Insolvency 2025

CHINA Trends and Developments Contributed by: Wenle Du, Yao Zhang, Lei Zhu and Yadan Pang, Han Kun Law Offices

China’s Enterprise Bankruptcy Law Undergoes Its Inaugural Amendment On 12 September 2025, the National People’s Con - gress of China issued draft revisions to the Enterprise Bankruptcy Law (the “Revision Draft”) for public com - ment. The Revision Draft is intended to address the novel challenges and problems that have arisen in the context of the application of the Enterprise Bankrupt - cy Law during the past 18 years. The Revision Draft constitutes a pivotal component of ongoing supply-side structural reforms and is impera - tive for aligning with the latest international bankrupt - cy practices, thereby optimising the institutional role of bankruptcy in China’s high-quality economic devel - opment. The Revision Draft adheres to the principles of market regulation, concentration on critical issues, gradual advancement of reforms, and enhancement of legal coherence. Key changes proposed in the Revision Draft The Revision Draft is comprehensive in its scope and would include the addition and modification of more than 160 provisions to the existing 136 articles within 12 chapters of the Enterprise Bankruptcy Law. Key changes found in the Revision Draft are listed and discussed in this article. 1. Establishing a bankruptcy co-ordination mechanism Issues related to social stability and credit restoration in bankruptcy cases need to be addressed by local people’s governments and relevant departments. To this end, the Revision Draft would establish a bank - ruptcy work co-ordination mechanism at the county level and above, and clearly define the leading depart - ments responsible for performing administrative man - agement duties and co-ordinating bankruptcy-related administrative matters (Article 7). 2. Enhancing the bankruptcy application and acceptance process The Revision Draft provides for interim measures to prevent the debtor’s property from depreciating or being fraudulently transferred after the bankruptcy application is filed and before the court makes a rul - ing. During this period, creditors and debtors can seek to halt enforcement or protective actions (Article 11).

The Revision Draft would strengthen the obligations of legal representatives and other relevant personnel in the bankruptcy process. It clearly stipulates that such personnel should hand over property, seals, books, documents, and other materials to the bank - ruptcy administrator as required. If such personnel fail to hand over within the specified time limit, the bankruptcy administrator may apply for compulsory execution (Article 17). Upon the court’s acceptance of a bankruptcy case, the range of actions for which preservation measures can be lifted and execution procedures can be stayed is broadened. This now includes administrative litiga - tion and actions involving preservation and execution measures implemented by tax authorities and cus - toms (Article 24). 3. Refining the bankruptcy administrator mechanism First, the Revision Draft clearly provides that the bank - ruptcy administrator is the principal entity responsible for administering a debtor’s bankruptcy proceedings (Article 29). Second, the Revision Draft would improve the way bankruptcy administrators are appointed; the credi - tors’ meeting can apply to the court to replace the bankruptcy administrator and recommend a candi - date. The court is required to replace the administrator with a candidate proposed by the creditors’ meeting, provided the proposed candidate does not fall under any disqualifying conditions as per the Enterprise Bankruptcy Law. A single creditor may submit a peti - tion for replacement, with the final decision resting with the court. The list of qualified bankruptcy admin - istrators is to be updated regularly (Articles 30 to 32). Third, the scope of a bankruptcy administrator’s duties is broadened to include the disclosure of pertinent property and management information to involved creditors, as well as the fulfilment of tax obligations such as tax filings and invoice issuances (Article 33). Fourth, the revisions introduce a framework for increased supervision of bankruptcy administrators by relevant government departments (Article 38).

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