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Chinese property firm Kaisa suspended share trading in Hong Kong on Wednesday, with questions swirling over its ability to make repayments and contagion spreading within the country’s debt-ridden real estate sector.

The Chinese government sparked a crisis within the property industry when it launched a drive last year to curb excessive debt among real estate firms as well as rampant consumer speculation.

Companies that had accrued huge debt to expand suddenly found the taps turned off and began struggling to complete projects, pay contractors and meet both domestic and foreign repayments.

Kaisa, China’s 27th-largest real estate firm in terms of sales but one of its most indebted, became the latest company to spook investors when it announced on Friday that it had failed in a bid for a debt swap that would buy it crucial time.

On Wednesday morning, the firm announced it was suspending trading in Hong Kong, where it is listed, “pending the release by the Company of an announcement containing inside information.”

It is the second time the company has suspended trading in the last month.

Kaisa last month announced a plan to delay the repayment timeline for some of its bonds, offering an exchange for at least $380 million of notes, which would have given it some room to find money further down the line.

But the offer failed to win the 95% approval from bondholders needed for the plan to go ahead.

The company currently has some $11.6 billion of dollar notes outstanding. It previously defaulted on a dollar debt in 2015, becoming the first Chinese developer to do so.

The most indebted Chinese property firm is Evergrande, which set off the current confidence crisis earlier in the summer.

The Shenzhen-based behemoth racked up an eye-watering $300 billion in loans before Beijing began to rein in the sector.

Mega-restructure

On Tuesday, Evergrande missed a deadline to repay some of its overseas creditors, raising the prospect of it defaulting as it prepares for a government-backed mega-restructure.

Bloomberg News reported some of the $82.5 million in overdue coupon payments it owed by the end of Tuesday — when a 30-day grace period ran out — remained unpaid.

Ratings group S&P has predicted that a default by Evergrande is now “inevitable.”

Questions have swirled over whether Evergrande is simply too big to be allowed to fail, given its collapse could send shock waves through the wider Chinese economy.

But signs now point to Beijing being willing to close the chapter on the 25-year-old real estate empire that has typified China’s breakneck growth in recent decades.

After Evergrande said Friday it may not be able to meet its financial obligations, the government summoned the company’s founder and announced several moves that have given the clearest picture yet of Beijing’s plans to end the crisis.

A new seven-strong “risk management committee” has been set up to manage the restructuring. Only two executives from the company are on the committee — others include officials from state entities.

Guangdong’s provincial government is also sending a working team to the company, which analysts at Jefferies said indicated a “potential takeover of Evergrande.”

Evergrande has yet to comment on the restructuring.

Kaisa and Evergrande have become the most visible faces of the debt crunch within China’s property sector but defaults have rippled throughout the sector.

According to Bloomberg News, at least 10 lower-rated real estate firms have now defaulted on onshore or offshore bonds since the summer.

So far this year, Chinese borrowers have defaulted on a record $10.2 billion of offshore bonds, Bloomberg reported, with real estate firms accounting for 36% of those nonrepayments.

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