China: Corporate/Commercial: Zhejiang: Contentious (PRC Firms) Overview

The New Battleground in the Insolvency of Technology and Innovation Enterprises: Judicial Reorganisation and Out-of-Court Workouts

Technology-driven enterprises (TDEs) continue to account for an increasing proportion of China’s economic structure, and their presence in corporate insolvency proceedings has grown in parallel. Compared with traditional asset-heavy enterprises whose value is largely embedded in real estate and equipment, TDEs are typically characterised by light-asset structures, strong innovation capabilities, and a high degree of reliance on founders and core technical teams. These structural differences are fundamentally reshaping the scenarios in which insolvency remedies are applied and the pathways through which value can be realised, such that traditional liquidation-oriented or asset-centred restructuring models often fail to capture the potential value inherent in technology enterprises.

Judicial practice in China is evolving in response to these new demands. Courts across the country are exploring accelerated procedures, differentiated approaches to the protection of intellectual property and the retention of talent, and the use of out-of-court workout platforms to provide more flexible rescue solutions. Based on recent judicial releases and practical observations, this article summarises the key risks in TDE restructurings, the major innovations emerging in Chinese practice, and provides practical guidance for administrators, creditors and distressed enterprises.

Reorganisation of technology-driven enterprises: judicial innovation in a new field

Causes of distress

Technology-driven enterprises are companies engaged in research and development in emerging technology sectors such as electronic information, biomedicine, aerospace, and energy and environmental technologies, generating intellectual property and commercialising such achievements. Their common features include light-asset structures, heavy R&D investment, and the co-existence of high growth potential with high uncertainty. According to the Ministry of Industry and Information Technology, by the end of 2024 China had more than 600,000 technology and innovation-oriented enterprises. With the continued strengthening of state support for technological innovation, the proportion of such enterprises in the market is expected to rise further, and the number entering insolvency proceedings is likely to grow accordingly.

The high-risk profile of TDEs goes hand in hand with their rapid development and differs materially from that of traditional manufacturing or real estate enterprises. Based on judicial practice and prevailing financing structures, the principal causes of distress can be summarised as follows.

Financing constraints and cliff risks – TDEs require substantial upfront investment and long development cycles, yet their asset base is largely composed of intangible assets such as patents, algorithms and data, making them ill-suited to traditional bank lending models. They therefore rely heavily on venture capital and private equity financing, which typically includes valuation adjustment mechanisms, buy-back or put arrangements linked to IPOs or M&A exits. When capital market conditions deteriorate or growth fails to meet expectations, these mechanisms may crystallise into concentrated repurchase or compensation obligations, rapidly exhausting liquidity and triggering insolvency.

Technology iteration and commercialisation uncertainty – TDEs face fast technology cycles and short product life spans. Whether R&D achievements can successfully transition from technical validation to market adoption depends on market positioning, cost control and industry-chain co-ordination. Misjudgements in technological pathways or obstacles in commercialisation frequently result in the immediate loss of going-concern value.

Governance weaknesses and dependence on key personnel – early-stage or growth-phase TDEs often operate with simplified governance structures and underdeveloped internal control and risk management systems. Their value is highly concentrated in founders and core technical teams, such that the departure or destabilisation of key personnel may have a decisive impact on survival.

Emerging practice in China

As the number of financially distressed TDEs has increased, Chinese courts have gradually developed a rescue framework distinct from that applied to traditional asset-heavy debtors. Its core lies in recognising and activating the value of intangible assets and core technical talent, while introducing procedural flexibility to accommodate the short value-preservation window and high demand for business continuity.

Green channels for identifying restructuring value – to shorten the time required for TDEs to obtain insolvency protection, administrative recognition is increasingly used as a reference point for assessing restructuring value. In some regions, designations such as “hi-tech enterprise”, “innovative SME” or “specialised and sophisticated SME” have become important indicators for the courts. For enterprises whose principal business clearly falls within frontier technology sectors, simplified review processes and expedited entry into reorganisation have been explored.

Given the time sensitivity of value preservation, administrators rely extensively on online tools in claims filing, verification and asset investigation to shorten procedural cycles. According to publicly released information from the Beijing No 1 Intermediate People’s Court, since 2024 the court has rescued 27 small and medium-sized TDEs, with an average period of only 4.5 months from commencement to approval of restructuring plans, significantly shorter than in traditional cases.

