Mr Yin Xiuchao
Senior Partner

Yin Xiuchao is a Senior Partner at Beijing Dacheng Law Offices, LLP, with 26 years of experience in bankruptcy restructuring and liquidation. He holds degrees from Northeastern Heavy Machinery Institute, Peking University, China University of Political Science and Law, and Renmin University of China. Yin serves as the Director of the Bankruptcy and Liquidation Committee of the Beijing Lawyers Association and is a member of multiple legal associations. He has led major cases, including the restructuring of Sanya Phoenix Island International Cruise Port Development Co., Ltd. and Xinxing Energy Equipment Co., Ltd. Recognized as a Leading Lawyer by Chambers, Legal 500, and Who’s Who Legal, Yin frequently lectures on bankruptcy law and has been appointed as a civil protest consultation expert by the Supreme People’s Procuratorate.

Ms Wang Yimeng
Attorney

Wang Yimeng is an attorney at Beijing Dacheng Law Offices, LLP, specializing in bankruptcy reorganization, liquidation, competition, and antitrust. She has extensive experience in creditor claim management, reorganization planning, and corporate restructuring. Wang has played a key role in convening creditors’ and shareholders’ meetings, effectively resolving conflicts, and ensuring smooth reorganization processes. Her ability to manage complex legal disputes and address urgent contingencies has earned her recognition as a reliable legal advisor in high-stakes bankruptcy cases.

Ms Zhang Sitong
Trainee Lawyer

Zhang Sitong is a trainee lawyer at Beijing Dacheng Law Offices, LLP, with a Bachelor of Laws from Dalian Maritime University and a Master of Laws from the University of Leeds. Her practice focuses on bankruptcy reorganization, liquidation, competition, and antitrust. Zhang has extensive experience in employee placement, claim verification, and dispute resolution. She has contributed to the bankruptcy proceedings of a state-owned enterprise, managing the placement of over 800 employees, and assisted in resolving debts for large real estate companies. Her dual expertise in Chinese and English legal systems enables her to provide effective legal solutions in complex cases.

ANNUAL REVIEW OF CHINA’S ENTERPRISE BANKRUPTCY LAW

In 2024, theoretical research and judicial practices regarding China’s Enterprise Bankruptcy Law continued to deepen. The National People’s Congress continued to push forward legislative preparations for the revision of the Enterprise Bankruptcy Law, while research into personal bankruptcy legislation also progressed. The scope of industries and the length of industrial chains involved in bankruptcy cases expanded, and the scale of debt continued to rise. The procuratorial organs explored supervisory roles over bankruptcy judgments. The government focused on optimizing the business environment and building a unified national market, improving the collaboration between government departments and the courts. The classification of bankruptcy administrators and association training matured, improving the quality and efficiency of bankruptcy proceedings.

The Communist Party of China, as the Governing Party, Leads the Reform and Implementation of Bankruptcy Law

The Communist Party of China holds the position of the ruling party in the People’s Republic of China. In July 2024, a document passed during the Third Plenary Session of the The Communist Party of China’s 20th Central Committee called for enhancing the enterprise bankruptcy system, investigating the potential creation of a personal bankruptcy system, promoting reforms in the enterprise deregistration process, and refining the enterprise exit framework. The document also highlighted the need to strengthen the social credit system and improve regulatory mechanisms, thereby setting the direction for the reform and practical implementation of enterprise bankruptcy law.

The National People’s Congress Standing Committee, as the Supreme Legislative Authority, Continues to Include the Revision of the Enterprise Bankruptcy Law in Its Annual Legislative Agenda

The Standing Committee of the National People’s Congress, which is the highest permanent legislative body in China, has included the revision of the Enterprise Bankruptcy Law in its legislative work plan for three consecutive years. On July 1, 2024, the newly revised Company Law officially came into effect, bringing significant changes to the corporate legal framework. The implementation of these changes requires careful coordination and integration with the provisions of the Enterprise Bankruptcy Law, which will help streamline the process of revising the bankruptcy law to ensure greater consistency and efficiency. Furthermore, proposals and recommendations regarding the Enterprise Bankruptcy Law have been presented by a group of three representatives each from both the National People’s Congress and the Chinese People’s Political Consultative Conference.

The Supreme People’s Court, with the aim of optimizing the business environment, leads efforts to improve the quality, reduce costs, and increase efficiency in bankruptcy adjudication activities

The Supreme People’s Court issued “Guiding Opinions on Further Regulating Online Judicial Auctions” to standardize the online judicial auction process. Additionally, the Court’s case database, including 13 bankruptcy-related cases, was made publicly available.

