Shares in China’s Evergrande Group have been suspended from trading after the embattled property developer was told to demolish 39 buildings in a huge resort-style development in the southern province of Hainan. After initially giving no reason for the share halt, Evergrande confirmed late on Monday that it had received an order from authorities at Danzhou city in Hainan on 30 December telling it to demolish 39 under-construction buildings at the Ocean Flower Island project. It did not disclose the reason for the demolition order but local Chinese media reports said building permits for the lavish development on an artificially created island had been illegally obtained. The buildings cover 435,000 square metres and have been under construction for eight years, the reports added, citing an official notice to Evergrande’s unit in Hainan. Regulators in Danzhou city said in November that they would block Evergrande’s plan to repay debts to contractors and other creditors by giving them properties, Caixin reported. Evergrande is struggling to repay more than $300bn (£222bn) in liabilities, including nearly $20bn of international market bonds that were deemed to be in cross-default by ratings firms last month after it missed payments. The property developer missed new coupon payments worth $255m due last Tuesday though both have a 30-day grace period. In common with a succession of incidences of missed payments in the final quarter of 2021, the company has not made any comment. The firm has set up a risk management committee with many members from state companies, and said it would actively engage with its creditors. On Friday, Evergrande dialled back plans to repay investors in its wealth management products, saying each investor in its wealth management product could expect to receive 8,000 yuan ($1,257) per month as principal payment for three months irrespective of when the investment matures. The move highlights the deepening liquidity squeeze at the property developer. Shares of Evergrande shed 89% last year, closing at HK$1.59 ($0.20; £0.15) on Friday. Its electric vehicle unit, China Evergrande New Energy Vehicle Group, plunged as much as 10% in early trading on Monday, while property management unit Evergrande Services declined 2.3%. Evergrande is not the only Chinese property developer engulfed by a liquidity crisis. Altogether the sector owes $19.8bn in US dollar-denominated offshore debt in the first three months of 2022, analysts at Nomura said last month. In the second quarter of this year, they must find another $18.5bn, while also meeting billions of repayments in local yuan debt. Other developers at risk of default include Kaisa, which missed a huge repayment in December and which has twice suspended its shares in recent months. Its stock has lost 75% in value in the past year. Analysts at S&P have estimated that one-third of Chinese developers could face a liquidity crunch in the next 12 months. Developers must also find 1.1tn yuan ($172bn) in backdated pay owed to construction workers before the lunar new year starts at the beginning of February.