Recognition and incentivisation of technology and talent – to prevent the loss of key teams and ensure continuity of R&D activities, courts typically adopt differentiated arrangements, including:

• Administrator selection– while maintaining judicial independence, some courts allow debtors and major creditors to recommend administrators with industry expertise.
• Debtor-in-possession and continued operation – enterprises are often permitted to continue operating during reorganisation under the control of their existing management teams, with timely lifting of preservation measures and flexible arrangements for rescue financing.
• Retention of equity and incentive mechanisms – instead of the traditional “wipe-out” approach to shareholder interests, restructuring plans often preserve part of the founders’ or core team’s equity, and link performance milestones to profit-sharing arrangements.
• Co-ordinated resolution of personal liabilities – given the prevalence of founder guarantees, personal insolvency pilots (eg, in Shenzhen and Xiamen), quasi-personal debt clearance mechanisms (eg, in Zhejiang and Jiangsu) and negotiated settlements are used to address personal liabilities. The draft amendments to the Enterprise Bankruptcy Law introducing entrepreneur debt restructuring are expected to further institutionalise this approach.

Balancing stakeholder interests and asset disposal – compared with traditional cases, issues arising from valuation adjustment mechanisms, the characterisation and ranking of investor claims, and the allocation of value among creditors, founders and new investors are more prominent. Restructuring plans must therefore incorporate governance reforms, refinancing structures and tools such as class shares or asset securitisation to prepare enterprises for future capital market access.

Asset disposal also presents unique challenges. The Shanghai Pudong Court has explored replacing piecemeal auctions with package sales of IP-heavy assets. As data assets represent a new form of property right, their transfer must comply with the Cybersecurity Law, Data Security Law and Personal Information Protection Law, with anonymisation and de-identification as preconditions.

Out-of-court workouts

Because TDE restructurings are highly sensitive to time windows, confidentiality and team stability, reliance on judicial proceedings alone often fails to preserve value. Out-of-court workouts – voluntary negotiations facilitated by neutral platforms – have therefore developed rapidly as a parallel rescue mechanism, enabling flexible consideration structures such as licensing, milestone payments and class shares.

Dedicated workout centres have emerged across China, concentrated in the Yangtze River Delta and the Greater Bay Area, operating under market-driven, administratively guided or court-led models. Despite their efficiency and flexibility, structural constraints remain: the absence of statutory moratoriums exposes negotiations to enforcement risks; dispersed creditor structures make co-ordination difficult; and uncertainty persists regarding the seamless migration of workout results into formal proceedings.

Practical responses include seeking co-ordination letters from courts, embedding standstill and default clauses in workout agreements, forming financial creditor committees, and pre-agreeing the continuation of intermediaries’ roles and fee priorities in subsequent judicial proceedings.

Conclusion

As TDEs continue to gain weight in China’s economy, their asset-light, innovation-driven and talent-dependent nature is redefining corporate rescue pathways. Judicial reorganisation continues to evolve in identifying restructuring value, expediting procedures and safeguarding technology and talent, while out-of-court workouts provide a flexible, market-oriented complement at the early distress stage.

A hybrid model of co-ordinated in-court and out-of-court processes is likely to become the norm. Workouts will serve as platforms for early-stage value discovery and consensus building, while judicial proceedings will provide statutory tools such as moratoriums, majority voting and judicial endorsement. For lawyers, investors and enterprises alike, the ability to structure and navigate transactions across both tracks will be decisive in improving the success rate of technology enterprise rescues.

科创类企业破产的新战场：重整与庭外重组

随着科创企业在中国经济结构中的占比持续上升，其在企业破产案件中的比重亦同步增加。相较于传统以不动产、设备等重资产为核心的企业，科创企业普遍具有“轻资产、强创新、对创始人和核心团队高度依赖”的特征，上述结构性差异正在重塑破产救济的适用场景，使单纯依赖资产变现为导向的清算或重整模式难以充分实现其潜在价值。

为适应这一变化，司法实践与市场机制正在同步演进，各地法院在探索提速审理，保护知识产权与人才激励的差异化措施。同时，庭外重组平台的兴起为危机企业提供了更灵活的自救路径。

