Solvent Liquidation/Deregistration

Overview

In China, there are often sound business reasons why a joint venture or Wholly Foreign Owned Enterprise should be wound up. The business may have run its course or be at risk of bankruptcy, or perhaps joint venture partners can no longer agree on how the business should be run. Sometimes, companies need to undergo voluntary liquidation simply because they are not needed post-merger or acquisition.

Whatever the reason, many Chinese Foreign Invested Enterprises (FIE) that are wound up are liquidated on a solvent basis with positive or nil net assets. This is largely due to foreign institutions which have made investments in China wanting to preserve their positive reputation and local relationships.

Voluntary liquidation of a company in China usually involves a more complex and protracted government approval process than the incorporation of the company. Our experience tells us that a smooth solvent liquidation and recovery not only requires a thorough understanding of laws and regulations, but also benefits from experience with local best practice and the ability to carry out complex on-the-ground work.

We can help shareholders design actionable close-down plans and identify potential problems that may be encountered during the liquidation process in China. We can also define corresponding solutions, deploy a team to assist the client in execution, and successfully implement the liquidation procedure, to lower the risk of losses and maximise the recovery. But perhaps most importantly, by taking care of asset protection, we help to free up time and resources so that management can focus on those operations with greater ongoing potential.