Enterprise Bankruptcy Law (Draft Revision) — Full Text

中华人民共和国企业破产法（修订草案）

Sources:

• Chinese full text: AllBright Law (锦天城律师事务所)
• Chinese full text (PDF): NPC Standing Committee (全国人大常委会)

All information in this document is authentic in Chinese only. This English translation is unofficial and provided for reference purposes.

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Table of Contents

• Chapter 1 — General Provisions (Articles 1–7)
• Chapter 2 — Application and Acceptance (Articles 8–28)
  • Section 1 — Application (Articles 8–11)
  • Section 2 — Acceptance (Articles 12–28)
• Chapter 3 — Administrator (Articles 29–39)
• Chapter 4 — Debtor's Property (Articles 40–59)
• Chapter 5 — Bankruptcy Expenses and Common-Benefit Debts (Articles 60–63)
• Chapter 6 — Claim Filing (Articles 64–81)
• Chapter 7 — Creditors' Meeting (Articles 82–94)
  • Section 1 — General Rules (Articles 82–90)
  • Section 2 — Creditors' Committee (Articles 91–94)
• Chapter 8 — Reorganization (Articles 95–140)
  • Section 1 — Reorganization Application and Review (Articles 95–102)
  • Section 2 — Reorganization Period (Articles 103–110)
  • Section 3 — Formulation and Approval of Reorganization Plan (Articles 111–129)
  • Section 4 — Execution and Supervision of Reorganization Plan (Articles 130–140)
• Chapter 9 — Composition (Articles 141–153)
• Chapter 10 — Bankruptcy Liquidation (Articles 154–177)
  • Section 1 — Declaration of Bankruptcy (Articles 154–158)
  • Section 2 — Realization and Distribution (Articles 159–168)
  • Section 3 — Conclusion of Bankruptcy Proceedings (Articles 169–177)
• Chapter 11 — Special Provisions for MSE Bankruptcy Proceedings (Articles 178–183)
• Chapter 12 — Consolidated Bankruptcy (Articles 184–191)
• Chapter 13 — Financial Institution Bankruptcy (Articles 192–201)
• Chapter 14 — Cross-Border Bankruptcy Judicial Cooperation (Articles 202–206)
• Chapter 15 — Legal Liability (Articles 207–214)
• Chapter 16 — Supplementary Provisions (Articles 215–216)

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Chapter 1 — General Provisions 总则

Article 1

This Law is enacted for the purpose of regulating enterprise bankruptcy proceedings, fairly settling claims and debts, protecting the lawful rights and interests of creditors and debtors, promoting the survival of the fittest among market-operating entities and the optimal allocation of resources, preventing and resolving major risks, and safeguarding the socialist market economic order.

Article 2

Where an enterprise legal person is unable to pay debts as they fall due and its assets are insufficient to pay all debts, or it manifestly lacks the ability to pay, its debts shall be settled in accordance with this Law.

Where an enterprise legal person has the circumstances described in the preceding paragraph, or where there is a clear possibility of its losing the ability to pay, it may undergo reorganization in accordance with this Law.

Where an enterprise legal person has already entered bankruptcy proceedings and a natural person shareholder of that enterprise is in the circumstances described in the preceding two paragraphs due to joint and several liability for the enterprise's debts (hereinafter referred to as a "jointly liable individual debtor"), such debts may be settled in accordance with this Law.

Article 3

Bankruptcy cases shall be under the jurisdiction of the people's court at the place of the debtor's domicile, unless otherwise provided by this Law.

Article 4

Where this Law does not provide for the debtor's bankruptcy proceedings, the relevant provisions of the Civil Procedure Law shall apply.

Article 5

The people's procuratorate shall exercise legal supervision over the debtor's bankruptcy proceedings in accordance with law.

Article 6

In hearing bankruptcy cases, the people's court shall safeguard the lawful rights and interests of enterprise employees in accordance with law, and shall safeguard social public interests, the security of state-owned assets, and the lawful rights and interests of citizens, legal persons, and other organizations in accordance with law.

Article 7

People's governments at or above the county level shall establish a bankruptcy-affairs coordination mechanism, designate a department to take the lead in performing administrative management responsibilities for bankruptcy affairs, and coordinate administrative matters in their respective administrative regions concerning social stability, asset disposal, credit restoration, deregistration, and similar matters arising in the course of bankruptcy proceedings.

The State shall support the establishment and improvement of an early-warning mechanism for debtor bankruptcy, strengthen information disclosure, promote information sharing, and strengthen the monitoring, early warning, and notification of debt risks.

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Chapter 2 — Application and Acceptance 申请和受理

Section 1 — Application 申请

Article 8

Where a debtor is in the circumstances described in Article 2 of this Law, it may file an application with a people's court for reorganization, composition, or bankruptcy liquidation.

Where a debtor is in the circumstances described in the first and second paragraphs of Article 2 of this Law, the directors and senior management of the debtor shall take reasonable measures to prevent the further deterioration of the enterprise's condition and the diminution of its assets.

Where a debtor is unable to pay debts as they fall due, a creditor may file an application with a people's court for reorganization or bankruptcy liquidation of the debtor.

Where an enterprise legal person has been dissolved but has not been liquidated or its liquidation has not been completed, and its assets are insufficient to pay its debts, the person legally responsible for liquidation shall apply to a people's court for bankruptcy liquidation.

Article 9

To file a bankruptcy application with a people's court, the applicant shall submit a bankruptcy application and relevant evidence.

The bankruptcy application shall specify the following:

1. the basic information of the applicant and the respondent;

2. the purpose of the application;

3. the facts and reasons for the application;

4. other matters that the people's court considers should be specified.

Where the debtor files the application, it shall also submit to the people's court a description of its financial condition, a list of debts, a list of claims, relevant financial and accounting reports, an employee placement plan, the opinions of the company's trade union, and information on the payment of employee wages and the contribution of social insurance premiums.

Article 10

Before a people's court accepts a bankruptcy application, the applicant may request to withdraw the application.

Article 11

Where, after the applicant has filed a bankruptcy application and before the people's court has rendered a ruling, the debtor's property faces urgent situations such as depreciation or malicious transfer, a creditor or the debtor may apply for the suspension of enforcement against, or the preservation of, the debtor's property. The people's court shall promptly render a ruling on whether to approve such application. Where necessary, the people's court may require the creditor or debtor who made the suspension application to provide security.

After the people's court renders a ruling, an interested party may raise an objection to the people's court. Where the objection is substantiated, the people's court shall rule to resume enforcement or release the preservation measures.

Where the people's court rules not to accept the bankruptcy application, the enforcement proceedings suspended under the first paragraph of this Article shall automatically resume, and the preservation measures adopted shall be released.

Section 2 — Acceptance 受理

Article 12

Where a creditor files a bankruptcy application, the people's court shall notify the debtor within five days from the date of receiving the application. Where the debtor has an objection to the application, it shall submit the objection to the people's court within seven days from the date of receiving the notice from the people's court. The people's court shall render a ruling on whether to accept the application within ten days from the expiration of the objection period.

Except for the circumstances described in the preceding paragraph, the people's court shall render a ruling on whether to accept the bankruptcy application within fifteen days from the date of receiving the application.

Where there are special circumstances requiring an extension of the ruling periods prescribed in the preceding two paragraphs, the period may be extended by fifteen days with the approval of the people's court at the next higher level.

Where an enterprise has borrowed sovereign loans from international financial organizations or foreign governments, the people's court shall temporarily not accept a bankruptcy application against such enterprise until the repayment obligations have been fulfilled.

Article 13

Where a people's court accepts a bankruptcy application, it shall serve the ruling on the applicant within five days from the date of the ruling.

Where a creditor has filed the application, the people's court shall serve the ruling on the debtor within five days from the date of the ruling. The debtor shall, within fifteen days from the date the ruling is served, submit to the people's court a description of its financial condition, a list of debts, a list of claims, relevant financial and accounting reports, and information on the payment of employee wages and the contribution of social insurance premiums, among other materials.

Article 14

Where a people's court rules not to accept a bankruptcy application, it shall serve the ruling on the applicant and explain the reasons within five days from the date of the ruling. Where the applicant is not satisfied with the ruling, it may appeal to the people's court at the next higher level within ten days from the date the ruling is served.

Where, after a people's court has accepted a bankruptcy application but before the debtor is declared bankrupt, the court upon review finds that the debtor did not meet the conditions described in Article 2 of this Law at the time the bankruptcy application was accepted, it may rule to dismiss the application. However, this shall not apply where the debtor comes to meet the conditions described in Article 2 of this Law after the bankruptcy case has been accepted.

Where the applicant is not satisfied with the ruling described in the preceding paragraph, it may appeal to the people's court at the next higher level within ten days from the date the ruling is served.

Article 15

Where a people's court rules to accept a bankruptcy application, it shall simultaneously designate an administrator.

Article 16

The people's court shall, within twenty-five days from the date of ruling to accept the bankruptcy application, notify the known creditors and the debtor's competent tax authority, and make a public announcement.

The notice and announcement shall specify the following:

1. the name of the applicant and the respondent;

2. the time at which the people's court accepted the bankruptcy application;

3. the time limit, location, and matters to be noted for filing claims;

4. the name of the administrator and the address for handling affairs;

5. the requirement that the debtor's debtors or holders of the debtor's property settle debts or deliver property to the administrator;

6. the time and place of the first creditors' meeting;

7. other matters that the people's court considers should be notified and announced.

Article 17

From the date the ruling accepting the bankruptcy application is served on the debtor until the conclusion of the bankruptcy proceedings, the relevant personnel of the debtor shall bear the following obligations:

1. properly safeguard the property, seals, account books, documents, and other materials in their possession and management, and hand them over to the administrator as required;

2. carry out work as required by the people's court and the administrator, and truthfully answer inquiries;

3. attend creditors' meetings and truthfully answer inquiries from creditors;

4. not leave their place of domicile without the permission of the people's court;

5. not assume the position of director, supervisor, or senior management of any other enterprise.

The "relevant personnel" referred to in the preceding paragraph means the legal representative of the enterprise; as determined by the people's court, it may also include the enterprise's financial management personnel and other operations management personnel.

Where the relevant persons in possession of and managing the debtor's property, seals, account books, documents, and other materials fail to hand them over within the specified period, the administrator may apply to the people's court that accepted the bankruptcy application for compulsory enforcement.

Article 18

Where a people's court rules to accept the bankruptcy application of a jointly liable individual debtor, it shall simultaneously issue a decision restricting the conduct of the jointly liable individual debtor, and shall serve the decision on the jointly liable individual debtor.

From the date of the people's court's decision to restrict the conduct of the jointly liable individual debtor until the date of the decision to lift such restrictions, the jointly liable individual debtor shall not engage in excessive consumption or consumption that is not necessary for daily life or work, unless with the consent of the people's court where such consumption is genuinely necessary for daily life or work.

Article 19

From the date the ruling accepting the bankruptcy application is served on the jointly liable individual debtor until the conclusion of the bankruptcy proceedings or the expiration of the supervision and examination period, the jointly liable individual debtor shall truthfully, accurately, and completely declare and disclose the financial information of himself/herself and his/her family.

Article 20

After a people's court accepts a bankruptcy application, any payment by the debtor to individual creditors shall be void.

Article 21

After a people's court accepts a bankruptcy application, the debtor's debtors or holders of the debtor's property shall settle debts or deliver property to the administrator.

Where the debtor's debtor or holder of the debtor's property intentionally violates the preceding paragraph by settling debts or delivering property to the debtor, thereby causing loss to creditors, such person shall not be discharged from its obligation to settle debts or deliver property.

Article 22

After a people's court accepts a bankruptcy application, the administrator shall have the right to decide whether to continue to perform contracts concluded before the acceptance of the bankruptcy application that have not been fully performed by both the debtor and the counterparty, and shall notify the counterparty. Where the administrator fails to notify the counterparty within two months from the date of acceptance of the bankruptcy application, or fails to reply within thirty days from the date of receiving a demand from the counterparty, it shall be deemed to have rejected performance, unless the parties agree otherwise. Intellectual property license agreements where the licensor has entered bankruptcy proceedings, residential house lease agreements where the lessor has entered bankruptcy proceedings, and immovable property lease agreements of material significance to the lessee's business operations shall not be subject to the preceding provision.

