Heavily indebted Chinese property giant Evergrande has until late January to put together a restructuring plan, a Hong Kong court ruled Monday, extending a deadline that could lead to its liquidation.

Once China's biggest real estate developer, Evergrande has reported more than $300 billion in liabilities and its troubles have become a symbol of the nation's years-long property crisis.

A creditor last year filed a winding-up petition in Hong Kong against China Evergrande Group -- which would begin the process of liquidation -- but the case has dragged on while parties tried to broker a deal out of court.

Judge Linda Chan on Monday adjourned the case until January 29, a reprieve after earlier saying December 4 would be Evergrande's deadline before appointing independent liquidators from accounting firm KPMG.

Chan urged Evergrande on Monday to have "more direct discussion with relevant authorities to confirm what is on the table is doable".

She emphasised "transparency is also key", asking whether the Chinese company planned to issue announcements on restructuring updates.

The demise of Evergrande, which first defaulted on a payment in 2021 and declared bankruptcy in the United States this year, has been closely watched as it was once a pillar of China's economy.

China's construction and property sector once accounted for around a quarter of its GDP.

But Chinese President Xi Jinping deemed the debt accrued by Evergrande and other property firms an unacceptable risk for China's financial system and overall economic health.

Authorities have gradually tightened developers' access to credit since 2020, and a wave of defaults has followed.

By the end of June, Evergrande estimated it had debts of $328 billion.

- 'Surprise' u-turn -

Evergrande in March offered to let creditors swap their debt into new notes issued by the company and equities in two subsidiaries, Evergrande Property Services Group and Evergrande New Energy Vehicle Group.

Negotiations stalled in September when company chair Xu Jiayin was "subject to mandatory measures" from Chinese authorities on suspicion of "crimes".

The company said the same month that it could not issue new debt because its subsidiary in China, Hengda Real Estate Group, was being investigated.

Lawyer Jose-Antonio Maurellet said Monday that Evergrande has had to "rejig or recast" its proposal since it was barred from issuing bonds or shares.

The firm will instead propose to issue "certificates" for the two subsidiaries, which were still trading as listed companies and "have value", Maurellet said.

Evergrande will use the next two months to "further refine" the scheme and seek creditor support, he added.

Lawyers for Top Shine Global, the creditor who filed the petition, told the court they would not actively seek liquidation -- a move that jolted some other creditors.

"The petitioner changed its position and didn't push to wind up the company, which is a surprise to us," Neil McDonald, a partner at law firm Kirkland & Ellis LLP who advises an ad-hoc group of creditors, told reporters after the hearing.

He added that the creditor group "has firmly rejected" the latest proposal Evergrande put forward to the court.

Evergrande shares on Hong Kong's stock exchange rose by nine percent Monday to close at HK$0.26 ($0.03).

Hong Kong has a common law legal system that is distinct from mainland China, and is favoured by some offshore creditors as a venue to seek the liquidation of failing Chinese builders.

It remains unclear if a winding-up order issued by a Hong Kong court can or will be enforced in the mainland.

Stephen Innes, managing partner at SPI Asset Management, said policymakers and investors are concerned about broader financial instability, adding that a liquidation order would be "nothing short of ruinous for other property developers and tragic for investors".