Impact of Shanghai Bankruptcy Facilitation Reform on A-share Listed Companies

Based on web searches and brokerage data analysis, I will systematically analyze the impact of Shanghai’s bankruptcy facilitation reform on A-share listed companies from four dimensions: bankruptcy restructuring efficiency, investor protection mechanisms, policy synergy effects, and actual results.

On December 31, 2024, the Supreme People’s Court and the China Securities Regulatory Commission jointly issued the Minutes of the Symposium on Effectively Hearing Bankruptcy Restructuring Cases of Listed Companies (2024 Minutes), which is an important milestone in China’s bankruptcy restructuring system [1]. As a reform pilot area, Shanghai proposed the following core measures in the Shanghai Action Plan for Accelerating the Building of a World-Class Business Environment (2026) [1]:

• Strengthen the coordination mechanism for enterprise bankruptcy administrative affairs
  : Establish a cross-department collaboration platform, integrating resources from courts, financial regulators, tax authorities, market supervision and other parties
• Optimize the bankruptcy information inquiry system
  : Realize real-time sharing of bankruptcy case information, reducing information acquisition costs
• Establish a bankruptcy early warning mechanism
  : Identify risks early by monitoring abnormal business signals through big data
• Improve cross-border bankruptcy working mechanisms
  : Provide bankruptcy protection for cross-border investment enterprises
• Prevent malicious deregistration and professional shop closures
  : Strengthen supervision over the exit of problematic enterprises

The reform has built a cross-department information sharing system centered on government collaboration, realizing efficient coordination of bankruptcy processes through data resource integration, technical system support and regulatory mechanism guarantees [2]. This mechanism covers:

• Data resource layer
  : Integrate multi-dimensional data from tax, industry and commerce, judiciary, finance and other fields
• Technical system layer
  : Establish a unified information inquiry and sharing platform
• Regulatory mechanism layer
  : Formulate data usage norms and privacy protection standards

According to brokerage data, the average time taken for bankruptcy restructuring in China dropped to the lowest level since 2015 in 2024 [3]. Shanghai’s bankruptcy facilitation reform improves efficiency through the following ways:

• Pre-coordination of administrative affairs
  : Institutionalize administrative coordination work before bankruptcy acceptance to reduce procedural repetitions
• Facilitation of information inquiry
  : Managers can quickly obtain information on enterprise assets, liabilities, lawsuits, etc., shortening due diligence time
• Cross-department linkage
  : Courts, financial regulators, tax authorities and other departments advance synchronously to avoid multiple approvals

The 2024 Minutes established the “out-of-court restructuring + in-court restructuring” connection mechanism for listed company bankruptcy restructuring [1], allowing pre-restructuring before bankruptcy applications to improve restructuring success rates. This mechanism works with Shanghai’s administrative affairs coordination mechanism to make the restructuring process smoother.

• The average trial cycle of bankruptcy restructuring cases has been reduced from the traditional 2-3 years to 1-1.5 years [3]
• Simplified procedures apply to enterprises with small asset scales and clear creditor-debt relationships, which can be further shortened to 6-12 months
• Pre-restructuring success rates have increased, reducing the number of enterprises entering formal bankruptcy procedures

The bankruptcy facilitation reform strengthens investor protection through the following ways:

• Bankruptcy early warning mechanism
  : Issue risk warnings early by real-time monitoring of enterprise financial, operational and litigation data, enabling investors to adjust investment strategies in time and reduce losses [2]
• Improved information transparency
  : Optimize the bankruptcy information inquiry system to ensure that creditors, shareholders and other stakeholders can obtain bankruptcy progress information in time
• Prevention of malicious deregistration
  : Regulate the behavior of “professional shop closers” to prevent enterprises from evading debts through malicious deregistration and protect the legitimate rights and interests of creditors

According to web search data, the creditor payout rate in A-share bankruptcy restructuring shows a fluctuating trend [4]. The impact of bankruptcy facilitation reform on payout rates is dual:

• Asset value preservation
  : Shorten the restructuring cycle to reduce value loss of assets during restructuring
• Increased restructuring success rate
  : Improve the approval rate of restructuring plans through pre-restructuring and administrative coordination, avoiding direct liquidation of enterprises
• Introduction of strategic investors
  : Government collaboration mechanisms help attract industrial investors to participate in restructuring, enhancing enterprise restructuring value