Where the administrator decides to continue to perform a contract, the counterparty shall perform; however, the counterparty shall have the right to require the administrator to provide security. Where the administrator fails to provide security, it shall be deemed to have rejected performance.

With the consent of the counterparty, the administrator may assign the rights and obligations of the contract as a whole.

Article 23

After a people's court accepts a bankruptcy application, where the administrator decides to cease the debtor's business operations, the administrator shall have the right to decide whether to continue to perform unexpired employment contracts between the debtor and its employees; where performance is rejected, the relevant persons shall be notified.

Article 24

After a people's court accepts a bankruptcy application, preservation measures against the debtor's property shall be lifted, and enforcement proceedings shall be suspended. The administrator may apply for the lifting of preservation measures and the suspension of enforcement on the basis of the ruling accepting the bankruptcy application and the decision designating the administrator, and the relevant authorities shall transfer the debtor's property or the right to dispose of it to the administrator.

The preservation measures and enforcement proceedings referred to in the preceding paragraph include preservation measures and enforcement proceedings adopted by people's courts in civil or administrative litigation, compulsory measures and compulsory enforcement in administrative compulsion by people's courts and administrative authorities to realize property payments of the debtor, and tax preservation measures and compulsory enforcement by tax authorities and customs.

Article 25

After a people's court accepts a bankruptcy application, any civil litigation or arbitration involving the debtor that has commenced but not yet concluded shall be suspended; after the administrator takes over the debtor's property, such litigation or arbitration shall continue.

Article 26

After a people's court accepts a bankruptcy application, civil litigation concerning the debtor's property may only be brought before the people's court that accepted the bankruptcy application.

Where there is an arbitration agreement between the parties, the matter shall be submitted for arbitration in accordance with the agreement, except where the arbitration agreement is invalid.

After a people's court accepts a bankruptcy application, tax disputes and labor disputes involving the debtor shall be brought directly before the people's court that accepted the bankruptcy application.

Article 27

Damage compensation actions brought against the administrator by relevant parties in accordance with this Law shall be filed with the people's court that accepted the bankruptcy application.

Article 28

From the date a people's court accepts a bankruptcy application, the limitation period for claims held by the debtor against third parties shall be interrupted.

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Chapter 3 — Administrator 管理人

Article 29

The administrator is the entity that manages the debtor's bankruptcy affairs during the bankruptcy proceedings. The administrator shall independently perform its duties in accordance with this Law, safeguard the lawful rights and interests of creditors, the debtor, and interested parties, and social public interests, report its work to the people's court, and accept supervision by the creditors' meeting and the creditors' committee.

The department performing administrative management responsibilities for bankruptcy affairs or its staff members may serve as the administrator in bankruptcy cases where the debtor's property is insufficient to cover bankruptcy expenses, provided that such staff members shall not receive remuneration.

Article 30

The administrator shall be designated by the people's court.

Where the creditors' meeting considers that the administrator is unable to perform its duties lawfully and impartially or has other circumstances rendering it unfit to serve, it may apply to the people's court for replacement and recommend a candidate. Where the recommended candidate does not have any of the circumstances under which a person may not serve as an administrator as provided by this Law, the people's court shall replace the administrator and designate the recommended candidate as the administrator.

An individual creditor who considers that the administrator has the circumstances described in the preceding paragraph may raise the matter with the people's court, which shall decide whether to replace the administrator.

The remuneration of the administrator shall be determined by the people's court. Where the creditors' meeting, creditors, or the administrator has an objection to the remuneration, they shall have the right to raise the matter with the people's court.

The administrator shall be subject to roster management and dynamic adjustment. The measures for designating administrators and determining their remuneration shall be formulated by the Supreme People's Court.

Article 31

The administrator may be a liquidation committee composed of personnel from relevant departments or institutions, or a law firm, accounting firm, bankruptcy liquidation firm, asset management company, or similar institution established in accordance with law, or the department performing administrative management responsibilities for bankruptcy affairs or its staff members.

The people's court may, based on the debtor's actual circumstances, after consulting with the relevant institution, designate personnel of that institution who have the relevant professional knowledge and have obtained practicing qualifications to serve as the administrator.

No person may serve as the administrator where any of the following circumstances exist:

1. the person has received a criminal penalty for an intentional crime;

2. the person has had the relevant professional practicing certificate revoked;

3. the person has a serious bad-faith record that has not yet been repaired;

4. the person has an interest in the case;

5. other circumstances in which the people's court considers the person unsuitable to serve as the administrator.

Where an individual serves as the administrator, such individual shall purchase professional liability insurance.

Article 32

In the bankruptcy of a financial institution, a state-invested enterprise, or a state-owned enterprise of significant influence, the people's court shall hear the opinions of the relevant financial regulatory department of the State Council, the state-owned asset supervision and administration authority, or other institutions performing investor duties when designating the administrator, and shall adopt an appropriate method of designation based on the specific circumstances of the case.

In the bankruptcy of a financial institution, the financial regulatory department of the State Council may recommend an administrator candidate to the people's court; where the recommended candidate does not have any of the circumstances under which a person may not serve as an administrator as provided by this Law, the people's court shall designate the recommended candidate as the administrator. Where a financial institution enters bankruptcy proceedings after undergoing risk resolution, the takeover team, trusteeship team, liquidation committee, or similar group may serve as the administrator.

In the bankruptcy of a state-invested enterprise or a state-owned enterprise of significant influence, the administrator may be a liquidation committee composed of the corresponding state-owned asset supervision and administration authority or other institution performing investor duties, the relevant government department, a trusteeship team, and intermediary institutions. Staff members of the relevant government departments and institutions shall not receive remuneration for their work as the administrator.

Article 33

The administrator shall perform the following duties:

1. take over the debtor's property, seals, account books, documents, and other materials;

2. investigate the debtor's financial condition and prepare a report on its financial condition;

3. decide on the debtor's internal management affairs;

4. decide on the debtor's daily expenses and other necessary expenses;

5. before the first creditors' meeting is convened, decide whether to continue or cease the debtor's business operations;

6. manage and dispose of the debtor's property;

7. represent the debtor in litigation, arbitration, or other legal proceedings;

8. disclose property and management information relevant to creditors' participation in the bankruptcy proceedings;

9. propose the convening of a creditors' meeting;

10. represent the debtor in performing tax obligations in accordance with law, including tax declarations and the issuance of invoices;

11. attend creditors' meetings, report on the performance of duties to the creditors' meeting, and answer inquiries;

12. other duties as provided by this Law or as the people's court considers the administrator should perform.

The administrator shall perform its duties in accordance with law, and relevant entities and individuals shall cooperate. Where this Law provides otherwise for the administrator's duties, such provisions shall apply.

Article 34

Before the first creditors' meeting is convened, where the administrator decides to continue or cease the debtor's business operations, or engages in any of the acts specified in Article 94 of this Law, it shall obtain the permission of the people's court.

Article 35

The administrator shall be diligent and responsible, and shall faithfully perform its duties.

Article 36

With the permission of the people's court, the administrator may employ necessary working personnel.

Article 37

The administrator shall not resign from its position without justifiable reasons. The resignation of the administrator shall be subject to the permission of the people's court.

Article 38

The relevant departments of the State Council and people's governments at or above the county level shall, in accordance with their respective duties, strengthen supervision and administration of institutions and individuals serving as administrators in accordance with law.

Article 39

People's governments at or above the county level shall, as needed, establish a bankruptcy guarantee fund to ensure the payment of bankruptcy expenses in cases where the debtor's property is insufficient to cover bankruptcy expenses. The bankruptcy guarantee fund shall be composed of the following:

1. government fiscal funds;

2. funds drawn at a certain percentage from administrator remuneration;

3. funds voluntarily donated by natural persons, legal persons, or unincorporated organizations;

4. fund interest;

5. other lawful income of the fund.

The measures for the administration and use of the bankruptcy guarantee fund shall be formulated by the Supreme People's Court in conjunction with the relevant state authorities.

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Chapter 4 — Debtor's Property 债务人财产

Article 40

All property belonging to the debtor at the time of acceptance of the bankruptcy application, and property acquired by the debtor after the acceptance of the bankruptcy application and before the conclusion of the bankruptcy proceedings, shall constitute the debtor's property.

Article 41

Where the debtor is declared bankrupt, jointly owned property shall be partitioned. Where the debtor undergoes reorganization or composition, jointly owned property may be partitioned based on the needs of the reorganization or composition.

Article 42

Where, within one year before the people's court accepts the bankruptcy application, the following acts involving the debtor's property are performed, the administrator shall have the right to request the people's court to set them aside:

1. waiver of claims;

2. waiver of security for claims;

3. gratuitous transfer of property;

4. extension of the performance period for matured claims;

5. other acts of gratuitous disposal of property rights.

Where the beneficiary has an affiliated relationship with the debtor, the avoidance period prescribed in this Article shall be two years before the people's court accepts the bankruptcy application.

Article 43

Where, within one year before the people's court accepts the bankruptcy application, the following acts involving the debtor's property are performed, the administrator shall have the right to request the people's court to set them aside:

1. conducting transactions at a manifestly unreasonable price;

2. providing security for the debts of others or assuming the debts of others.

Where the beneficiary has an affiliated relationship with the debtor, the avoidance period prescribed in this Article shall be two years before the people's court accepts the bankruptcy application.

Article 44

Where, within one year before the people's court accepts the bankruptcy application, the following acts involving the debtor's property are performed, the administrator shall have the right to request the people's court to set them aside:

1. providing property security for its own unsecured debts;

2. making early repayment of debts that have not yet matured.

Where the debtor provides a tax guarantee for itself, it shall not fall within the scope of avoidable acts under the preceding paragraph.

Where the debtor, at the time of entering into a contract, agrees to provide security with its own property, and the creation or acquisition of effectiveness of the security right against third parties occurs within the period prescribed in the first paragraph of this Article but does not exceed a reasonable period, it shall not constitute the circumstance described in Subparagraph (1) of the first paragraph of this Article.

Article 45

Where, within six months before the people's court accepts the bankruptcy application, the debtor is in the circumstances described in the first paragraph of Article 2 of this Law and still makes payment to an individual creditor, the administrator shall have the right to request the people's court to set aside such payment. However, this shall not apply where such individual payment does not prejudice the interests of other creditors.

Where the debtor makes individual payment to a creditor through litigation, arbitration, or enforcement proceedings, it shall not constitute an avoidable act under the preceding paragraph. However, this shall not apply where the debtor and the creditor collude in bad faith to prejudice the interests of other creditors.

Where the beneficiary has an affiliated relationship with the debtor, the avoidance period for the acts prescribed in this Article shall be one year before the people's court accepts the bankruptcy application.

Article 46

Any of the following circumstances shall constitute the circumstance under which individual payment does not prejudice the interests of other creditors as prescribed in Article 45 of this Law:

1. within the avoidance period prescribed in Article 45 of this Law, the debtor and the creditor entered into a bilateral contract that has been fully performed;

2. payment made by the debtor to maintain normal production and business operations;

3. payment by the debtor, within the value of the collateral, on a claim secured by the debtor's own property;

4. payment by the debtor of employees' wages, medical expenses, disability benefits, bereavement payments, economic compensation, and damages as required by law;

5. payment by the debtor of personal injury damages, maintenance payments, and support payments as required by law;

6. payment by the debtor of social insurance premiums and taxes;

7. other individual payments that do not prejudice the interests of other creditors.

Article 47

The right of avoidance shall be exercised within one year from the date on which the administrator knew or should have known of the grounds for avoidance.

Where the administrator fails to exercise the right of avoidance, a creditor shall have the right to bring an action within one year from the date on which the creditor knew or should have known that the administrator has not exercised the right of avoidance, requesting the court to set aside the debtor's aforementioned acts; any property recovered shall be included in the debtor's property.

Article 48

The following acts involving the debtor's property shall be void:

1. concealing or transferring property to evade debts;

2. fabricating debts or acknowledging false debts.

Article 49

Where property of the debtor has been obtained through the acts described in Article 42, Article 43, Article 44, Article 45, or Article 48 of this Law, the administrator shall have the right to recover it.

