Evegrande Group’s stock closed the Tuesday session 28% higher at 0.41 HKD apiece, less than a week after the company suspended trading in its shares. While it is uncertain what drove the rally, rumors emerged that the company may have made progress in its restructuring process.

Why did Evergande’s stock surge today?

Shares of the embattled Evergrande Group closed 28% higher on their first trading day after being suspended last week following reports that the company’s founder was being held by authorities. The stock soared as high as 42% during the session before closing 28.13% higher at 0.41 HKD ($0.052).

At the time of writing, it is unclear what fueled Evergrande’s rally. However, some rumors suggested “that there may be progress in restructuring,” said Linus Yip, chief strategist at First Shanghai Securities.

The company halted trading in its stock on Thursday after confirming that its billionaire founder and chairman, Hui Ka Yan, was “subject to mandatory measures in accordance with the law due to suspicion of illegal crimes.”

The founder’s detainment represented the last in a series of blows for Evergrande as the world’s most indebted property developer struggles to stay afloat. The company is attempting to carry out a restructuring plan, although analysts said that recent setbacks have increased the risk that the developer may not reach an agreement with its creditors.

Evergrande is set to appear at a court hearing in Hong Kong on a wind-up petition that could potentially tip the company into liquidation. The hearing is scheduled for 30th October.

What happened to Evergrande?

The beginning of Evergrande’s downfall dates back to 2021 when the Chinese government announced measures to curb excessive borrowing to slow the rise in home prices. As a result, the country’s property developers lost access to a significant funding source.

This was especially detrimental to Evergrande, which had been accumulating debt for decades before that during China’s economic boom. With $300 billion in liabilities, Evergrande defaulted in December 2021, leading to market panic and a wave of defaults across the property sector.

In mid-August, the company filed for Chapter 15 bankruptcy protection to restructure debt. However, China’s property crisis extends beyond Evergrande, with many large builders continuously defaulting as they fail to find cash amid waning housing demand.

This article originally appeared on The Tokenist

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