Introduction

The bankruptcy regime was a major milestone for China. For the first time in its history, China now has a unified and comprehensive
bankruptcy system covering all types of enterprises, including foreign investment vehicles and state-owned enterprises.

Similar to many jurisdictions, the bankruptcy regime uses key concepts such as:

  • Voluntary and involuntary bankruptcy;
  • An independent administrator;
  • Involvement of creditors in the administration of the bankruptcy; 
  • Restructuring and settlement;
  • Extraterritoriality, allowing property outside China and certain foreign proceedings to fall within the regime;
  • Voidable transactions; and
  • Ratable distribution.

A significant feature of the legislation relates to the protection of workersā€™ rights. The regime ranks employees ahead of other unsecured
creditors but behind secured creditors, who retain their priority over secured assets.

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Author

Partner, Hong Kong
Email: Kwun-Yee Cheung