Article 50

After a people's court accepts a bankruptcy application, where the debtor's investors have not fully performed their capital contribution obligations, the administrator shall demand that such investors pay their subscribed capital contributions, without regard to the capital contribution deadline.

Article 51

Non-standard income obtained and enterprise property misappropriated by the debtor's directors, supervisors, and senior management from the enterprise shall be recovered by the administrator.

Article 52

After a people's court accepts a bankruptcy application, the administrator may, by settling debts or providing security acceptable to the creditor, retrieve pledged or retained property.

Where the value of the pledged or retained property is less than the amount of the secured claim, the debt settlement or substitute security referred to in the preceding paragraph shall be limited to the then-current market value of the pledged or retained property.

Article 53

After a people's court accepts a bankruptcy application, where the debtor possesses property that does not belong to the debtor, the owner of such property may retrieve it through the administrator. However, this shall not apply where otherwise provided by this Law.

Article 54

Where property of another person possessed by the debtor is damaged or lost, and the insurance proceeds, compensation, or substitutes obtained as a result have not yet been delivered to the debtor, or have been delivered to the debtor but can be distinguished from the debtor's property, the owner shall have the right to retrieve such insurance proceeds, compensation, or substitutes.

Where the insurance proceeds, compensation, or substitutes have been delivered to the debtor and cannot be distinguished from the debtor's property, the matter shall be handled in accordance with the following:

1. where the damage or loss of the property occurred before the acceptance of the bankruptcy application, the claim formed by the owner's property loss shall be satisfied as an ordinary bankruptcy claim;

2. where the damage or loss of the property occurred after the acceptance of the bankruptcy application, the debt arising from the administrator's or relevant personnel's performance of duties causing harm to the owner shall be satisfied as a common-benefit debt.

Where property of another person possessed by the debtor is damaged or lost and no corresponding insurance proceeds, compensation, or substitutes were obtained, or where the insurance proceeds, compensation, or substitutes are insufficient to compensate for the loss, the portion of the shortfall shall be handled in accordance with the second paragraph of this Article.

Article 55

Where, at the time a people's court accepts a bankruptcy application, the seller has already dispatched the subject matter of a sale contract to the debtor as buyer but the debtor has not yet received it and has not paid the full price, the seller may retrieve the subject matter in transit. However, the administrator may request the seller to deliver the subject matter by paying the full price.

Article 56

Where a creditor owed a debt to the debtor before the acceptance of the bankruptcy application, the creditor may claim a set-off against the administrator. However, set-off shall not be permitted in any of the following circumstances:

1. the debtor's debtor acquired a claim of a third party against the debtor after the acceptance of the bankruptcy application;

2. the creditor, knowing that the debtor was unable to pay debts as they fell due or that a bankruptcy application had been filed, incurred a debt to the debtor; however, this shall not apply where the creditor incurred the debt by reason of a legal provision or a cause that arose more than one year before the bankruptcy application;

3. the debtor's debtor, knowing that the debtor was unable to pay debts as they fell due or that a bankruptcy application had been filed, acquired a claim against the debtor; however, this shall not apply where the debtor's debtor acquired the claim by reason of a legal provision or a cause that arose more than one year before the bankruptcy application;

4. debts arising from the creditor's infringement of the debtor's right to life, bodily integrity, or health, other than punitive damages.

Article 57

The following debts shall not be set off against debts owed by the debtor:

1. debts owed to the debtor by the debtor's shareholders due to unpaid or withdrawn capital contributions;

2. debts owed to the debtor by the debtor's shareholders or actual controllers who abused shareholder rights or affiliated relationships to the detriment of the company's interests.

Article 58

Qualified financial transactions that are subject to close-out netting in accordance with law shall not be subject to Article 22, Articles 43 through 45 of this Law. The scope of qualified financial transactions shall be determined by law, administrative regulation, or the financial regulatory departments of the State Council.

Article 59

On the date the people's court rules to accept the bankruptcy application, payment instructions that have been submitted by the debtor to a payment, clearing, or settlement system through a bank or other institution and have entered the clearing or settlement process shall not be revoked, and the bank or other institution shall make payment in accordance with such instructions. However, this shall not apply where the bank or other institution has already received the ruling accepting the bankruptcy application.

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Chapter 5 — Bankruptcy Expenses and Common-Benefit Debts 破产费用和共益债务

Article 60

The following expenses incurred after a people's court accepts a bankruptcy application shall constitute bankruptcy expenses:

1. litigation costs of the bankruptcy case;

2. expenses for investigating, collecting, managing, realizing, and distributing the debtor's property;

3. expenses for working personnel employed by the administrator with the permission of the people's court, where the creditors' meeting agrees that such expenses shall constitute bankruptcy expenses;

4. remuneration of the administrator;

5. expenses incurred after the conclusion of the bankruptcy proceedings for recovering bankruptcy property and making supplemental distributions.

The following expenses incurred to ensure the smooth progress of the bankruptcy proceedings shall be treated as bankruptcy expenses by analogy:

1. compulsory liquidation expenses of the company that remain unpaid at the time the people's court rules to accept the bankruptcy application;

2. appraisal fees, announcement fees, storage fees, and other enforcement expenses arising from enforcement proceedings that have not yet concluded at the time the people's court rules to accept the bankruptcy application, to the extent that the benefit thereof is borne by creditors in the bankruptcy proceedings.

Article 61

The following debts incurred after a people's court accepts a bankruptcy application shall constitute common-benefit debts:

1. debts arising from the administrator's or the debtor's request that the counterparty perform contracts that have not been fully performed by both parties;

2. debts arising from negotiorum gestio of the debtor's property;

3. debts arising from the debtor's unjust enrichment;

4. debts, labor remuneration, and social insurance premiums arising from the debtor's continued business operations;

5. debts arising from damages caused by the administrator or relevant personnel in the performance of their duties;

6. debts arising from damages caused by the debtor's property;

7. where the principal under an agency agreement enters bankruptcy proceedings and the agent, knowing of such fact, would cause harm to the principal's interests by terminating the agency agreement, debts arising from the agent's continued performance of the agency affairs;

8. other debts incurred for the protection of the common interests of creditors.

Article 62

Borrowings and other financing debts incurred for the debtor's continued business operations after the acceptance of the bankruptcy application shall constitute common-benefit debts. With the consent of the right-holder who holds a security interest over the debtor's specific property, the common-benefit debt creditor under this Article may have priority over such secured creditor in receiving payment.

Article 63

Bankruptcy expenses and common-benefit debts shall be paid from the debtor's property at any time. Where the debtor's property is insufficient to pay all bankruptcy expenses and common-benefit debts, bankruptcy expenses shall be paid first. Where the debtor's property is insufficient to pay all bankruptcy expenses or all common-benefit debts, they shall be paid on a pro rata basis.

Where the debtor's property is insufficient to pay bankruptcy expenses, the administrator shall request the people's court to declare the debtor bankrupt and conclude the bankruptcy proceedings. The people's court shall, within fifteen days from the date of receiving such request, rule to declare the debtor bankrupt, conclude the bankruptcy proceedings, and make a public announcement.

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Chapter 6 — Claim Filing 债权申报

Article 64

Claims that arose from legal facts occurring before the people's court accepted the bankruptcy application shall be exercised by their holders in accordance with the procedures prescribed by this Law.

Article 65

After a people's court accepts a bankruptcy application, it shall determine the period for creditors to file claims. The claim-filing period shall be calculated from the date the people's court publishes the announcement of acceptance of the bankruptcy application and shall be no less than thirty days and no more than three months. After a creditor files a claim or supplements a claim filing, the administrator shall promptly conduct a review.

Article 66

Claims that have not yet matured shall be deemed to have matured at the time of acceptance of the bankruptcy application.

Article 67

Claims subject to conditions, claims subject to time limits, and claims in pending litigation or arbitration may be filed by the creditors.

Article 68

Creditors shall file claims with the administrator within the claim-filing period determined by the people's court. Employee wages, medical expenses, disability benefits, and bereavement payments owed by the debtor, social insurance premiums owed, and economic compensation and damages payable to employees as required by law or administrative regulation need not be filed; the administrator shall prepare a list after investigation and publicize it. Where employees, creditors, or the debtor have objections to the amounts of expenses publicized by the administrator as described in the preceding paragraph, they shall have the right to request the administrator to make corrections; where the administrator refuses to make corrections, the aforesaid parties shall have the right to bring an action before the people's court.

Article 69

When filing claims, creditors shall specify in writing the amount of the claim and whether it is secured by property, and submit relevant evidence. Where the filed claim is a joint claim, this shall be stated.

Article 70

Joint creditors may have one of them file the claim on behalf of all joint creditors, or may file the claim jointly.

Article 71

Where the debtor's guarantor or other person jointly and severally liable has already paid the debtor's debt on its behalf, such person shall file its claim based on its right of recourse against the debtor. Where the debtor's guarantor or other person jointly and severally liable has not yet paid the debtor's debt on its behalf, such person shall file its claim based on its future right of recourse against the debtor. However, this shall not apply where the creditor has already filed the full amount of its claim with the administrator.

Article 72

Where several persons jointly and severally liable for the debt are each ruled to be subject to the proceedings prescribed by this Law, the creditor shall have the right to file the full amount of its claim separately in each bankruptcy case.

Article 73

Where the administrator or the debtor rejects the performance of a contract in accordance with this Law, the counterparty shall file its claim based on its claim for damages arising from the rejection of performance.

Article 74

Where the debtor is the principal under an agency agreement and is ruled to be subject to the proceedings prescribed by this Law, and the agent, not knowing of such fact, continues to handle the agency affairs, the agent shall file its claim based on the resulting claim.

Article 75

Where the debtor is the drawer of a negotiable instrument and is ruled to be subject to the proceedings prescribed by this Law, and the drawee of such instrument continues to make payment or acceptance, the drawee shall file its claim based on the resulting claim.

Article 76

Where a people's court accepts a bankruptcy application against the debtor or the mortgagor, the claim secured by the maximum-amount mortgage shall be determined. The foregoing provision shall apply mutatis mutandis to the determination of claims secured by maximum-amount pledges and maximum-amount guarantees.

Article 77

For mortgages established in accordance with Article 396 of the Civil Code, the movable mortgage property shall be determined at the time the people's court accepts the bankruptcy application against the mortgagor.

Article 78

Where a creditor fails to file its claim within the claim-filing period determined by the people's court, the creditor may supplement its filing before the final distribution of the bankruptcy estate; however, previous distributions already made shall not be supplemented in its favor. The expenses for reviewing and confirming supplementary filed claims shall be borne by the supplementary filer. A creditor that fails to file its claim in accordance with this Law shall not exercise rights under the procedures prescribed by this Law.

Article 79

After the administrator receives claim-filing materials, it shall register and prepare a list, review the filed claims, and compile a claims register. The claims register and claim-filing materials shall be kept by the administrator and shall be available for inspection by interested parties.

Article 80

The claims register compiled in accordance with Article 79 of this Law shall be submitted to the first creditors' meeting for verification. Where the debtor and creditors have no objection to the claims recorded in the claims register, the people's court shall confirm them by ruling.

Where the debtor or creditors have objections to the claims recorded in the claims register, they may bring an action before the people's court that accepted the bankruptcy application. Where no action is brought within a reasonable period, it shall be deemed that there is no objection to the records in the claims register.

Where a claim confirmed by the ruling of a people's court is indeed erroneous, creditors or the debtor may apply to the people's court for a ruling to adjust it. Where the adjusted claim amount affects the results of matters already voted on by the creditors' meeting, the people's court shall recalculate the voting results.

Article 81

Where the defendant in a special representative action for securities disputes enters bankruptcy proceedings, the investor protection institution may file claims on behalf of investors.

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Chapter 7 — Creditors' Meeting 债权人会议

Section 1 — General Rules 一般规定

Article 82

Creditors who have lawfully filed claims shall have the right to verify claims at the first creditors' meeting. Creditors whose claims have been confirmed shall be members of the creditors' meeting, shall have the right to attend the creditors' meeting, and shall enjoy voting rights. However, this is subject to the provisions of Article 117 of this Law.

