CHINA Trends and Developments Contributed by: Greg Hallahan, Amanda Rasmussen and Kristine Kwok, Secretariat
Secretariat Units 1401 04 14/F Great Eagle Centre 23 Harbour Road Wan Chai Hong Kong Tel: +852 2979 2229 Email: ghallahan@secretariat-intl.com Web: www.secretariat-intl.com
Determining whether the debtor has unencumbered assets in China
Trends in Debt Recovery for China Parties There are several useful debt recovery mechanisms within mainland China, including the following. Determining whether a debtor has already been pursued by other creditors Debtors placed on any of the following publicly availa - ble lists have already been pursued through the courts by creditors and do not have sufficient assets, or have been sanctioned for refusing, to repay unpaid debts. • Restricted consumption list: Individuals who have insufficient assets to respond to a court-ordered enforcement, and must refrain from high-end expenditure on travel, property, financial products or school fees. • Credit blacklist: Individuals or entities who have refused to comply with an enforcement order. Their accounts at banks, the housing authority, pension funds and payment platforms are frozen, they are not permitted to apply for government funding or tender for government projects and their personal expenditure is also curtailed. • Dishonest debtor list: Individuals who have engaged in misconduct to avoid paying debts, including obstructing the courts, engaging in frivo - lous litigation, concealing or dissipating assets and violating restricted consumption or credit blacklist orders.
Within mainland China, publicly available records can help parties obtain pertinent (albeit limited) informa - tion about assets held domestically, such as: • equity held in private companies via State Adminis - tration of Market Regulation records; • substantial (more than 5%) equity held in com - panies listed on the Shenzhen or Shanghai stock exchanges; and • patents, copyrights and trade marks via records maintained by the China National Intellectual Prop - erty Administration. Information about property holdings and “vanity” assets is not publicly available, and (unsurprisingly) cash balances held in bank accounts and ownership of other financial products are confidential. Obtaining support from the courts Where creditors make successful application to the courts, judges are permitted to query provincial and nationwide databases linked to a wide range of asset- related personal data held by government authorities. For example, the Supreme People’s Court database grants access to the following. • Financial information, including: (a) record of accounts opened at the People’s Bank of China, and 3,900 other domestic banks and financial institutions; (b) bank card transaction records kept by China
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