科创类企业重整：新领域内的司法创新

科创类企业破产成因的特征

科创类企业共同特征在于资产结构轻、研发投入高、成长性与不确定性并存。根据工业和信息化部数据，截至2024年末，中国科技和创新型企业数量超过60万家。随着国家持续加大对科技创新领域的政策扶持，预计科创类企业在市场主体中的占比仍将进一步提升，相应进入破产程序的科创企业数量亦将持续增长。

综合司法实践与投融资结构，此类企业主要破产原因主要集中在三方面：

• 融资约束与断点风险 - 企业高度依赖创投和私募股权融资，对赌与回购条款一旦被触发，极易在短期内形成集中现金流压力。
• 技术与商业化不确定性 - 技术路径选择失误或商业化推进受阻，往往直接导致其丧失持续经营能力。
• 公司治理与核心团队依赖性 - 治理结构简化、内部控制薄弱，加之企业价值高度集中于创始人与核心技术人员，使人员变动对企业存续产生放大效应。

中国司法实践的主要创新

为回应上述特征，各地逐步形成以“价值导向、程序提速、激励核心资源”为核心的重整模式。

重整价值识别与程序推进

行政部门授予的“高新技术企业”、“创新型中小企业”、“专精特新中小企业”等资质，已成为法院判断企业是否具有重整价值的重要参考。部分法院对于主营业务明确属于前沿科技领域的企业简化审查流程、优先导入重整程序。

同时破产管理人在科创类企业重整案件中也会更倾向于在债权申报与审查、资产调查等环节借助线上工具，以缩短程序周期。

激发技术和人才的价值

为防止核心技术团队流失、保障研发活动的连续性，科创类企业重整案件通常需在以下方面作出差异化安排：

• 允许债务人及主要债权人对管理人人选提出推荐意见，以引入更熟悉行业的专业力量；
• 鼓励持续经营并适用债务人自行管理（DIP），在解除保全、引入重整融资方面强调及时与灵活；
• 通过保留部分出资人权益、设置绩效里程碑和利润分成机制，将核心团队的持续投入与重整成效直接挂钩。
• 鉴于创始人普遍为企业债务提供担保，实践中逐步形成通过个人破产试点地区制度、类个人破产集中清理机制或与债权人协商等方式，协同处理企业与个人债务的路径。随着企业破产法修订草案引入经营者个人债务重组条款，企业与个人协同重整有望进一步制度化。

多元利益平衡与资产处置合规

科创类企业重整需重点处理对赌回购义务的性质认定、投资人权利受偿顺位等问题，并通过治理结构优化、再融资安排、类别股或资产证券化工具，为企业后续对接资本市场预留空间。无形资产处置上，部分地区已探索以整体转让替代逐项拍卖。涉及数据资产的，还需遵守网络安全与个人信息保护法律，通过匿名化、去标识化等方式方可流转。

庭外重组：司法重整的关键补充机制

鉴于科创企业对时间窗口、保密性与核心人才连续性的特殊需求，单纯依赖司法程序往往难以及时保全其经营价值。庭外重组作为由债务人与利害关系人在第三方平台主持下协商实现债务与资源重构的市场化机制，近年来在中国迅速发展，成为司法重整的重要补充。

多地已设立庭外重组服务中心与平台，主要集中于长三角与大湾区，并呈现市场化平台、行政引导与司法牵头三类并行的发展格局。这些平台在提升重组服务可得性、整合法律与投融资资源方面发挥了积极作用。

然而，庭外重组仍面临三项结构性制约：其一，缺乏法定的执行中止效力，个别债权人的保全或执行行为可能形成“执行阴影”；其二，债权人分散导致外部协调成本高；其三，庭外成果能否顺利迁移进入司法程序仍存在不确定性。为此，实践中通常通过争取法院出具协调性函件、在庭外协议中设置暂停执行与违约救济条款、构建金融机构债权人委员会以及明确中介在司法程序中的角色延续等方式加以应对。

结语

科创企业的轻资产结构与对核心团队的高度依赖，正在推动中国企业债务救济体系向“价值导向、庭内外协同”的方向演进。未来，庭外重组将承担价值发现与谈判整合功能，司法程序则为执行中止、多数决与成果确认提供制度背书。能否在两种路径之间进行有效切换并进行结构性设计，将成为提升科创企业挽救成功率的关键能力。