Creditors whose claims have not yet been confirmed shall not exercise voting rights, unless the people's court is able to temporarily determine the claim amount for the purpose of exercising voting rights.

Creditors holding a security interest over specific property of the debtor who have not waived their right of priority shall not have voting rights on the matters specified in Subparagraphs (7) and (10) of the first paragraph of Article 84 of this Law.

Creditors under Subparagraphs (6) through (10) of the first paragraph of Article 162 of this Law shall not have voting rights.

Creditors may appoint representatives to attend the creditors' meeting and exercise voting rights. A representative attending the creditors' meeting shall submit the creditor's power of attorney to the people's court or the chairperson of the creditors' meeting.

The creditors' meeting shall include representatives of the debtor's employees and the trade union to express opinions on relevant matters.

Article 83

The creditors' meeting shall have one chairperson, to be elected by the creditors and designated by the people's court; where the election fails, the people's court shall directly designate one from among the creditors. The chairperson of the creditors' meeting shall preside over the creditors' meeting.

Article 84

The creditors' meeting shall exercise the following powers:

1. verification of claims;

2. application to the people's court for replacement of the administrator and recommendation of candidates, and review of the administrator's expenses and remuneration;

3. supervision of the administrator;

4. election and replacement of creditors' committee members;

5. decision on whether to continue or cease the debtor's business operations, and borrowing for continued business operations;

6. approval of the reorganization plan;

7. approval of the composition agreement;

8. approval of the management plan for the debtor's property;

9. approval of the realization plan for the bankruptcy estate;

10. approval of the distribution plan for the bankruptcy estate;

11. decision on the disposal of the debtor's property that has a material impact on creditors' interests;

12. other powers that the people's court considers should be exercised by the creditors' meeting.

Minutes shall be prepared for resolutions on the matters deliberated by the creditors' meeting.

Article 85

The first creditors' meeting shall be convened by the people's court within fifteen days from the expiration of the claim-filing period. For bankruptcy cases involving complex creditor-debtor relationships, the period may, upon the administrator's application and by the people's court's decision, be extended to thirty days.

Subsequent creditors' meetings shall be convened when the people's court considers it necessary, or when the administrator, the creditors' committee, or creditors holding one-quarter or more of the total claims propose to the chairperson of the creditors' meeting that one be convened.

Article 86

To convene a creditors' meeting, the administrator shall give known creditors at least fifteen days' notice, and shall inform known creditors of the specific items to be deliberated and voted on at least three days in advance. The creditors' meeting may be held in person or by online video conference. With the consent of the first creditors' meeting, subsequent meetings may also be held by other means. Where a non-in-person voting method is used, the administrator shall, within three days after the vote, notify creditors of the voting results by letter, e-mail, or other means.

Article 87

Resolutions of the creditors' meeting shall be adopted by more than half of the creditors attending the meeting who have voting rights on the relevant matter, and such creditors shall represent more than one-half of the total claims with voting rights on the relevant matter. However, this shall not apply where this Law provides otherwise.

Where a creditor considers that a resolution of the creditors' meeting violates the law and harms its interests, it may, within fifteen days from the date it knew or should have known of the meeting resolution, request the people's court to rule to set aside the resolution and order the creditors' meeting to adopt a new resolution in accordance with law.

Resolutions of the creditors' meeting shall be binding on all creditors.

Article 88

Where the matters specified in Subparagraphs (8) and (9) of the first paragraph of Article 84 of this Law are not adopted by a vote of the creditors' meeting, the people's court shall make a ruling. Where the matter specified in Subparagraph (10) of the first paragraph of Article 84 of this Law is not adopted after a second vote of the creditors' meeting, the people's court shall make a ruling.

Regarding the rulings under the preceding two paragraphs, the people's court may announce them at the creditors' meeting or otherwise notify the creditors.

Article 89

Where a creditor is not satisfied with a ruling made by the people's court under the first paragraph of Article 88 of this Law, or where creditors holding more than one-half of the total unsecured claims are not satisfied with a ruling made by the people's court under the second paragraph of Article 88 of this Law, the creditor(s) may apply for reconsideration to such people's court within fifteen days from the date the ruling is announced or the date the notice is received. The enforcement of the ruling shall not be suspended during the reconsideration period.

Article 90

An individual creditor shall have the right to inspect the debtor's financial condition report, creditors' meeting resolutions, creditors' committee resolutions, the administrator's supervisory reports, and other information and materials on the debtor's property and business operations that are necessary for participation in the bankruptcy proceedings. Where the administrator refuses to provide such information without justifiable reasons, the creditor may request the people's court to issue a decision; the people's court shall issue a decision within five days.

Where the aforesaid information and materials involve trade secrets, the creditor shall bear confidentiality obligations in accordance with law or sign a confidentiality agreement; where they involve state secrets, the matter shall be handled in accordance with the relevant legal provisions.

Section 2 — Creditors' Committee 债权人委员会

Article 91

The creditors' meeting may decide to establish a creditors' committee. The creditors' committee shall be composed of creditor representatives elected by the creditors' meeting and one representative of the debtor's employees or the trade union. The creditors' committee shall have three to nineteen members.

Where a financial institution creditors' committee has been established before the people's court accepts the bankruptcy application, the court may designate members of the financial institution creditors' committee to serve as members of the creditors' committee; the number of such designated members shall not exceed one-third of the total members of the creditors' committee.

Members of the creditors' committee shall be approved in writing by the people's court.

Article 92

The creditors' committee shall exercise the following powers:

1. supervise the management and disposal of the debtor's property;

2. supervise the distribution of the bankruptcy estate;

3. propose the convening of a creditors' meeting;

4. other powers entrusted by the creditors' meeting.

In the performance of its duties, the creditors' committee shall have the right to require the administrator and the debtor's relevant personnel to provide explanations or relevant documents on matters within the scope of its powers.

Where the administrator or the debtor's relevant personnel violate this Law by refusing to accept supervision, the creditors' committee shall have the right to request the people's court to issue a decision on the supervisory matter; the people's court shall issue a decision within five days.

Article 93

Members of the creditors' committee and the administrator shall have the right to submit proposals to the creditors' committee. Decisions on matters deliberated by the creditors' committee shall be adopted by more than half of all members. The creditors' committee shall report to the creditors' meeting and accept guidance and supervision from the people's court.

Article 94

Where the administrator performs any of the following acts and such acts have a material impact on creditors' interests, the consent of the creditors' committee shall be obtained:

1. transfer of rights and interests in land, buildings, or other immovable property;

2. transfer of exploration rights, mining rights, intellectual property rights, data assets, or other property rights;

3. transfer of all inventory or business operations;

4. borrowing;

5. creation of property security;

6. transfer of claims and negotiable instruments;

7. performance of contracts that have not been fully performed by both the debtor and the counterparty;

8. waiver of rights;

9. retrieval of collateral;

10. other acts of property disposal that have a material impact on creditors' interests.

The administrator shall report to the creditors' committee in writing at least ten days before the disposal, provide corresponding explanations, and present supporting evidence.

Where the creditors' committee considers that an act performed by the administrator does not conform to a resolution of the creditors' meeting, it shall have the right to require the administrator to rectify the act. Where the administrator refuses to rectify, the creditors' committee may request the people's court to issue a decision.

Where no creditors' committee has been established, the administrator shall promptly report to the people's court when performing any of the acts described in the first paragraph of this Article.

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Chapter 8 — Reorganization 重整

Section 1 — Reorganization Application and Review 重整申请和审查

Article 95

A debtor or a creditor may, in accordance with this Law, directly apply to a people's court for the reorganization of the debtor.

Where a creditor has applied for the bankruptcy liquidation of the debtor, after the people's court accepts the bankruptcy application and before the debtor is declared bankrupt, a creditor, the debtor, or an investor holding one-tenth or more of the debtor's registered capital may apply to the people's court for reorganization.

Article 96

In reviewing a reorganization application, the people's court may organize hearings involving the applicant and the respondent. Creditors, the debtor's investors, prospective investors, and other interested parties may, with the permission of the people's court, participate in the hearing. The hearing period shall not be counted in the reorganization application review period.

Where the debtor is a listed company, the people's court shall, before accepting the reorganization application, solicit the opinions of the securities regulatory authority of the State Council.

Article 97

When filing a reorganization application with a people's court, the applicant shall, in addition to submitting the materials required by Article 9 of this Law, also submit relevant materials demonstrating the debtor's reorganization value and the feasibility of reorganization.

Article 98

A jointly liable individual debtor who has foreseeable future income may apply to a people's court for reorganization, and shall simultaneously submit a reorganization feasibility report or a draft reorganization plan. In addition to the relevant contents required by Article 115 of this Law, the draft reorganization plan shall include a repayment plan for non-dischargeable debts. The reorganization plan execution period shall not exceed five years.

Article 99

Where a people's court, upon review, considers that the reorganization application meets the requirements of this Law, it shall rule to reorganize the debtor and make a public announcement.

Article 100

Before applying for reorganization, the debtor and its investors may negotiate with creditors, prospective investors, and other interested parties for the purpose of reorganization, and may reach a reorganization agreement or formulate a preliminary draft reorganization plan. The debtor shall promptly disclose to all parties participating in the negotiations the information necessary for formulating the reorganization agreement or the preliminary draft reorganization plan, and shall ensure that such information is true, accurate, and complete.

Article 101

Where a reorganization agreement has been reached through negotiation or a preliminary draft reorganization plan has been formulated, the debtor may apply to a people's court for reorganization and either incorporate the content of the reorganization agreement directly into the draft reorganization plan or request the people's court to approve the preliminary draft reorganization plan by ruling.

Where the debtor makes a reorganization application under the preceding paragraph, it shall also submit the reorganization agreement, the preliminary draft reorganization plan, the results of preliminary voting, written opinions of creditors, and other materials.

Article 102

Where a reorganization agreement has been reached in accordance with Article 100 of this Law and a party applies for the debtor's reorganization, after the people's court rules to accept the reorganization application, all matters other than those provided in Article 120 of this Law shall be subject to the procedural provisions on reorganization in this Law.

Where the debtor requests the people's court to approve the preliminary draft reorganization plan by ruling, and the people's court, upon review, considers that the information disclosure, the content of the draft, the preliminary voting procedures and their results meet the requirements of this Law, and that the financial reports and other materials submitted with the application can demonstrate the feasibility of the draft, the court shall rule to approve it, terminate the reorganization proceedings, and make a public announcement.

Section 2 — Reorganization Period 重整期间

Article 103

The period from the date of the people's court's ruling to reorganize the debtor until the termination of the reorganization proceedings shall be the reorganization period.

During the reorganization period, the information disclosure obligor shall be the administrator. Where the debtor manages its own affairs, the information disclosure obligor shall be the debtor. The information disclosure obligor shall disclose to creditors, the debtor's investors, and other interested parties the information necessary for their participation in the proceedings. Information disclosure shall be timely and effective, and the disclosed information shall be true, accurate, and complete.

Where creditors, the debtor's investors, and other interested parties consider that the information disclosure is insufficient, they may require the debtor or the administrator to accept inquiries or to supplement and improve the disclosure.

The information disclosure obligor shall also comply with the information disclosure requirements of other laws, administrative regulations, the securities regulatory authority of the State Council or departments authorized by the State Council, and securities trading venues.

Article 104

During the reorganization period, upon application by the debtor, the people's court may, upon review, approve the debtor to manage its own property and business affairs under the supervision of the administrator, provided that such arrangement does not harm the interests of creditors.

Where the circumstances described in the preceding paragraph exist, the administrator that has taken over the debtor's property and business affairs in accordance with this Law shall transfer the property and business affairs to the debtor, and the powers of the administrator prescribed by this Law shall be exercised by the debtor. The directors, supervisors, and senior management of the debtor shall be diligent and responsible and shall faithfully perform their duties.

Article 105

Where any of the following circumstances exist, upon the administrator's application, the people's court may approve the termination of the debtor's self-management of its property and business affairs:

1. the debtor has engaged in fraudulent conduct, malicious reduction of property, or other conduct significantly detrimental to creditors;

2. the debtor has caused procedural delay or other serious adverse consequences;

3. the creditors' meeting considers that the debtor's self-management harms creditors' interests and has adopted a resolution to revoke the debtor's self-management;

4. other circumstances under which the debtor should not continue to manage its own affairs.