In 2024, local courts strengthened their research on bankruptcy adjudication mechanisms for small and micro enterprises to address the bankruptcy evaluation of small and micro enterprises in the World Bank and Chinese government business environment indicators. Bankruptcy courts in cities such as Shanghai, Beijing, Chongqing, as well as the courts in Zhejiang, Hainan, and Yiyang He District of Hunan, have enhanced professional adjudication abilities by conducting specialized training for judges on handling bankruptcy cases, exchanging experiences, and summarizing typical cases aimed at optimizing the business environment.

In the Sixth Five-Year Reform Outline, the Supreme People’s Court proposed: improving the coordination and cooperation between people’s courts and government departments in handling bankruptcy cases, enhancing cross-border bankruptcy assistance mechanisms, promoting the improvement of corporate bankruptcy systems, and exploring the establishment of personal bankruptcy systems. It also called for improving the connection between enforcement procedures and bankruptcy procedures, enhancing the management of bankruptcy case time limits, strengthening the construction of specialized bankruptcy courts and professional adjudication institutions, and improving the cultivation of specialized bankruptcy adjudication personnel.

According to information published by the Supreme People’s Court and data compiled by civil organizations such as Wupo Digital Technology (Hangzhou) Group Co., Ltd, as of 2024, there are a total of 17 specialized bankruptcy courts nationwide. In 2024, 2,356 courts participated in handling 103,551 bankruptcy cases, representing a 140.61% increase in the number of cases compared to the previous five years. Among the bankruptcy cases filed in 2024, 30,224 cases were bankruptcy liquidations, accounting for 65.09%; 14,540 cases were compulsory liquidations, accounting for 31.31%; 1,166 cases were reorganizations, accounting for 2.51%; and 508 cases were compromises, accounting for 1.09%. These cases involved 55,268 enterprises and 1,090,152 creditors. The total assets involved in these cases amounted to 1.18 trillion yuan. In the applicant composition of these bankruptcy cases, 47,257 were creditors, accounting for 84.75%; 6,825 were debtors, accounting for 12.24%; and 1,678 were liquidation teams, accounting for 3.01%. A total of 28,361 cases were concluded during the year, with an average processing time of 265 days, the longest case taking 6,211 days, and the shortest taking 6 days.

To deepen the resolution of disputes, the courts provided pre-litigation mediation and other alternative dispute resolution options. With the increasing number of bankruptcies, fake litigation in the bankruptcy field began to emerge, and even fraudulent lawsuits occurred, prompting the courts to strengthen punitive measures.

The Chinese Government Strengthens Cooperation Between the Government and the Courts

The Chinese government, by focusing on optimizing the business environment, promotes the effectiveness and quality of bankruptcy proceedings through a government-court cooperation mechanism. Local governments, such as the General Office of the Beijing Municipal People’s Government, have issued measures like the “Key Points for Comprehensive Optimization of the Business Environment in 2024.” These actions have, to some extent, improved China’s bankruptcy legal system, providing legal foundations for bankruptcy practice and transforming innovative experiences from practice into relatively standardized regulations or guiding opinions.

In 2024, the Chinese government raised the local debt quota by 600 million yuan in one move, converting 200 million yuan of local government implicit debt that same year. This eased the pressure on local debt, optimized the debt structure, extended the debt maturity, reduced interest costs, and curbed the increase in implicit debts related to new local government financing platform companies.

Formulation of New Regulations for the Restructuring of Listed Companies

The restructuring of listed companies has always been a particular focus in the practice of China’s Enterprise Bankruptcy Law. In 2024, 28 listed companies underwent restructuring or pre-restructuring, with 12 of them being accepted. In the first half of 2024, the State Council issued the “Opinions on Strengthening Supervision, Preventing Risks, and Promoting the High-Quality Development of the Capital Market” (State Council Document No. 10 [2024]), referred to as the new “Nine Guidelines” for the capital market.

By the end of 2024, the Supreme People’s Court and the China Securities Regulatory Commission jointly released the “Summary of the Symposium on Effectively Handling Bankruptcy Restructuring Cases of Listed Companies,” which comprehensively regulates various aspects of listed company bankruptcy restructuring, including trial principles, jurisdiction, application and review, information disclosure and confidentiality, the formulation and voting of restructuring plans, the execution of restructuring plans, and the restructuring of delisted companies. These regulations further refine and clarify the rules, enhancing the transparency and predictability of listed company restructurings.

