Allen
- Nov 4, 2022
- 4 min read

How to Collect Your Debt on a Chinese Company Going Bankruptcy?

If your Chinese supplier fails to deliver goods to you after your payment, and you find that this supplier is bankrupt, can you still get your money back? What is the claim process? We will answer these questions for you in this article.

1. Confirm claim declaration period and information of bankruptcy administrator in the court announcement.

Upon making a decision to accept a bankruptcy case, the Chinese court will issue a notice to known creditors and issue a court announcement on the bankruptcy case.

In the above announcement, the court will notify creditors to declare their claims within a certain period of time, and will list the information of the bankruptcy administrator designated by the court (hereinafter referred to as "administrator"), including the name, contact number and address.

Generally speaking, the administrator is a law firm, or an accounting firm, or a bankruptcy liquidation firm. The administrator is responsible for managing the bankruptcy case and reporting work to the court.

If you have not received the notice from the court, you could search the above court announcement on the Chinese court website. The link of the Chinese court website is as follows:

https://rmfygg.court.gov.cn/web/rmfyportal/noticeinfo

2. Submit claim declaration to the administrator within the time limit.

You shall submit the claim declaration within the time limit specified in the court announcement, and the declaration shall be submitted to the administrator.

According to Chinese law, the time limit for claim declaration shall be no less than 30 days and no more than 3 months from the date when the court issues the announcement mention in Point 1 above.

3. The administrator reviews the declaration and drafts the statistical table of recognized claims.

After receiving the claim declarations submitted by the creditors, the administrator will review the declarations, confirm the final recognized claims, and draft a statistical table of the final recognized claims.

According to Chinese laws, the administrator shall complete the statistical table above within 15 days from the date when the time limit for claim declaration expires.

4. Attend the creditors' meeting and check the statistical table drafted by the administrator.

After drafting the statistical table, the administrator shall submit it to the creditors for check at the first creditors' meeting. According to Chinese laws, the first creditors' meeting shall be convened by the court, and the court shall convene the creditors' meeting within 15 days from the date when the time limit for claim declaration expires, and the administrator shall notify the creditors 15 days before convening the creditors' meeting.

Generally speaking, the date of the first creditors' meeting will be determined in the court announcement in the Point 1 mentioned above.

If the administrator does not recognize your claim, or only recognizes part of your claim, and you have objection to the statistical table, please continue to read point 5.

If the administrator has recognized your claim, and you have no objection to the statistical table, please skip to Point 7 to continue reading.

5. Submit the objection against the statistical table to the administrator.

If you have any objection to the statistical table drafted by the administrator, you could submit your objection to the administrator, explain your reasons and legal basis, and submit relevant evidence.

6. File a litigation in the court for reorganization of the claim.

If the administrator refuses to respond to you after you submit the objection, or refuses to modify the statistical table according to your objection, you could file a litigation in the court, and ask the court to recognize your claim. The aforesaid court can only be the court which issues the announcement in the Point 1 above.

However, before this bankruptcy case, if you and the bankrupt Chinese supplier have agreed in writing to resolve the dispute through arbitration by a specific arbitration institution, you shall file an arbitration in the agreed arbitration institution instead of the aforesaid court.

According to Chinese laws, the time limit for filing the above litigation or arbitration is within 15 days after the creditors' meeting in Point 4 above.

7. The court confirms the final statistical table by adjudication.

If you and other creditors, as well as the bankrupt Chinese supplier, have no objection to the statistics table, the administrator will submit the statistics table to the court, and the court will decide whether to confirm the statistical table is the final version by adjudication.

8. The administrator drafts the distribution plan of the bankrupt Chinese supplier’s property.

The administrator shall draft a distribution plan of the bankrupt Chinese supplier’s property (hereinafter referred to as "distribution plan"), which shall include the following contents:

(1) Information of creditors participating in distribution.

(2) Amount of claims of creditors participating in distribution.

(3) Amount of property available for distribution.

(4) Order, proportion and amount of distribution.

(5) Distribution way.

9. The creditors vote to approve the distribution plan and the court decides the result.

After drafting the distribution plan, the administrator shall convene a creditors' meeting, and the creditors shall vote on the approval of the distribution plan.

According to Chinese law, if more than half of the creditors present at the meeting agree on a matter, and the amount of their claims exceeds half of the total amount of all unsecured claims, this matter is deemed to have been passed by vote.

After the distribution plan is approved by vote, the administrator shall submit it to the court. The court will decide whether to confirm the distribution plan is the final version by adjudication.

If the distribution plan is not approved after two rounds of vote, the court will directly make an adjudication on the final confirmation of the distribution plan. The court may announce the adjudication at the creditors' meeting, or notify the creditors at other times after the creditors' meeting.

If you think the vote result of the creditors' meeting violates laws and harms your interests, you could submit an application to the court within 15 days from the date of making the vote result, ask the court to revoke the vote result and vote again.

10. The administrator carries out the distribution plan.

After the court determines the final confirmation of the distribution plan, the administrator shall carry out the distribution plan, pay the creditors according to the distribution plan.

If you have any further questions, please feel free to contact our professional Chinese lawyer at Landing Law Offices China.