Where the circumstances described in the preceding paragraph exist and the administrator has not applied to the people's court for a termination decision, creditors and other interested parties may apply to the people's court.

Article 106

With the permission of the people's court, during the reorganization period, where the administrator is responsible for managing the property and business affairs, it may engage management personnel to take charge of business affairs. A debtor exercising self-management may employ persons with professional knowledge in law, finance, or other fields to provide professional services necessary for the reorganization.

Article 107

During the reorganization period, the exercise of security interests over specific property of the debtor shall be suspended. However, where the collateral is damaged or its value has significantly decreased, endangering the rights of the secured creditor, and the administrator or the debtor has not provided security or compensation corresponding to the decrease in value, or where the collateral is not necessary for the reorganization, the secured creditor may apply to the people's court to resume exercising its security interest.

The people's court shall render a ruling within thirty days from the date of receiving the application to resume exercising the security interest. Where the secured creditor, other creditors, the administrator, or the debtor is not satisfied with the ruling, it may apply for reconsideration to the people's court that rendered the ruling within fifteen days from the date of receiving the ruling.

During the reorganization period, where the debtor or the administrator borrows for continued business operations, security may be created for such borrowing.

Article 108

Where the debtor lawfully possesses property belonging to another person, the owner of such property who requests retrieval during the reorganization period shall satisfy the conditions agreed upon in advance.

Article 109

During the reorganization period, the debtor's investors shall not request the distribution of investment returns.

During the reorganization period, the debtor's controlling shareholder, directors, supervisors, and senior management shall not transfer their shares in the debtor to a third party. However, this shall not apply where approved by the people's court.

Article 110

During the reorganization period, where any of the following circumstances exist, upon the request of the administrator or interested parties, the people's court shall rule to terminate the reorganization proceedings and declare the debtor bankrupt:

1. the debtor's business condition and financial condition continue to deteriorate and there is no possibility of rescue;

2. the debtor has engaged in fraudulent conduct, malicious reduction of the debtor's property, or other conduct significantly detrimental to creditors, making it impossible for the reorganization to continue;

3. the debtor's conduct has made it impossible for the administrator to perform its duties.

Section 3 — Formulation and Approval of Reorganization Plan 重整计划的制定和批准

Article 111

The debtor or the administrator shall, within six months from the date of the people's court's ruling to reorganize the debtor, simultaneously submit a draft reorganization plan to the people's court and the creditors' meeting.

Where the period prescribed in the preceding paragraph has expired, upon the request of the debtor or the administrator and for justifiable reasons, the people's court may rule to extend the period by three months.

Where the debtor or the administrator fails to submit a draft reorganization plan within the prescribed period, the people's court shall, within fifteen days after the expiration of the aforesaid period, rule to terminate the reorganization proceedings and declare the debtor bankrupt.

Article 112

Where the debtor manages its own property and business affairs, the debtor shall prepare the draft reorganization plan. Where the administrator manages the property and business affairs, the administrator shall prepare the draft reorganization plan.

The debtor or the administrator shall, in the course of preparing the draft reorganization plan, consult and negotiate with creditors, reorganization investors, and other interested parties; creditors, reorganization investors, and other interested parties may submit opinions and suggestions to the debtor or the administrator regarding the draft reorganization plan.

Article 113

The reorganization investor shall be publicly recruited by the administrator or the debtor responsible for preparing the draft reorganization plan, unless the creditors' meeting resolves otherwise. Creditors, the debtor's investors, and other interested parties may recommend reorganization investor candidates to the administrator or the debtor.

Article 114

Prospective investors may inspect relevant materials on the debtor's property, claims and debts, and business conditions. Prospective investors shall pay a necessary deposit. Prospective investors shall enter into a confidentiality agreement with the debtor and the administrator regarding confidential matters and bear confidentiality obligations.

Article 115

The draft reorganization plan shall include the following:

1. the debtor's business plan;

2. classification of claims;

3. claim adjustment plan;

4. claim repayment plan;

5. the execution period of the reorganization plan;

6. the supervision period for the execution of the reorganization plan;

7. other plans beneficial to the debtor's reorganization.

Subparagraph (4) of the preceding paragraph shall include an explanation of the repayment ratios that would be available under the bankruptcy liquidation procedures and under the draft reorganization plan, respectively.

Where there is a reorganization investor, the draft reorganization plan shall include the reorganization investment plan. Where ordinary creditors cannot receive full repayment, the draft reorganization plan shall include content on the adjustment of investor equity.

Article 116

The debtor or the administrator shall, at least fifteen days before the creditors' meeting votes on the draft reorganization plan, inform creditors, the debtor's investors, and other interested parties of the content of the draft reorganization plan by meetings, letters, fax, or e-mail, or by other means.

Where the debtor has outstanding sovereign loans from international financial organizations or foreign governments that have not yet been fully repaid, the preparer of the draft reorganization plan shall truthfully disclose such circumstances to the reorganization investor.

Article 117

Creditors participating in the creditors' meeting to discuss the draft reorganization plan shall vote on the draft reorganization plan in groups based on the following classification of claims:

1. claims secured by specific property of the debtor;

2. employee wages, medical expenses, disability benefits, and bereavement payments owed by the debtor, as well as economic compensation and damages payable to employees as required by law or administrative regulation;

3. taxes owed by the debtor;

4. ordinary claims.

The people's court may, when necessary, establish additional voting groups based on different types of claims to vote on the draft reorganization plan.

Creditors and interested parties whose rights are not affected by the draft reorganization plan shall not participate in the voting.

Article 118

Secured creditors shall participate in the voting of the secured creditor group based on the amount of secured claims determined according to the value of the collateral. The portion exceeding the value of the collateral shall be treated as an ordinary claim and shall participate in the voting of the ordinary creditor group.

The collateral value referred to in the preceding paragraph shall be determined based on the market value at the time the reorganization application was accepted, taking into account the future use and purpose of the collateral.

Where a secured creditor objects to the determination of the collateral value, it may raise the matter with the people's court.

Article 119

A reorganization plan shall not provide for the reduction or exemption of social insurance premiums owed by the debtor; creditors for such amounts shall not participate in the voting on the draft reorganization plan.

Article 120

Where a reorganization agreement has been reached in accordance with Article 100 of this Law and the content of the reorganization agreement is consistent with the draft reorganization plan prepared during the reorganization proceedings, the consent of the relevant creditors and the debtor's investors to the reorganization agreement shall be deemed as consent to the corresponding content of the draft reorganization plan, and they shall not participate in the voting on the draft reorganization plan again.

Where the draft reorganization plan has modified the content of the reorganization agreement in a manner adverse to the relevant creditors or investors, the affected creditors and investors shall have the right to participate in the voting on the draft reorganization plan in accordance with this Law.

Article 121

The people's court shall convene a creditors' meeting within thirty days from the date of receiving the draft reorganization plan to vote on the draft reorganization plan.

The draft reorganization plan shall be deemed adopted by a voting group where more than half of the creditors in that group who participate in the vote consent to the draft reorganization plan, and such consenting creditors represent two-thirds or more of the total claims of the creditors in that group who participate in the vote.

The debtor or the administrator shall explain the draft reorganization plan to the creditors' meeting and answer inquiries.

Article 122

Representatives of the debtor's investors may attend the creditors' meeting at which the draft reorganization plan is discussed.

Where the draft reorganization plan involves the adjustment of investor equity, an investor group shall be established to vote on such matter, and the voting results shall be provided to the people's court for reference when approving the reorganization plan.

Article 123

Where all voting groups adopt the draft reorganization plan, the reorganization plan shall be deemed adopted. Within ten days from the date the reorganization plan is adopted, the debtor or the administrator shall apply to the people's court for approval of the reorganization plan.

The people's court shall, upon review, where the following conditions are satisfied, approve the plan by ruling within thirty days from the date of receiving the application, terminate the reorganization proceedings, and make a public announcement:

1. the grouping of creditors and investors and the voting procedures are lawful;

2. the debtor's business plan is feasible;

3. the content of the reorganization plan is fair and just, does not violate the mandatory provisions of laws or administrative regulations, and the repayment ratio that creditors can receive is no less than the repayment ratio that would be available under the bankruptcy liquidation procedures.

Article 124

Where some voting groups have not adopted the draft reorganization plan, the debtor or the administrator may negotiate with the voting groups that have not adopted the draft reorganization plan. Such voting groups may vote once more after negotiation. The combined time for negotiation and the second vote shall not exceed thirty days.

Where the results of the negotiation adversely affect other voting groups, the other voting groups shall also vote again.

Article 125

Where a voting group that has not adopted the draft reorganization plan refuses to negotiate with the debtor or the administrator, or more than half of the creditors in that group expressly oppose a second vote, no further vote shall be conducted.

Article 126

Where a voting group that has not adopted the draft reorganization plan refuses to negotiate or vote again, or where the draft reorganization plan is not adopted upon a second vote, but the draft reorganization plan satisfies the requirements of Article 123, second paragraph and the following conditions, the debtor or the administrator may apply to the people's court to approve the draft reorganization plan:

1. under the draft reorganization plan, the claims listed in Subparagraph (1) of the first paragraph of Article 117 of this Law will receive full repayment out of the specific property, the losses suffered due to deferred repayment will receive fair compensation, and the security interests have not been substantially impaired, or such voting group has already adopted the draft reorganization plan;

2. under the draft reorganization plan, the claims listed in Subparagraphs (2) and (3) of the first paragraph of Article 117 of this Law will receive full repayment, or the corresponding voting groups have already adopted the draft reorganization plan;

3. under the draft reorganization plan, the repayment ratio for ordinary claims is no less than the repayment ratio that would be available under the bankruptcy liquidation procedures at the time the draft reorganization plan is submitted for approval, or such voting group has already adopted the draft reorganization plan;

4. the draft reorganization plan treats members of the same voting group fairly, and the prescribed order of claim repayment does not violate the provisions of Article 162 of this Law;

5. at least one group of creditors whose interests are impaired has adopted the draft reorganization plan.

Article 127

Where the administrator or the debtor applies for approval of the draft reorganization plan in accordance with Article 126 of this Law, the people's court may organize hearings involving the debtor, the administrator, the debtor's investors, the reorganization investor, and representatives of the voting groups that did not adopt the draft reorganization plan.

Article 128

Where the people's court, upon review, considers that the draft reorganization plan meets the requirements of Article 126 of this Law, it shall approve the plan by ruling within thirty days from the date of receiving the application, terminate the reorganization proceedings, and make a public announcement.

Where an interested party is not satisfied with the ruling, it may apply for reconsideration to the people's court at the next higher level within fifteen days from the date the ruling is served. Whether to suspend the enforcement of the ruling during the reconsideration period shall be decided by the people's court conducting the reconsideration. The people's court at the next higher level shall render a ruling within thirty days from the date of receiving the reconsideration application.

Article 129

Where the draft reorganization plan has not been adopted and has not been approved by ruling in accordance with Article 126 of this Law, or where the adopted reorganization plan has not been approved, the people's court shall rule to terminate the reorganization proceedings and declare the debtor bankrupt.

Section 4 — Execution and Supervision of Reorganization Plan 重整计划的执行和监督

Article 130

The reorganization plan shall be executed by the debtor. After the people's court approves the reorganization plan by ruling, the administrator that has taken over the property and business affairs shall transfer the property and business affairs to the debtor.

Article 131

From the date the people's court approves the reorganization plan by ruling, the administrator shall supervise the execution of the reorganization plan during the supervision period prescribed in the reorganization plan.

During the supervision period, the administrator shall perform the following duties:

1. require the debtor to regularly submit reports on the execution of the reorganization plan and the debtor's financial condition;

2. promptly identify and rectify unlawful or improper conduct in the course of executing the reorganization plan;

3. review the debtor's application for extension of the reorganization plan execution period;

4. continue to represent the debtor in litigation and arbitration cases that commenced before the supervision period but have not yet concluded;

5. supervise the execution of the claim repayment plan;

6. other supervisory duties that the people's court considers the administrator should perform.