The China Securities Regulatory Commission also issued the “Guidelines No. 11 for the Supervision of Listed Companies – Matters Related to the Bankruptcy Restructuring of Listed Companies (Draft for Comments),” emphasizing that the goal should be to improve the quality of the enterprise, rather than simply reducing debt. It also stresses the importance of considering the actual operational value of the company during the restructuring process to prevent restructuring from becoming a tool for shell preservation.

High-Profile Bankruptcy Cases

Large real estate companies and mixed financial enterprises, such as China Evergrande Group, Shimao Group, Zhongzhi Enterprise Group, Country Garden, and Sino-Ocean Group, have been subject to bankruptcy filings, reflecting the challenges faced by China in its macroeconomic structural adjustment.

On August 29, 2024, the Shenzhen Intermediate People’s Court ruled to declare the personal debt bankruptcy of Guo and Li, a married couple, and in the following month, it issued the “Guidelines for Pre-Application Counseling Services for Personal Bankruptcy.”

The number of bankruptcy cases involving financial institutions also increased in 2024, with debtor types including trust institutions, insurance companies, financial companies, and securities firms. This indicates that the market exit of financial institutions has begun, and it also shows that China has accumulated practical experience, forming a distinctive judicial mechanism for financial risk resolution.

Academic Research

From October 26 to 27, 2024, the China Bankruptcy Law Forum was held for the fifteenth consecutive year, with over 1,200 participants attending to exchange ideas and insights. Throughout the country, there has been an increasing frequency of academic activities related to bankruptcy law and interdisciplinary exchanges, with various publications also flourishing in this field.

Bankruptcy Administrators

As of 2024, there are 261 bankruptcy administrator associations across the country, with 10,290 members, of which 5,890 administrators are actively involved in managing bankruptcy cases. The application of technology, such as empowerment through digital tools, artificial intelligence, one-stop query services, online claims submission and review, and virtual creditor meetings, has significantly improved the convenience of handling bankruptcy cases. Additionally, measures like the “Shanghai Bankruptcy Administrator Assessment Measures (Trial)” have strengthened supervision over the performance of bankruptcy administrators. Procuratorial organs in cities such as Suzhou have further clarified the elements of prosecutorial supervision concerning administrators’ fidelity and diligence, as well as the administrator’s compensation.

The issue of administrator compensation has become a focal point of concern. The term “involution” has emerged as a key topic this year. Some courts have imposed stricter requirements regarding the discount rates for compensation and the timing of its collection, which has had a certain impact on the survival and healthy development of the bankruptcy administration industry as a whole.

Cross-Border Bankruptcy

According to Article 95 of the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, starting from January 29, 2024, the “Minutes of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition and Assistance in Bankruptcy Procedures between the Mainland and the Hong Kong Special Administrative Region” were signed and came into effect. Following this, the High Court of Hong Kong recognized the bankruptcy liquidation procedure of Galaxy Tiancheng Group Co., Ltd. and the appointment of its administrator by the Intermediate People’s Court of Nanning, Guangxi, granting the administrator the authority to exercise their powers in Hong Kong. Similarly, the Intermediate People’s Court of Xiamen recognized the liquidation procedure of Shell Environmental Technology Group Co., Ltd. in Hong Kong and the identity of the liquidator, allowing the liquidator to exercise their powers in the Mainland.

However, the current framework for cross-border bankruptcy is still limited to mutual recognition of bankruptcy procedures and does not yet address cross-border disputes over bankruptcy entities. To further enhance the development of cross-border bankruptcy, it is necessary not only to deepen the cooperation between the Mainland and Hong Kong but also to broaden the scope of application across different regions.

2025 Outlook

On December 12, 2024, the Standing Committee of the National People’s Congress did not include the revision of the Enterprise Bankruptcy Law in the list of key laws for discussion. Whether the revision of the Enterprise Bankruptcy Law will be delayed in 2025 remains to be seen.

On January 13, 2025, the Supreme People’s Court emphasized the need to strengthen the handling of bankruptcy cases and continue to guide the principle of “reorganization instead of liquidation” where possible.

In 2025, under the influence of new regulations, the number of bankruptcy cases involving listed companies is expected to stabilize with a slight decrease, while the quality of these cases should improve. The number of bankruptcy cases involving group companies will increase, with the scale of debt also expected to rise. Due to factors such as the World Bank’s indicators for optimizing the business environment, accumulated experience in handling bankruptcy cases, and economic cyclical and transmission effects, the number of bankruptcy cases for small and medium-sized enterprises (SMEs) in third- and fourth-tier cities is expected to continue to rise.