Until now, no matter how bad things got, Chinese property developers could count on state-owned lenders to have their backs. That can no longer be taken for granted with state-owned China Construction Bank (CCB) taking rare legal action against the troubled mainland developer Shimao Group. It is, though, good news for bank investors.

Shanghai-based Shimao, which has about $11.7bn of offshore debt, said on Monday that CCB had filed a liquidation petition against it in Hong Kong over its failure to repay loans of $200mn. Shimao’s $11.7bn worth of offshore debt is already in default following its missed interest and principal payment for a $1bn offshore bond in 2022.

Shimao’s Hong Kong-listed shares fell 19 per cent to a record low on Monday despite its vows to oppose the lawsuit, suggesting surprise over the lender’s unusual move. Shimao wants to continue with its proposed restructuring plan.