Article 132

Upon expiration of the supervision period, the administrator shall submit a supervisory report to the people's court. The administrator's supervisory duties shall terminate from the date the supervisory report is submitted. Interested parties in the reorganization plan shall have the right to inspect the supervisory report submitted by the administrator to the people's court.

Upon the administrator's application, the people's court may rule to extend the supervision period for the execution of the reorganization plan.

Article 133

A reorganization plan approved by ruling of a people's court shall be binding on the debtor, all creditors, the debtor's investors, reorganization investors, and other interested parties.

A creditor who, for justifiable reasons, failed to file its claim in accordance with this Law or who filed its claim after the draft reorganization plan was submitted to the creditors' meeting, shall not exercise rights during the execution period of the reorganization plan; after the reorganization plan has been fully executed, such creditor may exercise rights in accordance with the repayment conditions for the same class of claims as prescribed in the reorganization plan.

The rights of creditors against the debtor's guarantors and other persons jointly and severally liable shall not be affected by the reorganization plan.

Article 134

Where the reorganization plan involves the adjustment of the debtor's investors' equity, the administrator shall, bearing the people's court's ruling approving the reorganization plan, apply to the equity registration authority to release preservation measures against the relevant equity, and to process equity change registration and cancellation of pledge registration, and the equity registration authority shall cooperate.

Article 135

Where the reorganization plan fails to be fully executed within the prescribed period for justifiable reasons, the debtor may apply to the people's court for an extension of the execution period of the reorganization plan, provided that the extension shall not exceed six months.

Where individual provisions of the reorganization plan cannot be executed due to force majeure or other material reasons, the debtor may apply to the people's court for the amendment of such provisions, and the amended provisions shall be submitted for a vote by the voting groups whose interests are affected.

Article 136

During the execution period of the reorganization plan, civil litigation, tax disputes, and labor disputes concerning the debtor's property that arise from facts occurring after the termination of the reorganization proceedings shall not be subject to Article 26 of this Law.

Unless the reorganization plan expressly provides otherwise, litigation arising from the aforesaid disputes shall no longer be conducted by the administrator on behalf of the debtor.

Article 137

Where the debtor is unable to execute or fails to execute the reorganization plan, upon the request of the administrator or interested parties, the people's court shall rule to terminate the execution of the reorganization plan and declare the debtor bankrupt.

Where the people's court rules to terminate the execution of the reorganization plan, the commitments to adjust claims made by creditors in the reorganization plan shall lose effect. Payments already received by creditors through the execution of the reorganization plan shall remain effective, and the unpaid portions of claims shall be treated as bankruptcy claims. Where creditors received payment through non-cash means such as equity or trust beneficiary rights, the outstanding unpaid amount shall be re-determined.

A creditor described in the preceding paragraph may continue to receive distributions only after other creditors of the same priority have received distributions in the same proportion as such creditor.

Where the circumstances described in the first paragraph of this Article exist, security provided for the execution of the reorganization plan shall remain effective.

Article 138

After the reorganization plan has been fully executed, the debtor shall submit an execution report on the reorganization plan to the people's court and apply for the people's court to confirm by ruling that the reorganization plan has been fully executed. The bankruptcy proceedings shall conclude on the date the people's court confirms by ruling that the reorganization plan has been fully executed.

Debts reduced or exempted under the reorganization plan shall no longer be the debtor's responsibility to repay.

Before ruling that the execution of a listed company's reorganization plan has been completed, the people's court may solicit the opinions of the securities regulatory authority of the State Council.

Article 139

After the people's court approves the reorganization plan by ruling, the debtor may apply to the relevant departments or institutions for credit restoration, and the relevant departments or institutions shall temporarily block the relevant bad-faith information and suspend the relevant bad-faith disciplinary measures.

After the reorganization plan has been fully executed, the relevant departments or institutions shall, upon the credit restoration application of the relevant party and the people's court's ruling, lift the relevant bad-faith disciplinary measures by terminating the publication of the relevant bad-faith information, removing the party from the relevant serious violations and bad-faith entities list and the abnormal operations directory, and by other means.

After the reorganization plan has been fully executed, where new evidence proves that the debtor had engaged in tax-related illegal conduct before the bankruptcy proceedings that warrants administrative penalties, the relevant authority shall exercise its rights in accordance with the second paragraph of Article 133 of this Law.

Article 140

Debts forgiven by creditors to the debtor shall be non-taxable income in accordance with law.

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Chapter 9 — Composition 和解

Article 141

The debtor, or an investor holding one-half or more of the debtor's registered capital, may directly apply to a people's court for composition in accordance with this Law; alternatively, after the people's court has accepted the bankruptcy application and before the debtor is declared bankrupt, the debtor or such investor may apply to the people's court for composition.

The debtor or the investor holding one-half or more of the debtor's registered capital who applies for composition shall submit a draft composition agreement.

Article 142

Where a people's court, upon review, considers that the composition application meets the requirements of this Law, it shall rule to proceed with composition, make a public announcement, and convene a creditors' meeting to discuss the draft composition agreement.

Rights-holders who hold a security interest over specific property of the debtor may exercise their rights from the date the people's court rules to proceed with composition.

Article 143

The resolution of the creditors' meeting to adopt a composition agreement shall be approved by more than half of the creditors with voting rights who attend the meeting, and such creditors shall represent two-thirds or more of the total unsecured claims.

Article 144

Where the creditors' meeting adopts the composition agreement, the people's court shall ratify it by ruling, terminate the composition proceedings, and make a public announcement. The administrator shall transfer the property and business affairs to the debtor and submit a report on the performance of its duties to the people's court.

Article 145

Where the draft composition agreement is not adopted by a vote of the creditors' meeting, or where a composition agreement already adopted by the creditors' meeting is not ratified by the people's court, the people's court shall rule to terminate the composition proceedings and declare the debtor bankrupt.

Article 146

A composition agreement ratified by ruling of a people's court shall be binding on the debtor and all composition creditors.

A composition creditor is a person who held an unsecured claim against the debtor at the time the people's court accepted the bankruptcy application.

A composition creditor who failed to file its claim in accordance with this Law shall not exercise rights during the execution period of the composition agreement; after the composition agreement has been fully executed, such creditor may exercise rights in accordance with the repayment conditions prescribed in the composition agreement.

Article 147

The rights of composition creditors against the debtor's guarantors and other persons jointly and severally liable shall not be affected by the composition agreement.

Article 148

The debtor shall repay debts in accordance with the conditions prescribed in the composition agreement.

Article 149

Where a composition agreement was formed through the debtor's fraud or other illegal conduct, upon a creditor's application, the people's court shall, based on legal provisions, rule to set aside the agreement or declare it void, and declare the debtor bankrupt.

Where the circumstances described in the preceding paragraph exist, payments received by composition creditors through the execution of the composition agreement need not be returned to the extent that such payments are within the proportionate range of distributions received by other creditors.

Article 150

After the people's court ratifies the composition agreement by ruling or after the composition agreement has been fully executed, the debtor may apply for credit restoration by reference to Article 139 of this Law.

Article 151

Where the debtor is unable to execute or fails to execute the composition agreement, upon the request of composition creditors, the people's court shall rule to terminate the execution of the composition agreement and declare the debtor bankrupt.

Where the people's court rules to terminate the execution of the composition agreement, the commitments to adjust claims made by composition creditors in the composition agreement shall lose effect. Payments already received by composition creditors through the execution of the composition agreement shall remain effective, and the unpaid portions of composition claims shall be treated as bankruptcy claims.

A creditor described in the preceding paragraph may continue to receive distributions only after other creditors have received distributions in the same proportion as such creditor.

Where the circumstances described in the first paragraph of this Article exist, security provided for the execution of the composition agreement shall remain effective.

Article 152

After a people's court accepts a bankruptcy application, where the debtor and all creditors reach an agreement on the settlement of claims and debts on their own, they may request the people's court to ratify it by ruling and conclude the bankruptcy proceedings.

Where the debtor has been declared bankrupt, and the people's court ratifies the agreement described in the preceding paragraph by ruling, it shall simultaneously revoke the declaration of bankruptcy.

Article 153

Debts reduced or exempted under a composition agreement shall no longer be the debtor's responsibility to repay from the date the composition agreement has been fully executed.

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Chapter 10 — Bankruptcy Liquidation 破产清算

Section 1 — Declaration of Bankruptcy 破产宣告

Article 154

After a people's court accepts a bankruptcy liquidation application, where no person applies for reorganization or composition within thirty days after the first creditors' meeting, after claim verification, confirmation, and necessary auditing and asset appraisal, where the people's court, upon review, determines that the debtor is in the circumstances described in the first paragraph of Article 2 of this Law, it shall declare the debtor bankrupt.

Article 155

Where a people's court declares the debtor bankrupt in accordance with this Law, it shall serve the ruling on the debtor and the administrator within five days from the date of the ruling, notify known creditors within ten days from the date of the ruling, and make a public announcement.

After the debtor is declared bankrupt, the debtor shall be referred to as the "bankrupt," the debtor's property shall be referred to as the "bankruptcy estate," and the claims held against the debtor at the time the people's court accepted the bankruptcy application shall be referred to as "bankruptcy claims."

Article 156

Before the declaration of bankruptcy, where any of the following circumstances exist, the people's court shall rule to conclude the bankruptcy proceedings and make a public announcement:

1. a third party has provided sufficient security for the debtor or has settled all debts on behalf of the debtor;

2. the debtor has settled all debts.

Article 157

A right-holder who holds a security interest or other priority over specific property of the debtor shall have the right of priority to receive payment from such specific property.

A right-holder holding a security interest or other priority over specific property of the debtor may at any time claim the exercise of such priority against the administrator with respect to such specific property, and the administrator shall promptly realize the value and make distribution, and shall not refuse on the grounds that a resolution of the creditors' meeting is required or on other such grounds. However, this shall not apply where separate disposal of such property would reduce the value of other bankruptcy estate or affect the exercise of other priorities.

Article 158

Where a creditor exercising the right of priority described in Article 157 of this Law is not fully satisfied, the unsatisfied portion of the claim shall be treated as an ordinary claim; where such creditor waives the right of priority, the claim shall be treated as an ordinary claim.

Section 2 — Realization and Distribution 变价和分配

Article 159

The administrator shall, in accordance with the principle of value maximization, promptly prepare a plan for the realization of the bankruptcy estate and submit it to the creditors' meeting for discussion.

The administrator shall realize and sell the bankruptcy estate in a timely manner in accordance with the realization plan adopted by the creditors' meeting or the ruling made by the people's court under the first paragraph of Article 88 of this Law. For perishable goods and other property that is difficult to store, property the storage costs of which are excessive, or property the value of which will seriously depreciate if not promptly realized, the administrator shall promptly dispose of it after reporting to the people's court.

Article 160

Before disposing of bankruptcy estate, the administrator may engage auditing and asset appraisal institutions with the appropriate professional capabilities to conduct auditing and appraisal of the bankruptcy estate in accordance with law. Where the creditors' meeting has no objection to the market price of the bankruptcy estate, appraisal may not be conducted; however, this shall not apply where state-owned assets are involved.

Article 161

The realization and sale of bankruptcy estate shall be conducted by auction. However, this shall not apply where the creditors' meeting resolves otherwise.

Where the realization and sale of bankruptcy estate is conducted by auction, the creditors' meeting may determine the reserve price for the auction subject matter.

A bankrupt enterprise may be realized and sold in whole or in part. When the enterprise is realized and sold, intangible assets and other property may be realized and sold separately.

Property that may not be auctioned or the transfer of which is restricted under state regulations shall be handled in the manner prescribed by the State. The realization and sale of state-owned assets shall comply with the provisions of laws, administrative regulations, and state-owned asset supervision and administration authorities to prevent the loss of state-owned assets and to avoid harming state interests.

