Western hedge funds that saw a killing in billions of Evergrande bonds stunned when government handed out 99% haircut instead, sources say

A Hong Kong court has ordered Evergrande Group's liquidation, and the bonds are nearly worthless, trading in secondary markets at just 1 cent on the dollar.

Key players on both sides of the negotiations paint a Kafkaesque picture of endless micro-managing by unidentified government handlers.

A series of setbacks, including weaker than expected property sales, push back from regulators and the detention of Evergrande billionaire chairman Hui Ka Yan , ultimately torpedoed a deal.

A key sticking point was the claims of a group of creditors identified as class C, which consists of some state-run banks.