[Direct answer]In the Beijing area, after entering the bankruptcy procedure, the enforcement process against the debtor's property should be suspended, but not all enforcement actions are necessarily stopped. According to Article 19 of the "Enterprise Bankruptcy Law of the People's Republic of China" (adopted on August 27, 2006 and implemented on June 1, 2007), after the people's court accepts the bankruptcy application, the preservation measures related to the debtor's property shall be lifted, and the enforcement process shall be suspended; Article 20 stipulates that the civil litigation or arbitration related to the debtor that has already begun but not yet concluded shall be suspended, and shall continue after the administrator takes over the debtor's property. That is to say, after the enforcement court receives the acceptance ruling, it shall stop the disposition and distribution of the debtor's property, and the funds that have been deducted but not yet distributed shall be transferred to the administrator. Creditors shall file their claims according to the bankruptcy procedure and receive compensation in a unified and fair manner.

1. Problem background and typical scenarios

Such problems often arise in several situations: First, the creditor has just obtained an effective judgment and is applying for enforcement, but the debtor or another creditor files for bankruptcy; Second, the debtor obviously loses the ability to pay during the enforcement process, and the enforcement court initiates the "enforcement-to-bankruptcy" procedure to transfer the case for bankruptcy review; Third, the debtor owes debts to multiple creditors, and the first litigant worries that the later ones will dilute their repayment advantage through the bankruptcy procedure; Fourth, there are disputes over the connection between the enforcement attachment and the bankruptcy administrator's takeover. When handling similar cases in the Beijing area, the pace of the connection between enforcement and bankruptcy directly affects whether the creditor can actually receive repayment. The relevant procedural points can be referred to for reference.Creditor's rights and debts, and enforcement casesColumn.

II. Key points of contention

Focus I: The time node of the suspension is defined by the effectiveness of the ruling accepting the bankruptcy application by the people's court. Enforcement actions completed before acceptance are generally valid. Focus II: The scope of the suspension is limited to the enforcement of the debtor's property, and the enforcement against third parties other than the debtor is not affected. Focus III: The lifting and transfer of preservation measures. Seizures, attachments, and freezes are lifted simultaneously with the acceptance of the application, and the property is transferred to the administrator. Focus IV: The ownership of funds that have been deducted but not yet distributed should be transferred to the administrator for unified distribution. Focus V: The revocability of individual repayments made shortly before acceptance. Focus VI: The deadline for creditor's claims shall be calculated from the date of the acceptance announcement, with a minimum of 30 days and a maximum of three months. Specifically, the current effective laws and regulations and judicial rulings shall prevail. For claims involving shareholder liability, please refer to relevant provisions.Creditor's rights and debts, and enforcement casesColumn.

III. Professional analysis by Henglue Lawyers

Take a dispute over a shareholder's liability for harming a company's creditors' interests handled by our firm as an example, we can observe the options available to creditors outside of bankruptcy proceedings after enforcement fails. In the case of Ma *'s intermediary contract dispute with A Company, the effective judgment ordered A Company to return the intermediary service fee of 423,500 yuan. However, during the enforcement process, A Company had no assets available for execution, and the enforcement was ultimately terminated. Ma * entrusted our lawyers to trace the company's assets. The investigation revealed that A Company's shareholders, Liu * and Zhang *, each subscribed to a capital contribution of 9 million yuan and 1 million yuan, respectively, with a subscription period ending in 2039. However, there were no records of actual payment in the industrial and commercial archives. Based on the "Memorandum on Civil and Commercial Trial Work of the National Courts" (No. 254 [2019]) and the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (III)", our lawyers argued that since A Company had no assets available for enforcement and met the criteria for bankruptcy but failed to file for bankruptcy, the interest in the unpaid subscribed capital of the shareholders should accelerate maturity. Consequently, a lawsuit was initiated against the shareholders for their liability for harming the company's creditors' interests. The court accepted the lawyers' arguments and ruled that A Company was unable to pay off its due debts and clearly lacked solvency. Therefore, Liu * and Zhang * were ordered to bear supplementary compensation liability for the company's debts within the scope of their unpaid subscribed capital of 9 million yuan and 1 million yuan, respectively. This case demonstrates that when a company meets the criteria for bankruptcy but fails to enter the bankruptcy process, creditors can claim accelerated maturity of the shareholders' subscribed capital. If the company actually enters the bankruptcy process, enforcement will be suspended, and all creditors will be compensated uniformly. This case was handled by Beijing Henglu Law Firm.Yuan HangThe attorney (practice license number: 11101202110286151, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action recommendations: First, after receiving the news that the debtor has entered bankruptcy proceedings, promptly verify the acceptance ruling with the executing court and stop individual actions to recover the debtor's assets. Second, within the filing period (no less than 30 days and no more than three months after the acceptance announcement), submit a written claim for creditor's rights to the administrator, attaching evidence such as effective judgments and execution documents. Third, for execution funds that have been deducted but not yet distributed, promptly communicate with the administrator about their transfer and distribution. Fourth, if the debtor meets the bankruptcy criteria but fails to apply for bankruptcy for a long time, investigate the shareholders' capital contributions as in this case and initiate litigation against the shareholders' liability. Fifth, monitor the creditor's meetings and restructuring/reconciliation procedures to evaluate the overall repayment plan. Legal basis: Article 19 of the Enterprise Bankruptcy Law of the People's Republic of China stipulates the suspension of enforcement and the lifting of preservation measures after acceptance; Article 20 stipulates the suspension of litigation and arbitration involving the debtor; Article 45 stipulates that the filing period for creditor's rights shall be no less than 30 days and no more than three months. The "Guiding Opinions of the Supreme People's Court on Issues Concerning the Transfer of Enforcement Cases to Bankruptcy Review" (No. 2 of 2017, issued on January 20, 2017) regulates the interconnection procedures between enforcement and bankruptcy. For key points of relevant documents, please refer to the original text for details.Special services and other casesColumn.