Article 162

After priority payment of bankruptcy expenses and common-benefit debts, the bankruptcy estate shall be distributed in the following order:

1. personal injury compensation claims arising from the bankrupt's infringement of others' right to life, bodily integrity, or health, excluding punitive damage claims;

2. claims for goods or services necessary for consumers' livelihoods owed by the bankrupt;

3. employee wages, medical expenses, disability benefits, and bereavement payments owed by the bankrupt, social insurance premiums owed, economic compensation and damages payable to employees as required by law or administrative regulation, and claims formed after the wage guarantee fund or similar fund has advanced employee claims;

4. taxes owed by the bankrupt;

5. ordinary bankruptcy claims;

6. loan claims among family members;

7. interest accruing on bankruptcy claims after the acceptance of the bankruptcy application;

8. subordinated claims formed by subordinated bonds issued by the bankrupt;

9. punitive claims such as late payment surcharges, civil punitive damages, administrative fines, and criminal fines on amounts unpaid by the bankrupt before the acceptance of the bankruptcy application;

10. claims arising from unfair transactions between the bankrupt and parties having an affiliated relationship with the bankrupt.

Where the bankruptcy estate is insufficient to pay all claims of the same priority, it shall be distributed on a pro rata basis.

The wages of the directors, supervisors, and senior management of the bankrupt enterprise shall be calculated based on the average wages of the enterprise's employees.

Article 163

The distribution of the bankruptcy estate shall be conducted in monetary form. However, this shall not apply where the creditors' meeting resolves otherwise.

Article 164

The administrator shall promptly prepare a distribution plan for the bankruptcy estate and submit it to the creditors' meeting for discussion. The distribution plan for the bankruptcy estate shall specify the following:

1. the names and addresses of creditors participating in the distribution of the bankruptcy estate;

2. the claim amounts of creditors participating in the distribution;

3. the amount of bankruptcy estate available for distribution;

4. the order, proportions, and amounts for the distribution of the bankruptcy estate;

5. the method for implementing the distribution of the bankruptcy estate.

After the creditors' meeting adopts the distribution plan for the bankruptcy estate, the administrator shall submit the plan to the people's court for ratification by ruling.

Article 165

After the distribution plan for the bankruptcy estate is ratified by ruling of the people's court, it shall be executed by the administrator.

Where the administrator implements multiple distributions in accordance with the distribution plan for the bankruptcy estate, it shall publicly announce the amount of property and claims for each distribution. Where the administrator implements the final distribution, it shall indicate as such in the announcement and specify the matters described in the second paragraph of Article 166 of this Law.

Article 166

For claims subject to conditions precedent or conditions subsequent, the administrator shall set aside the corresponding distribution amounts in escrow.

Where, as of the date of the final distribution announcement, the condition precedent has not been fulfilled or the condition subsequent has been fulfilled, the distribution amount set aside by the administrator in accordance with the preceding paragraph shall be distributed to other creditors; where, as of the date of the final distribution announcement, the condition precedent has been fulfilled or the condition subsequent has not been fulfilled, it shall be delivered to the creditor.

Article 167

Where a creditor has not received its share of the bankruptcy estate distribution, the administrator shall set it aside in escrow. Where a creditor fails to claim it within two months from the date of the final distribution announcement, it shall be deemed to have waived its right to receive the distribution, and the administrator or the people's court shall distribute the escrowed amount to other creditors.

Article 168

Where claims are in pending litigation or arbitration at the time of distribution of the bankruptcy estate, the administrator shall set aside the corresponding distribution amounts in escrow. Where, within three years from the date of conclusion of the bankruptcy proceedings, the distribution cannot be received, the people's court shall distribute the escrowed amount to other creditors.

Section 3 — Conclusion of Bankruptcy Proceedings 破产程序的终结

Article 169

Where the bankrupt has no property available for distribution, the administrator shall request the people's court to rule to conclude the bankruptcy proceedings.

After the final distribution has been completed, the administrator shall promptly submit a distribution report on the bankruptcy estate to the people's court and request the people's court to rule to conclude the bankruptcy proceedings.

The people's court shall render a ruling on whether to conclude the bankruptcy proceedings within fifteen days from the date of receiving the administrator's request. Where the proceedings are concluded, a public announcement shall be made.

Article 170

After the conclusion of the bankruptcy proceedings, the administrator shall transfer the account books, documents, and other materials of the bankrupt that it has taken over to an archival custody institution for storage. The storage expenses shall be reserved by the administrator from the bankruptcy estate at the time of distribution.

Article 171

The administrator shall, within ten days from the date of conclusion of the bankruptcy proceedings, apply to the original registration authority of the bankrupt for deregistration, bearing the people's court's ruling concluding the bankruptcy proceedings.

Where the equity held by the bankrupt's investors in the bankrupt is subject to pledge registration or preservation measures, the registration authority shall, pursuant to the people's court's ruling, cooperate in releasing the pledge registration and related preservation measures, and processing the deregistration.

Article 172

The administrator shall cease performing its duties on the day following the completion of the deregistration. However, this shall not apply where there is pending litigation or arbitration.

Where the administrator has ceased performing its duties and the circumstances described in Article 173 of this Law arise, requiring the management, disposal, or supplemental distribution of the bankrupt's property, the people's court may decide to restore the administrator's duties.

Article 173

Within three years from the date the bankruptcy proceedings are concluded in accordance with the fourth paragraph of Article 63 or Article 169 of this Law, where any of the following circumstances exist, a creditor may request the people's court to make supplemental distributions in accordance with the distribution plan for the bankruptcy estate:

1. property is discovered that should be recovered in accordance with Article 42, Article 43, Article 44, Article 45, Article 48, or Article 51 of this Law;

2. other property of the bankrupt that should be available for distribution is discovered.

Where the circumstances described in the preceding paragraph exist but the amount of property is insufficient to cover the distribution expenses, no supplemental distribution shall be made, and the people's court shall hand over the property to the state treasury.

Article 174

A jointly liable individual debtor who meets the requirements of this Law shall undergo a supervision and examination period of five years.

During the supervision and examination period, the jointly liable individual debtor shall not serve as a director, supervisor, or senior management of a listed company, a non-listed public company, or a financial institution; the jointly liable individual debtor shall report monthly to the administrator or the department performing administrative management responsibilities for bankruptcy affairs on his/her personal income, expenditures, and financial condition, and the administrator shall notify all creditors.

The portion of the jointly liable individual debtor's income exceeding the level necessary to maintain a basic standard of living shall be used to repay debts.

After the expiration of the supervision and examination period, the jointly liable individual debtor may apply to the court for a ruling that the debt settlement is complete, and the court shall render a ruling in accordance with law.

Article 175

A jointly liable individual debtor shall bear non-dischargeable repayment obligations for debts arising from, among others: intentional or grossly negligent infringement of others' personal rights, claims for goods or services necessary for consumers' livelihoods, labor remuneration owed to employees, and losses caused to the enterprise.

Article 176

Where a jointly liable individual debtor has any of the following circumstances, the outstanding debts shall not be discharged:

1. violation of the provisions of this Law regarding the obligations of and restrictions on the conduct of the jointly liable individual debtor, where the circumstances are serious;

2. the debtor's principal debts were primarily caused by extravagant consumption, squandering of assets, gambling, or other conduct contrary to public order and good morals;

3. after the circumstances described in Article 2 of this Law arose, the debtor concealed, transferred, or destroyed property or concealed, fabricated, altered, or destroyed account books, documents, and other evidence relating to the financial condition, where the circumstances are serious;

4. the debtor bears responsibility for the enterprise's illegal distribution of profits, financial fraud, or similar conduct that harmed the enterprise and its creditors' interests;

5. other circumstances under which discharge should not be granted.

Where, after the ruling confirming the completion of debt settlement takes effect, it is discovered that the jointly liable individual debtor had any of the above circumstances, the people's court shall revoke the ruling.

Article 177

The debtor's guarantors and other persons jointly and severally liable shall, after the conclusion of the bankruptcy proceedings, continue to bear repayment obligations in accordance with law for claims not satisfied through the bankruptcy liquidation proceedings.

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Chapter 11 — Special Provisions for MSE Bankruptcy Proceedings 小型微型企业破产程序的特别规定

Article 178

This Chapter shall apply to bankruptcy cases of micro and small enterprises where the debtor's financial condition is clear, the creditor-debtor relationships are simple, and the number of creditors is relatively small.

Article 179

Cases heard under the provisions of this Chapter may be tried by a single judge, and an individual shall be designated as the administrator in accordance with Article 31 of this Law.

Article 180

In cases heard under the provisions of this Chapter, a creditors' committee shall generally not be established.

Article 181

Where a creditor, after having been duly notified and informed of the consequences through statutory means, fails to attend the creditors' meeting or exercise its voting right without justifiable reasons and has not raised substantive objections, such creditor shall be deemed to have attended the meeting and consented to the matters put to vote.

Article 182

Cases heard under the provisions of this Chapter shall not be subject to the limitations on the claim-filing period prescribed in Article 65 of this Law.

Cases heard under the provisions of this Chapter shall be concluded by the people's court within six months from the date of ruling to accept the bankruptcy application.

Article 183

Where a micro or small enterprise undergoes reorganization under the provisions of this Chapter, the debtor shall generally manage its own property and business affairs under the supervision of the administrator.

The debtor shall, within three months from the date the people's court rules to accept the debtor's reorganization application, simultaneously submit a draft reorganization plan to the people's court and the creditors' meeting.

Where an investor who is of significant value to the debtor's continued operations agrees to apply the debtor's expected disposable income over a certain future period to debt repayment, the draft reorganization plan may retain such investor's full or partial equity and control.

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Chapter 12 — Consolidated Bankruptcy 合并破产

Article 184

Where affiliated enterprises have a high degree of commingling of legal personality such that it is difficult to distinguish them, and this has seriously prejudiced the interests of creditors in receiving fair repayment, or where affiliated enterprises were established for fraudulent purposes, the affiliated enterprises, their investors, creditors, and the administrator of an affiliated enterprise whose bankruptcy application has already been accepted by a people's court may apply for substantive consolidation bankruptcy of the relevant affiliated enterprises.

Article 185

Substantive consolidation bankruptcy cases shall be under the jurisdiction of the people's court at the place of the domicile of the core controlling enterprise among the affiliated enterprises. Where the core controlling enterprise is not clear, the people's court at the place of the principal assets of the affiliated enterprises shall have jurisdiction. Where multiple people's courts have a dispute over jurisdiction, the matter shall be reported to their common superior people's court for designation of jurisdiction.

Article 186

Where an applicant files an application for substantive consolidation bankruptcy, the people's court shall, within five days from the date of receiving the application, notify the respondent, its investors, known creditors, the administrator, and other interested parties, and shall publicly announce the application; the public announcement period shall be no less than ten days. Interested parties who object to the application shall submit their objections in writing before the expiration of the public announcement period. Where interested parties raise objections, the people's court shall organize a hearing.

Article 187

The people's court shall render a ruling on whether to approve the substantive consolidation bankruptcy within two months from the expiration of the public announcement period for the substantive consolidation bankruptcy of affiliated enterprises.

Where the affiliated enterprises, their investors, creditors, or the administrator of an affiliated enterprise whose bankruptcy application has already been accepted by a people's court are not satisfied with the ruling approving the substantive consolidation bankruptcy, they may apply for reconsideration to the people's court at the next higher level within fifteen days from the date the ruling is served. Whether to suspend the enforcement of the ruling during the reconsideration period shall be decided by the people's court conducting the reconsideration. The people's court at the next higher level shall render a ruling within thirty days from the date of receiving the reconsideration application.

Article 188

Where a bankruptcy case is heard by way of substantive consolidation, the claims and debts among the affiliated enterprises shall be extinguished, the property of the affiliated enterprises shall be treated as unified property, and the creditors of the affiliated enterprises shall receive repayment jointly in accordance with the statutory order.

Where, before the substantive consolidation, the people's court has already accepted the bankruptcy application of some of the affiliated enterprises, the time limits prescribed in Article 28, Article 42, Article 43, Article 44, Article 45, Article 65, and Article 66 of this Law shall be calculated separately from the date each enterprise's bankruptcy application was accepted by ruling.

The draft reorganization plan in a substantive consolidation reorganization case shall provide for a unified claim adjustment and repayment plan. The deadline for submitting the draft reorganization plan in a substantive consolidation reorganization case shall be recalculated from the date the people's court rules to proceed with the substantive consolidation reorganization.

