CHINA Trends and Developments Contributed by: Yaxing Zhang, Bing San, Lubin Qiang and Jiahui Zhu, Han Kun Law Offices
Upon bankruptcy acceptance, enforcement proceed - ings are suspended and preservation measures are lifted, with the debtor’s assets being managed col - lectively as the bankruptcy estate. Upon receipt of such an acceptance ruling, the enforcement court will transfer the debtor’s assets under its actual control (such as bank deposits already seized or credited, movable property actually detained, securities, etc) to the bankruptcy court or the appointed administra - tor. At that point, the Subordinated Creditor may, in accordance with the PRC Enterprise Bankruptcy Law, participate in distribution on a pari passu basis with other creditors of the same ranking (including those creditors who had previously obtained asset preserva - tion orders) in proportion to the amount of their rec - ognised claims.
In conclusion, China’s judicial system has under - gone a substantial evolution in recent years, both in recognising and enforcing foreign judgments and in strengthening relief mechanisms for creditors facing enforcement obstacles. The refinement of the reci - procity principle – from a rigid factual prerequisite to a legal presumption grounded in compatibility – signals China’s increasing alignment with international stand - ards in private international law. At the same time, the expansion of creditor remedies in domestic enforce - ment highlights the system’s growing emphasis on accountability, deterrence and fairness.
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