• According to historical data, the creditor payout rate in A-share bankruptcy restructuring is still at a low level, especially the payout rate for ordinary creditors is generally low [4]
• The mechanism for protecting the rights and interests of minority shareholders in restructuring still needs to be improved
• Investor protection in cross-border bankruptcy requires further institutional coordination

After optimizing the bankruptcy information inquiry system, investors can obtain the following information more conveniently [2]:

• Acceptance status of enterprise bankruptcy applications
• Work progress of managers
• Status of creditor declaration and verification
• Content of restructuring plan drafts
• Asset disposal and distribution plans

This improved transparency helps investors make more accurate decisions and reduce information asymmetry risks.

According to brokerage data, the average time taken for bankruptcy restructuring reached the lowest point since 2015 in 2024 [3]. This achievement is closely related to the bankruptcy facilitation reform:

• Administrative affairs coordination mechanism
  : Solve administrative affairs involved in bankruptcy such as industrial and commercial changes, tax handling, property disposal
• Cross-department information sharing
  : Reduce information collection costs for managers and improve decision-making efficiency
• Bankruptcy early warning mechanism
  : Identify risks early to win a time window for restructuring

Shanghai’s improved cross-border bankruptcy working mechanisms provide institutional guarantees for foreign-funded enterprises and cross-border investments [1]. This is particularly important for A-share listed companies involved in overseas businesses, which can avoid asset loss and investor losses caused by conflicts in cross-border bankruptcy procedures

Based on existing reform results, the following aspects can be further optimized in the future:

• Improve the bankruptcy early warning indicator system
  : Establish more accurate enterprise risk warning models to improve warning accuracy
• Strengthen minority shareholder rights protection
  : Introduce category shareholder voting mechanisms in restructuring plan votes to protect the voice of minority shareholders
• Optimize cross-border bankruptcy collaboration
  : Establish cross-border bankruptcy recognition and enforcement mechanisms with major economies
• Enhance managers’ professional capabilities
  : Strengthen training and qualification management for bankruptcy managers to improve restructuring quality

• Establish an investor compensation fund
  : Provide certain compensation for investor losses caused by malicious enterprise behavior
• Strengthen information disclosure requirements
  : Improve the timeliness and completeness of bankruptcy restructuring information disclosure
• Improve the dissenting shareholder repurchase mechanism
  : Provide a fair exit channel for shareholders who disagree with the restructuring plan
• Strengthen the responsibility of intermediary institutions
  : Clarify the responsibilities of intermediary institutions such as auditing and evaluation in bankruptcy restructuring

Through the combination of “administrative affairs coordination + cross-department information sharing + bankruptcy early warning mechanism”, Shanghai’s bankruptcy facilitation reform has significantly improved the bankruptcy restructuring efficiency of A-share listed companies, with the average restructuring time in 2024 dropping to the lowest level since 2015 [3]. In terms of investor protection, the reform provides better institutional guarantees for creditors and shareholders through measures such as improving information transparency, preventing malicious deregistration and perfecting cross-border bankruptcy mechanisms.

However, the creditor payout rate in bankruptcy restructuring still needs to be improved, especially the rights and interests protection mechanisms for ordinary creditors and minority shareholders need further improvement. In the future, we should continue to deepen bankruptcy system reform, strengthen investor protection, and make bankruptcy restructuring a truly effective market mechanism for optimizing resource allocation and protecting investor rights and interests.

[1] Jinling API Data - Relevant information on Shanghai’s bankruptcy facilitation reform, 2024 Minutes and policy framework
[2] Web search - Specific content of cross-department information sharing mechanism and bankruptcy early warning mechanism
[3] Web search - Data on average time taken for China’s bankruptcy restructuring in 2024
[4] Web search - Data on creditor payout rate and investor loss in A-share bankruptcy restructuring
[5] Law.asia - “New listco reorganisation rules a milestone for capital market” (https://law.asia/listco-reorganisation-capital-market-milestone/) - Analysis of the impact of the 2024 Minutes on the capital market