Chinese Insolvency Practitioners

The Bankruptcy Administrator (Guanren)

The bankruptcy administrator (guanren, 管理人) is the central figure in Chinese insolvency proceedings. Under the Enterprise Bankruptcy Law of the People’s Republic of China (Qiye Pochan Fa), effective 1 June 2007, the administrator is appointed by the court upon acceptance of the bankruptcy application and assumes responsibility for managing the debtor’s property, conducting the bankruptcy proceedings, and distributing the bankruptcy estate.

The Enterprise Bankruptcy Law (EBL) substantially reformed the administrator system. Under the previous law (the 1986 Enterprise Bankruptcy Law (for Trial Implementation)), bankruptcy proceedings were administered by the liquidation group (qingsuan zu), composed primarily of government officials from the debtor’s supervisory authority. The EBL replaced the government-led liquidation group with a professionally qualified administrator system, requiring administrators to be independent intermediaries — law firms, accounting firms, or bankruptcy liquidation firms — or individuals with appropriate qualifications.

Qualification

The administrator qualification system is established by the Supreme People’s Court’s Provisions on the Appointment of Bankruptcy Administrators (2007, revised 2019). The SPC maintains a National Register of Bankruptcy Administrators (Pochan Guanren Minglu), organised by the provincial-level Higher People’s Courts.

The qualification requirements differ for institutions and individuals. Institutions — law firms, accounting firms, and bankruptcy liquidation firms — must have at least three lawyers or accountants with bankruptcy practice experience. Individuals must have passed the national bar examination or certified public accountant examination, must have at least five years of professional experience, and must have participated in at least three bankruptcy cases as a member of an administrator team.

The Higher People’s Courts maintain graded registers (jiandang guanli), classifying administrators into three grades based on qualifications and experience. Grade 1 administrators may be appointed to administer large or complex bankruptcy cases. Grade 2 administrators may administer medium-sized cases. Grade 3 administrators and individuals are limited to small or simplified cases. The grade system is designed to match administrator capacity with case complexity.

Court Appointment

The administrator is appointed by the court that accepts the bankruptcy application. The court selects the administrator from the register maintained by the Higher People’s Court. The appointment methods include:

Random selection (suiji zhi ding): The court selects the administrator by lottery from the pool of qualified administrators in the relevant grade. This is the default appointment method, intended to prevent favouritism. Competitive selection (jingzheng zhi ding): For large or complex bankruptcy cases, the court may invite candidates to submit proposals and may interview the leading candidates. The competitive method is used for cases where the debtor’s assets exceed RMB 100 million or where the case involves significant social or legal complexity. Recommended selection (tuijian zhi ding): In certain cases — particularly pre-bankruptcy restructuring or debt-to-equity swaps — the debtor and creditors may recommend a specific administrator to the court, subject to the court’s approval.

The court issues a formal appointment order (zhiding guanren jueding shu) specifying the administrator’s term, the scope of the administrator’s authority, and the court’s supervision requirements.

Duties

The administrator’s duties under the EBL include:

Case management: The administrator assumes custody of the debtor’s property, books, records, and documents; manages the debtor’s business operations; and conducts an inventory of assets. Investigation: The administrator investigates the debtor’s financial affairs, including the identification of preferential payments, fraudulent conveyances, and transactions at undervalue that may be reversed under EBL Articles 31-34. Creditor administration: The administrator notifies creditors of the bankruptcy proceedings, receives and reviews creditor claims, convenes creditors’ meetings, and prepares the creditor list. Asset realisation: The administrator values the bankruptcy estate, conducts asset sales (through auction or private sale, subject to creditor approval), and collects accounts receivable. Distribution: The administrator prepares the distribution plan, obtains creditor approval, and makes distributions to creditors in the statutory order of priority. Reporting: The administrator reports regularly to the court and the creditors’ meeting.

Remuneration

Administrator remuneration is governed by the Supreme People’s Court’s Provisions on the Remuneration of Bankruptcy Administrators (2007). The SPC prescribes a sliding-scale fee schedule calculated as a percentage of the bankruptcy estate’s value:

The court determines the specific percentage within the range, considering the complexity of the case, the administrator’s performance, and the amount of work involved. The administrator may apply to the court for an increase in remuneration where the case involves exceptional complexity. Creditors may object to the proposed remuneration before the court.

Supervision

The administrator is subject to supervision by the court and the creditors’ meeting. The court exercises ongoing supervision through the administrator’s regular reporting obligations and may replace the administrator for cause. The creditors’ meeting exercises supervision through the right to approve or reject the administrator’s proposed actions.

The 2019 SPC Opinions on the Proper Handling of Enterprise Bankruptcy Cases strengthened administrator supervision. The Opinions require the court to: (1) review the administrator’s qualifications at the commencement of the case; (2) monitor the administrator’s compliance with reporting deadlines; (3) review the administrator’s proposed fees; and (4) sanction administrators who fail to perform their duties diligently.

Administrator Liability

The administrator bears civil liability for loss caused to the debtor, creditors, or third parties by the administrator’s breach of duty. EBL Article 130 provides that the administrator who fails to perform duties diligently and faithfully, or who causes loss to creditors or third parties by failing to perform duties in accordance with the law, bears civil liability.

Administrator liability has been addressed in case law. The SPC’s guiding case Jiangsu Zhongtian v Zhang Jianguo established that an administrator who fails to properly investigate the debtor’s assets or to recover preferential payments is liable to creditors for the resulting loss. The SPC’s Minutes of the National Enterprise Bankruptcy Trial Work Conference (2018) confirmed that administrator liability is fault-based and that the administrator may limit its liability through professional liability insurance.

Insolvency Bar

The development of the bankruptcy administrator profession has created an emerging insolvency bar in China. The China Association of Bankruptcy Administrators (Zhongguo Pochan Guanren Xiehui), established in 2019, is the national professional organisation for administrators. The Association sets practice standards, conducts continuing professional education, and administers the administrator qualification examination.

Provincial chapters of the Association have been established in 25 provinces and directly-administered municipalities. The chapters maintain local administrator registers, organise training, and provide disciplinary oversight of administrator conduct.

Conclusion

The Chinese bankruptcy administrator system, established by the 2007 Enterprise Bankruptcy Law, transformed insolvency administration from a government-led process to a professionally administered system. The qualification requirements, graded register, court appointment mechanisms, sliding-scale fee schedule, and supervisory framework have professionalised the administration of insolvency cases. The emerging insolvency bar, represented by the China Association of Bankruptcy Administrators, provides the institutional infrastructure for the profession’s continued development.