Recovery of PRC Assets by Foreign Liquidators

October 02, 2003 | BY

clpstaff &clp articles

As foreign investment into China keeps growing, one of the most pressing concerns for the shareholders in a China investment is how to recover and/or realize the company's assets in China when the principal entity is placed in liquidation overseas. How do the creditors and liquidators proceed in such a case?

By Firmina Chen, Sinclair Roche & Temperley, Shanghai

While foreign investment in China often takes the form of a joint venture (a JV) or a wholly foreign-owned enterprise (a WFOE), liquidation of a foreign entity does not necessarily require the liquidation of the JV or WFOE itself. The recovery process in China can be quite cumbersome for the shareholders, as the Chinese legal framework is incomplete and confusing on insolvency issues. Additionally, foreign shareholders may also suspect that the "system" works against overseas interests. Here we will give a brief examination of the insolvency procedures currently in place for the recovery of investments in China and attempt to explain some of the measures available under the current regime.

An Overview of PRC Liquidation Procedures

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