Daily Archives: December 30, 2015

Threshold to Bankrupt Your Debtor in China

When your debtor defaults in your payment, one of the options, probably the most well known one, is to file a petition with court to bankrupt your debtor such that the court can stop all the operation of your debtor, seize whatever is left, turn them into cash and apply the same towards the amount owing to you.

However, this may not be easy in China. Although China has promulgated a western style Bankruptcy Law back to 1 June 2007, most PRC courts had been most reluctant to accept creditors’ applications for insolvency/bankruptcy of enterprises unable to pay their debts as they fell due. That was partially due to other economical, social or even cultural reasons, but technical set back, such as absence of clarity and guidance on the proof of insolvency and the burden of proof, certainly plays a role.