Key practical points:
• Three paths: liquidation (sell assets, end the company), reorganization (rescue it), and settlement with creditors.
• An administrator is appointed to manage the insolvent company's assets.
• Creditors have a priority order: employee wages and insurance often first, then taxes, then other creditors.
• A foreign creditor can file a claim under the local procedure.
• Reorganization may temporarily stay lawsuits and enforcement against the company to allow rescue.
🏢 Company setup
Enterprise Bankruptcy Law · Yalla China
中华人民共和国企业破产法 / Enterprise Bankruptcy Law
Enacted: 2006-08-27 ✅ Effective: 2007-06-01
📝 Overview
A law on corporate insolvency: liquidation, reorganization and settlement, and the order of paying creditors.
This is general information only, not legal advice. For your specific case, consult a licensed lawyer.
📜 The law text / key provisions
💬 Practical reading
💬 This is a general reading/opinion for orientation — not the official legal text nor legal advice.
If a company that owes you money goes bankrupt, do not assume your money is automatically lost; there is a procedure to file your claim and a payment priority order. And if it is your own company in trouble, reorganization may offer a rescue instead of liquidation. Act fast and consult a lawyer. General orientation, not legal advice.
📎 Official source
npc.gov.cn
🕒 Updated: 16 March 2026