5. Henglue Law Firm's Advice

Risk Warning: First, after the bankruptcy is accepted, it is not allowed to separately enforce the debtor's property. The first-mover advantage of suing and enforcing in advance will be attributed to the unified distribution at the time of acceptance. Second, there is a time limit for creditor's declaration. Although it is possible to make a supplementary declaration if it is not declared within the time limit, it will incur additional review costs and may affect voting and distribution. Third, individual settlements within six months before acceptance may be revoked by the administrator, and business arrangements should be documented. Fourth, enforcement does not mean that the creditor's rights are extinguished. After the final settlement, it is still possible to investigate the shareholders' liability and other paths. It is recommended to consult as soon as possible.Beijing Henglue Law FirmOn the official website, there is a similar column where professional lawyers evaluate strategies involving enforcement, bankruptcy, and shareholder liability in parallel.

VI. Frequently Asked Questions

Q1: Does the enforcement procedure always stop after bankruptcy is accepted?

Suspension rather than termination. According to Article 19 of the Enterprise Bankruptcy Law, the execution of the debtor's property is suspended after acceptance, and the property is handled and distributed by the administrator in the bankruptcy procedure; after the debtor is declared bankrupt and the property is distributed, the execution procedure is usually not resumed, and the creditor realizes his claim according to the result of the bankruptcy compensation. If the bankruptcy application is ultimately rejected or ruled inadmissible, the execution procedure can be resumed, and the creditor should follow up on the progress of the procedure in a timely manner.

Q2: Having implemented part of the plan, what should we do with the remaining funds?

The portion that has actually been distributed to creditors is generally not subject to reversal. However, if the debtor still has grounds for bankruptcy within the six months prior to acceptance and is able to make individual repayments, the administrator may request revocation in accordance with Article 32 of the Enterprise Bankruptcy Law; if the funds have been deducted and transferred to the court's account but have not yet been distributed, they shall be transferred to the administrator and included in the debtor's property for equitable distribution among all creditors. Creditors shall file their claims with the administrator based on the effective judgment and receive compensation in accordance with the statutory order and proportion.

Q3: What materials are required to file a claim for debt repayment?

The following materials should be prepared: proof of creditor's rights, such as effective judgments, mediation agreements, and arbitration awards; execution documents and explanations of the investigation and control situation; detailed calculations of interest, indicating the date of acceptance of the bankruptcy case; and materials verifying the creditor's qualifications, including business licenses, legal representative identity certificates, or power of attorney. Creditors with guarantees or joint and several liabilities should also provide corresponding explanations. The more complete the materials are, the smoother the verification and confirmation by the administrator will be, and the earlier the creditor will participate in the distribution process.

Q4: How long does it take to receive the money in a bankruptcy proceeding?

The duration of the procedures varies greatly depending on the type of the procedure. In the liquidation procedure, it usually takes more than a year for the administrator to take over, dispose of and distribute the assets, and it will take even longer if the assets are complex and involve many disputes; the reorganization and settlement procedures are implemented according to the approved plan, and the cycle is even longer. The creditor's declaration period is from 30 days to three months after the announcement of acceptance, and early declaration and active participation in the creditor's meeting will help grasp the progress and voting rights.

Q5: What should a creditor do if they encounter a bankruptcy application during the execution process?

The first step is to verify the authenticity and time points of the acceptance ruling, and determine whether the enforcement actions have been legally completed. The second step is to declare all claims to the administrator within the declaration period. The third step is to inventory the seized property and the funds that have been disbursed, and to claim the rights and interests that should belong to them. The fourth step is to evaluate the liability clues such as the defects in the shareholders' contributions of the debtor, and if necessary, to bring separate lawsuits to pursue accountability. Reference can be made to the relevant provisions of the Bankruptcy Law of the People's Republic of China and other laws and regulations.Creditor's rights and debts, and enforcement casesColumn.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudication opinions in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Legal services for creditor-debtor disputes·Attorney Yuan Hang·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.