faces a Hong Kong court hearing on Monday over a creditor request to wind up the company, a lawsuit that’s lingered for about 18 months. The developer must convince the judge that it has a concrete debt restructuring plan. Failure to do so will likely mean liquidation, leading to more chaos in its operations and further denting sentiment in the housing market.

“If Evergrande fails to deliver an improved restructuring plan that meets the demands of the ad hoc group of creditors, the Hong Kong court is very likely to grant a winding-up order against the company,” said Lance Jiang, a partner at law firm Ashurst LLP.

Evergrande is trying to salvage its multi-billion dollar debt overhaul since a slew of setbacks derailed the process in recent months. In the latest twist ahead of the court hearing, a group of offshore creditors is demanding controlling equity stakes in the developer and its two Hong Kong-listed units, people with knowledge of the matter said.

Read more: Evergrande Creditors Demand Controlling Stakes in New Proposal

The so-called ad-hoc group of bondholders, which has said it holds more than $6 billion of the builder’s about $19 billion of offshore notes, wants the debt to be swapped for controlling stakes, the people said. Evergrande earlier proposed offering 17.8% of the parent and 30% of each of the subsidiaries — Evergrande Property Services Group and China Evergrande New Energy Vehicle Group Ltd.

It’s unclear whether Evergrande has responded to the proposal or whether it will mark a step closer to an agreement.

The tight deadline ahead of Monday’s session may prompt the developer to offer more favorable terms to win over bondholders, according to CreditSights analyst Zerlina Zeng.

Evergrande, which has liabilities of about $327 billion, has become the poster child of China’s real estate debt crisis since it defaulted in December 2021. China has been releasing new measures to shore up the struggling sector, including drafting a list of builders that would be eligible for funding support. But there is little indication that Evergrande has benefited at all.

The developer scrapped creditor meetings at the last minute in late September and said it would reassess its original restructuring proposal. In the same month, its founder and chairman Hui Ka Yan was suspected of committing crimes and placed under police control.

In the most recent court hearing in October, Evergrande’s lawyer contended that the company was considering a new plan — one that would offer creditors new shares in its units, after the firm failed to obtain permission from Chinese authorities to issue bonds. That argument won what Judge Linda Chan called “a final adjournment.”

Any order to wind up Evergrande will further complicate the picture for creditors and homebuyers. One big question is whether a liquidation decision by a Hong Kong judge would be acknowledged and carried out in the mainland. Another is what happens to the progress of building presold homes — estimated at 604 billion yuan — that the company has yet to deliver.

“There will be significant interest” in the hearing on Monday, said Jiang. “In part because of the sheer scale of the default, but also because market participants are very interested in finding out if the liquidator appointed in Hong Kong will be recognized in mainland China.”

--With assistance from Shuiyu Jing and Pearl Liu.