Article 189

Where affiliated enterprises that have entered bankruptcy proceedings do not meet the conditions for substantive consolidation bankruptcy, the people's court hearing the bankruptcy cases may conduct coordinated hearings of the affiliated enterprises' bankruptcy cases. Where genuinely necessary, jurisdiction may be concentrated at the people's court at the place of the domicile of the core controlling enterprise for the purpose of procedural coordination. Where the core controlling enterprise is not clear, jurisdiction may be concentrated at the people's court at the place of the principal assets of the affiliated enterprises. Where multiple people's courts have a dispute over jurisdiction, the matter shall be reported to their common superior people's court for designation of jurisdiction.

Article 190

Coordinated hearings shall not extinguish the claims and debts among the affiliated enterprises and shall not result in the consolidation of the affiliated enterprises' property. However, claims among affiliated enterprises that were formed through the improper use of affiliated relationships shall be dealt with in accordance with Article 162 of this Law, and the holder of such claims shall not receive priority repayment from specific property provided by other affiliated enterprises.

Without violating the provisions of this Law, the debtor or the administrator may, in the reorganization proceedings, propose a single or coordinated draft reorganization plan; however, the creditors of each affiliated enterprise shall vote on the draft reorganization plan separately, and creditors shall receive repayment from the property of each affiliated enterprise separately.

Article 191

Where an individual and an enterprise have commingled assets and liabilities that are difficult to distinguish, the provisions of this Chapter on substantive consolidation bankruptcy may be applied by analogy.

Where the standard for substantive consolidation bankruptcy described in the preceding paragraph is not met, the provisions of this Chapter on procedural coordination may be applied by analogy.

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Chapter 13 — Financial Institution Bankruptcy 金融机构破产

Article 192

This Chapter shall apply to the bankruptcy of commercial banks, securities companies, insurance companies, trust companies, securities investment fund management companies, futures companies, non-bank payment institutions, and other financial institutions established with the approval of the financial regulatory department in accordance with law; where this Chapter does not provide, the relevant provisions of this Law shall apply.

Article 193

Where a financial institution has the circumstances described in Article 2 of this Law, or where the financial regulatory department of the State Council determines in accordance with law that it seriously fails to meet regulatory standards, the financial regulatory department of the State Council or an institution entrusted by it, the deposit insurance fund, and other industry guarantee funds may apply for its bankruptcy.

Where a financial institution applies for bankruptcy, or where a creditor, the deposit insurance fund, or other industry guarantee fund applies for the bankruptcy of a financial institution, the approval of the financial regulatory department of the State Council that approved the establishment of such financial institution shall be obtained.

Where a people's court receiving a bankruptcy application considers that administrative liquidation or risk resolution should be conducted for the financial institution, it may raise the matter with the financial regulatory department of the State Council.

Article 194

Bankruptcy cases involving financial institutions shall be under the jurisdiction of the intermediate people's court at the place of the financial institution's domicile.

Article 195

Where the financial regulatory department of the State Council and the local people's government conduct risk resolution of a financial institution in accordance with law, they may apply to a people's court or arbitral tribunal for the suspension of civil litigation proceedings, arbitration proceedings, or enforcement proceedings concerning the debtor's property in which the financial institution, its branches, or companies closely commingled with it is the defendant, respondent, third party, or person subject to enforcement.

Article 196

From the date the people's court accepts the bankruptcy application until the conclusion of the bankruptcy proceedings, the principal shareholders, actual controllers, and beneficial owners identified by the financial regulatory department of the State Council as bearing primary responsibility for the bankruptcy of the financial institution shall comply with the provisions of Article 17 of this Law.

Article 197

In the risk resolution proceedings of a financial institution, the effectiveness of risk resolution measures already completed, including asset verification, claim verification, and property disposal, shall be recognized by the people's court upon review in accordance with law.

Article 198

In the course of conducting risk resolution of a financial institution in accordance with law, borrowings and other financing debts obtained to maintain the financial institution's continued operations, as well as debts formed by People's Bank of China relending and other public funds, may be satisfied by reference to common-benefit debts in the bankruptcy proceedings.

Article 199

After a people's court accepts a bankruptcy application, property of other persons held in the name of the financial institution may be retrieved by the owner of such property in accordance with Article 53 of this Law, unless otherwise provided by law or agreed by contract.

Article 200

Where the financial stability guarantee fund, deposit insurance fund, insurance guarantee fund, trust industry guarantee fund, securities investor protection fund, futures trader guarantee fund, or similar fund has been used to compensate right-holders or to assume claims of right-holders in accordance with law, such fund shall, after the compensation or assumption, enjoy a right of recourse or a claim against the financial institution, shall file the claim with the administrator in accordance with law, and shall, within the amount compensated or assumed, obtain the same repayment priority as the compensated party. Where the law provides for the order of claim repayment in the bankruptcy of a financial institution, such provisions shall apply.

Article 201

The financial regulatory department of the State Council may, jointly with relevant departments, supervise the execution of the reorganization plan of a financial institution.

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Chapter 14 — Cross-Border Bankruptcy Judicial Cooperation 跨国破产的司法合作

Article 202

For the purpose of promoting cooperation in cross-border bankruptcy cases, effectively handling cross-border bankruptcy cases, and fairly protecting the interests of creditors, debtors, and other interested parties, a people's court may communicate and cooperate with foreign courts regarding the recognition, assistance, and coordination of bankruptcy proceedings.

This Chapter shall not apply to financial institutions or debtors outside the scope of this Law.

Article 203

Where the debtor's domicile or habitual residence is outside the territory of the People's Republic of China, but jurisdiction by a people's court would be more beneficial to the interests of creditors, a creditor or the debtor may apply for the settlement of debts in accordance with this Law. Cases under this provision shall be under the jurisdiction of the intermediate people's court having the closest connection.

Upon verification that the foreign law does not contain discriminatory provisions, debtors and creditors of that country may initiate or participate in bankruptcy proceedings in accordance with this Law; however, foreign tax creditors and collectors of social insurance premiums shall be excluded.

The administrator in bankruptcy proceedings commenced under this Law shall have the right to perform its duties outside the territory of the People's Republic of China in accordance with this Law and the laws of the relevant country or region, and may apply to a foreign court for the recognition of the bankruptcy proceedings conducted under this Law, for recognition of its status as administrator, and for assistance in the performance of its duties.

Article 204

Where bankruptcy proceedings have been initiated at the place of the debtor's center of main interests, the relevant persons may apply to the intermediate people's court at the place of the debtor's principal domestic assets for the recognition of such foreign bankruptcy proceedings.

Where a people's court, upon review, considers that the foreign bankruptcy proceedings do not violate the laws or administrative regulations of the People's Republic of China or its public policy, do not harm state sovereignty, security, or social public interests, do not prejudice the lawful rights and interests of creditors within the territory of the People's Republic of China, and are consistent with the principle of reciprocity, it shall rule to recognize the proceedings and provide relevant assistance as appropriate.

After a people's court rules to recognize foreign bankruptcy proceedings, the debtor's property within the territory of the People's Republic of China may, after the full satisfaction of domestic secured claims, personal injury compensation claims, consumer claims, employee claims and social insurance premiums, and taxes and other priority claims, be distributed in accordance with the relevant provisions.

Article 205

Where the debtor is in bankruptcy proceedings in both the People's Republic of China and a foreign country, and an unsecured creditor has already received a certain percentage of payment in the foreign bankruptcy proceedings, such unsecured creditor may continue to receive payment in the proceedings commenced under this Law only after other creditors of the same priority have received payment in the same proportion.

Article 206

Where an international treaty concluded or acceded to by the People's Republic of China contains provisions different from those of this Law, the provisions of such international treaty shall apply, except for those provisions on which the People's Republic of China has declared reservations.

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Chapter 15 — Legal Liability 法律责任

Article 207

Where the directors, supervisors, or senior management of an enterprise breach their duties of loyalty or diligence and cause the enterprise to go bankrupt, they shall bear civil liability in accordance with law.

A person in the circumstances described in the preceding paragraph shall not serve as a director, supervisor, or senior management of any enterprise for a period of three years from the date of conclusion of the bankruptcy proceedings.

Article 208

Where the debtor's relevant personnel violate this Law by failing to properly safeguard and transfer to the administrator the debtor's property, seals, account books, documents, and other materials, or by leaving their place of domicile without authorization, the people's court may admonish or detain them, and may impose a fine in accordance with law.

Where the debtor's relevant personnel violate this Law by failing to cooperate with the people's court or the administrator's work, or by failing to truthfully answer inquiries, the people's court may admonish, summon, or detain them, and may impose a fine in accordance with law.

Where the debtor's relevant personnel who are obligated to attend the creditors' meeting fail to attend without justifiable reasons after being summoned by the people's court, the people's court may compel their attendance and impose a fine in accordance with law.

Where the debtor's relevant personnel violate this Law by refusing to make statements or answer questions, or by making false statements or answers, the people's court may impose a fine or detain them in accordance with law.

Where any of the above acts causes damage to creditors, the person responsible shall bear compensation liability in accordance with law.

Article 209

Where the debtor violates this Law by refusing to submit to the people's court, or by submitting false documents regarding its financial condition, lists of debts, lists of claims, relevant financial and accounting reports, and information on employee wage payments and social insurance premium contributions, or by refusing to transfer property, seals, account books, documents, and other materials to the administrator, or by forging or destroying relevant financial evidence such that the financial condition is unclear, the people's court may take measures such as inquiry, interception, seizure, extraction, search, compulsory delivery, compulsory eviction, and compulsory withdrawal to forcibly obtain the relevant materials and property and promptly transfer them to the administrator.

Where the debtor fails to comply with this Law, the people's court may, against the directly responsible personnel, take measures such as restricting high consumption, restricting exit from the country, and listing on the national public credit information list of dishonest parties in accordance with law, and may impose fines or detention.

Where accounting vouchers, accounting books, or financial accounting reports are forged, altered, or fabricated, or where accounting vouchers, accounting books, or financial accounting reports that should be preserved in accordance with law are concealed or intentionally destroyed, the matter shall be handled in accordance with the Accounting Law and other relevant laws.

Article 210

Where the debtor has engaged in the acts described in Article 42, Article 43, Article 44, Article 45, or Article 48 of this Law, thereby harming creditors' interests, the debtor's legal representative and other directly responsible personnel shall bear compensation liability in accordance with law.

Where a third party violates the above provisions and harms creditors' interests, it shall bear corresponding civil compensation liability.

Where a creditor files a fabricated claim by means such as fabricating evidence or making false statements, legal liability shall be pursued for fraudulent litigation.

Article 211

Where the administrator fails to perform its duties diligently and faithfully in accordance with this Law, the people's court may impose a fine in accordance with law; where loss is caused to creditors, the debtor, or third parties, the administrator shall bear compensation liability in accordance with law.

Where the department performing administrative management responsibilities for bankruptcy affairs or its staff members serves as the administrator, the responsible leaders and directly responsible personnel shall be disciplined in accordance with law.

Article 212

Where auditing, appraisal, auction, or other intermediary institutions cause loss to creditors, the debtor, or third parties due to improper performance of their duties, they shall bear compensation liability in accordance with law. Where the administrator is at fault in the engagement of such institutions, it shall bear civil liability within the scope of its fault.

Article 213

Where the jointly liable individual debtor or the debtor's spouse, close relatives living together, persons managing property on behalf of the debtor, or other interested parties violate this Law, the people's court may, based on the severity of the circumstances, admonish, summon, detain, or impose a fine on them in accordance with the Civil Procedure Law.

Article 214

Where a violation of this Law constitutes a crime, criminal liability shall be pursued in accordance with law.

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Chapter 16 — Supplementary Provisions 附则

Article 215

Where other laws provide for the liquidation of organizations other than enterprise legal persons and such liquidation constitutes bankruptcy liquidation, the procedures prescribed by this Law shall apply by analogy.

In the bankruptcy liquidation of a farmers' professional cooperative, the scope of the bankruptcy estate, the distribution plan for the bankruptcy estate, and similar matters shall be handled in accordance with the Farmers' Professional Cooperatives Law and other relevant laws, regulations, or the cooperative's articles of association.

Article 216

This Law shall take effect on [date to be determined].