Court-Appointed Administrators and Liquidators in China

What court-appointed administrators do in China

When a Chinese court accepts a bankruptcy application, it appoints an administrator at the same time. From that moment the administrator, not the board, controls the debtor's assets, books, seal and bank accounts. Court-appointed administrators in China run the estate through reorganisation, settlement or liquidation, report to the court and the creditors' meeting, and are the counterparty that creditors, buyers, investors and foreign office-holders must deal with. Understanding how they are chosen, what they may do without permission and how they are paid is essential for anyone with money or assets at stake in a Chinese insolvency.

The framework is the Enterprise Bankruptcy Law (in force since 1 June 2007), two Supreme People's Court (SPC) judicial interpretations issued in 2007 on the designation and the remuneration of administrators, and a growing body of local court guidance. A substantial revision of the law received its first reading in September 2025 and its second reading in August 2026 and was still pending in November 2026. This page explains how the system works today, what the draft would change, and how court-appointed administrators interact with liquidators in Hong Kong and offshore centres.

How courts select court-appointed administrators

Under the Enterprise Bankruptcy Law, the administrator may be a liquidation group (typically used where the debtor is state-owned, a financial institution or the case raises policy issues), or a qualified intermediary: a law firm, an accounting firm or a bankruptcy liquidation firm. Individuals with relevant professional qualifications may also be appointed in suitable cases. Higher people's courts and intermediate courts maintain rosters of approved institutions, ranked by experience and capacity, and appointments are generally made from those rosters.

The SPC's 2007 provisions allow several selection methods. Rotation and random selection are used for routine cases; competitive selection, in which candidate firms submit proposals and fee terms, is used for larger or more complex cases; and the court may appoint a liquidation group directly where the law or policy requires it. Courts in major commercial centres, including Shenzhen, Shanghai and Beijing, have specialised bankruptcy tribunals and publish their own rules on rosters, competitive selection and performance evaluation.

Creditors are not powerless. The creditors' meeting may apply to the court to replace an administrator who cannot perform independently and fairly or is otherwise unfit, and the court decides. The second-reading draft of the revised law goes further: parties that have conducted pre-reorganisation negotiation in accordance with the law could recommend an administrator to the court. That reflects existing practice in several courts, where the interim administrator in a pre-reorganisation is often confirmed as the formal administrator.

Two further features shape appointments in large cases. First, where affiliated companies are so intermingled that their assets and liabilities cannot be separated at reasonable cost, courts have ordered substantive consolidation and appointed a single administrator for the whole group; the revision draft would put consolidated bankruptcy on a statutory footing. Second, in pre-reorganisation, a court may register the case before formal acceptance and allow the debtor, its main creditors and prospective investors to negotiate a plan under the supervision of an interim administrator. For foreign creditors, the practical lesson is that court-appointed administrators are often in place, informally, weeks or months before the public announcement, so monitoring local court notices pays off.

Powers, duties and the first 100 days

The administrator's statutory duties include taking over the debtor's property, seals, books and documents; investigating the debtor's financial position and preparing a report; deciding internal management matters and daily expenses; deciding whether to continue the business before the first creditors' meeting; managing and disposing of property; representing the debtor in litigation and arbitration; proposing and convening creditors' meetings; and reviewing claims. In a reorganisation the debtor may, with court approval, manage its own affairs under the administrator's supervision, a model resembling debtor-in-possession.

Several decisions require prior consent. Before the first creditors' meeting, significant dispositions such as transfers of land use rights, real estate, intellectual property and entire inventories, borrowing, creating security and abandoning rights need the court's permission. After the meeting, the administrator must report those acts to the creditors' committee, or to the court if there is no committee. The revision draft would give the creditors' meeting authority over major asset disposals, strengthening creditor control.

The early weeks set the tone for the whole case. The typical sequence is shown below; timing varies by court and case size.

Remuneration, supervision and liability

Administrators' fees are fixed by the court under the SPC's 2007 remuneration provisions, which set a sliding scale of percentage caps applied to the value of assets distributed to creditors; the percentage falls as the estate grows. Where an administrator was chosen by competitive selection, the court may follow the fee terms in the winning bid. The creditors' meeting may object to the remuneration plan, and courts can adjust fees during the case to reflect the work actually done and the results achieved.

Fees and other bankruptcy expenses are paid from the estate ahead of ordinary claims, and secured creditors may bear a share of the administrator's costs of preserving and realising their collateral. In reorganisations where an investor brings new money, fees are often negotiated as part of the plan budget. For creditors, the economic point is simple: administrator costs, court fees and the expenses of continuing the business reduce the pool available to unsecured claims, so scrutinising the budget is worthwhile.

Administrators must perform their duties diligently and faithfully, are supervised by the court and the creditors' meeting and committee, and may be fined by the court or held liable for losses caused by breach of duty. In practice the strongest controls are transparency demands made through the creditors' committee, requests for information supported by the court, and, in serious cases, applications to replace the administrator.

