Company Deregistration, Liquidation & Bankruptcy in China
With the rapid growth of the Chinese economy and an array of opportunities, many corporations have begun to undertake plans to expand into China. Most ventures have been a success, but like in any market, some companies may still fail. In the event of this, company de-registration, liquidation & bankruptcy processes should be employed. They are often perceived to be problematic and this can be due to many reasons, but is not always related to financial difficulties. Sometimes unfortunate, other times an opportune move – de-registration is a risky process yet can yield great returns.
The normal procedure is for company de-registration, liquidation & bankruptcy is to create a committee to be appointed to gather and dispose of the assets of the insolvent and to pay the creditors. In China, the relevant government authorities must approve the liquidation of an enterprise and certain procedures must be followed.
Liquidation Committee Tasks
Disposal of company assets, preparation of balance sheet and list of assets;
Notification to creditors and public announcement; The liquidation committee shall notify the creditors within ten days from the date of its establishment and publish an announcement on the newspapers within 60 days.
Handling outstanding business of the company which relates to the liquidation;
Settlement of outstanding tax payments and tax payments which arise during the liquidation period;
Settlement of creditors’ rights and debts;
Disposal of assets remaining after settlement of the company’s debts and representing the company in civil litigation.
In China, the procedure for company de-registration, liquidation & bankruptcy is rather complicated, particularly in the face of mainland customs and tax departments. Thanks to our history of working closely with all areas of Chinese tax and business regulations/legislation, LehmanBrown is intimately familiar with every sector of company de-registration and can therefore effortlessly guide you through an otherwise challenging task. LehmanBrown is able to offer advice on recovery plans as well as the more complex side of the liquidation procedure. In the current business environment, corporate restructuring and turnaround processes can often be closely linked to insolvency, which sometimes uncovers possibilities for saving the business. LehmanBrown has a thorough understanding of bankruptcy and liquidation procedures and the experience required for seeking out alternative financial sources. We are also able to offer proposals for reorganising debts and help for companies get back on track financially.
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