Liquidators outside bankruptcy: dissolution and compulsory liquidation

Not every court-appointed office-holder is a bankruptcy administrator. When a solvent company is dissolved, the revised Company Law (effective 1 July 2024) makes the directors the persons obliged to liquidate and requires a liquidation group to be formed within 15 days of the dissolution event. Directors who fail to liquidate on time can be liable for resulting losses. If no liquidation group is formed, or the liquidation is delayed or improperly conducted, a creditor or shareholder may ask the court to appoint one; that is compulsory liquidation.

A court-appointed liquidation group in compulsory liquidation is often drawn from the same roster of law and accounting firms used for bankruptcy. If the liquidators discover that assets are insufficient to pay debts, they must apply to convert the case into bankruptcy, at which point the regime of court-appointed administrators takes over. For foreign parents winding down a subsidiary, this means a voluntary exit can become a court-supervised process if creditors are not paid in full. Our guide to liquidation and deregistration of foreign-invested enterprises covers the solvent route in detail.

Shenzhen also operates China's first personal bankruptcy regime under the Shenzhen Special Economic Zone Personal Bankruptcy Regulations, in force since 1 March 2021. Administrators in personal cases supervise the debtor's assets and conduct during the observation period. That matters to foreign creditors of founders and guarantors resident in Shenzhen, and the national revision draft also refines debt-clearance rules for individuals jointly liable for company debts.

Cross-border work: court-appointed administrators and Hong Kong liquidators

Most Chinese groups with offshore financing sit under a Cayman Islands or British Virgin Islands holding company listed in Hong Kong, with operating subsidiaries on the Mainland. A Hong Kong or offshore liquidator appointed over the holding company controls shares in intermediate companies, but not the onshore assets directly. Conversely, court-appointed administrators in China have no automatic authority over assets in Hong Kong, Singapore or the United States.

The Enterprise Bankruptcy Law allows Chinese courts to recognise foreign insolvency proceedings on the basis of treaties or reciprocity, subject to public policy and the protection of Chinese creditors, but recognition of non-Hong Kong proceedings remains uncommon. The most developed channel is with Hong Kong. Under a Record of Meeting signed with the Hong Kong government in May 2021, the SPC issued Opinions on piloting the recognition and assistance of Hong Kong insolvency proceedings, designating courts in Shanghai, Xiamen and Shenzhen.

The pilot covers compulsory winding-up, creditors' voluntary winding-up and court-sanctioned schemes initiated by a liquidator or provisional liquidator, where the debtor's centre of main interests has been in Hong Kong for at least six months and it has principal assets, a place of business or a representative office in a pilot area. The first recognition, by the Shenzhen Intermediate People's Court, was announced in January 2022. Recognised Hong Kong liquidators may take over property and records and manage assets, but major dispositions and moving assets out of the Mainland need separate court approval.

In the other direction, the Hong Kong courts have recognised Mainland administrators at common law in a series of cases, assisting them to take control of Hong Kong assets and stay local proceedings. Recognition is not automatic and depends on the nature of the Mainland proceeding and the relief sought. China has not adopted the UNCITRAL Model Law on Cross-Border Insolvency, but the revision draft would refine the extraterritorial effect of Chinese proceedings, the jurisdiction of Chinese courts and international judicial assistance. For the wider picture see our cross-border restructuring page.

Working with court-appointed administrators: practical checklist

Foreign creditors, investors and offshore office-holders who deal successfully with court-appointed administrators tend to follow the same disciplines.

• Map the case early. Identify the court, the administrator, the case number, the procedure (liquidation, reorganisation or settlement) and the claims-filing deadline. Missing the deadline does not extinguish a claim, but late filers bear the cost of supplementary review and cannot share in distributions already made.
• Document claims properly. Claims need evidence of the underlying contract, performance, amounts and any security, with translations and, for foreign documents, the notarisation and legalisation or apostille the administrator requires.
• Assert proprietary rights separately. Goods held under retention of title, consigned stock and trust property are recovered by a claim for return, not by filing as an unsecured creditor.
• Use the creditors' committee. A committee seat (up to nine members) gives access to information and a voice on major disposals.
• Coordinate onshore and offshore. Where offshore liquidators or scheme companies are involved, agree protocols on information sharing and asset realisation with the onshore administrator.
• Budget for the timeline. Reorganisations often take one to two years from acceptance to plan completion; liquidations of complex estates can take longer.

Common mistakes include treating the administrator as an adversary rather than as the decision-maker whose cooperation is needed, filing claims in foreign currency without the conversion basis the administrator expects, and assuming that a guarantee from an offshore parent will be honoured outside the Chinese process. Creditors also often overlook avoidance risk: payments received in the six months before acceptance may be challenged as preferences, and transfers at an undervalue within one year may be set aside.

How TRW & Co helps

From our Shenzhen representative office we advise foreign creditors, investors and offshore office-holders on strategy when a Chinese counterparty enters a process run by court-appointed administrators. We coordinate claims preparation and document legalisation, prepare creditor positions and committee strategy, advise on Hong Kong, English-law and other non-PRC aspects such as guarantees, schemes and offshore liquidations, and help design cooperation protocols between onshore administrators and foreign office-holders. Where PRC legal advice, filings or representation before Chinese courts are needed, we work alongside licensed PRC law firms and manage the combined team. See also creditor representation and our 2026 restructuring review. To discuss a case, contact us.