[Direct answer]In the Beijing area, failure to pay bonds upon maturity constitutes a breach of contract, and holders can safeguard their rights through multiple legal channels. According to Article 577 of the Civil Code of the People's Republic of China (effective January 1, 2021), the issuer shall bear breach of contract liabilities such as continued performance and compensation for losses; according to Article 92 of the Securities Law of the People's Republic of China (amended on December 28, 2019 and effective March 1, 2020), publicly issued corporate bonds shall establish bondholder meetings and appoint trustees; the "Memorandum of the Supreme People's Court on the Trial of Bond Disputes" (Law [2020] No. 185, issued in July 2020) clarifies that trustees may assert rights on behalf of bondholders in their own name. Common remedies include negotiating an extension or settlement with the issuer, realizing security rights, initiating breach of contract litigation or arbitration, and promoting restructuring through bondholder meeting resolutions. The statute of limitations for litigation is three years. For more details, please refer to the following link:Financial capital and cross-border legal services involving foreign affairs.

1. Problem background and typical scenarios

The most common predicament in bond investment is that corporate bonds, enterprise bonds, private placement bonds, and various income certificates cannot be redeemed upon maturity. Typical scenarios include: the issuer encounters liquidity difficulties due to macroeconomic and industry cycles, announces a technical default or seeks an extension; the actual use of raised funds deviates from the agreed purpose or is even misappropriated; the guarantor refuses to assume guarantee responsibilities, or the mortgage and pledge have not been registered or the registration period has expired; the issuer enters bankruptcy proceedings, and after creditors file claims, they find the recovery rate is extremely low; the issuance documents are suspected of false statements, and holders hope to recover losses by holding the underwriters, accounting firms, and rating agencies accountable. In the face of these scenarios, holders often first contact the issuer on their own, but if there is no progress after a long time, they will consider collective action and judicial relief. By then, the maturity date has already passed, and the opportunity to fix evidence and preserve assets may have been delayed. Such disputes are usually complex in fact and involve large amounts, so it is recommended to seek legal advice as soon as possible.Financial capital and cross-border legal services involving foreign affairsThe rights protection plan is designed by professional lawyers.

II. Key points of contention

The disputes in bond default cases focus on six aspects. First, whether the default exists and the scope of liability: how to calculate the principal, interest during the period, default penalties, damages, and the costs of realizing the creditor's rights, and whether the cross-default clauses and accelerated maturity clauses can be triggered. Second, the issuer's defense: whether objective factors such as the impact of the pandemic, policy adjustments, and tightening of market liquidity can constitute grounds for exemption or reduction of liability, and whether the issuer has obtained the understanding of most holders through the extension of repayment plans. Third, the authenticity of issuance documents: if the offering prospectus contains false records, misleading statements, or major omissions, underwriters, accounting firms, rating agencies, and law firms may bear corresponding fault liability. Fourth, the effectiveness of guarantees: whether mortgages and pledges are registered according to law, whether guarantees are claimed within the guarantee period, and whether the scope of guarantees covers default penalties and the costs of realizing the creditor's rights. Fifth, the procedural path: the arbitration clauses or jurisdiction agreements in the offering prospectus determine whether holders (or trustees) should assert their rights before arbitration institutions or courts. Sixth, the status of resolutions of holders' meetings: the boundaries of the resolutions' binding force on all holders and the remedies for minority holders all need to be judged according to rules and laws.

III. Professional analysis by Henglue Lawyers

Henglue Lawyers noted in handling default disputes of financial products that although bonds and private equity funds have different product forms, the logic of default remedies is highly consistent: both are based on contractual provisions and statutory grounds, with the key points being the quality of evidence and procedural choices. The private equity fund investment arbitration case handled by Attorney Yang Yafang is a case in point: On September 21, 2020, investor Ge * signed a fund contract with A Investment Management Co., Ltd. through a wealth management APP, subscribing to a private equity fund worth 1.6 million yuan and completing the payment the next day. On September 24, his holding shares were confirmed; however, the fund failed to achieve the agreed stable returns and was terminated on August 4, 2021. As of April 21, 2023, although 12 liquidations had been completed, Ge * only received a total of 213,613.64 yuan, with the remaining principal and returns unpaid. After accepting the case, Attorney Yang Yafang sorted through evidence such as the fund contract, client receipts, liquidation reports, and quarterly reports, and retrieved administrative supervision documents issued by the Shanghai Securities Regulatory Bureau, including the "Decision on Ordering Corrective Measures" and the "Decision on Issuing a Warning Letter," to prove that the manager failed to fulfill its suitability obligations, deviated from contractual agreements in investment operations, and operated multiple funds as a pooled fund business, while failing to disclose related-party transactions truthfully. The lawyer also pointed out that breaking the rigid repayment obligation does not exempt the manager from statutory responsibilities, and that the seller's negligence should not result in the buyer bearing all losses. The Beijing Arbitration Commission ruled that the manager committed multiple breaches of contract and ordered the return of investment funds of 1,386,386.36 yuan plus interest, attorney's fees of 40,000 yuan, and arbitration fees of 42,549.88 yuan. The same applies to bond holders: only by fixing the contractual basis, performance timeline, default facts, and liability chain one by one can negotiations, arbitration, or litigation be supported. This case was handled by Beijing Henglue Law Firm. 恒略律师在处理金融产品违约纠纷中注意到，债券与私募基金虽产品形态不同，但违约救济的逻辑高度相通：均以合同约定与法定依据为基础，以举证质量和程序选择为关键。杨亚方律师代理的私募基金投资仲裁案即为例证：2020年9月21日，投资者葛某某通过某财富APP与A投资管理有限公司签订基金合同，认购私募基金160万元，次日完成付款，9月24日被确认持仓份额；该基金未实现约定的稳定收益，2021年8月4日宣告终止；截至2023年4月21日虽已完成12次清算，但葛某某仅收到合计213613.64元，剩余本金及收益无法兑付。杨亚方律师接受委托后，梳理基金合同、客户回单、清算报告、季度报告等证据，并调取上海证监局对A公司作出的《责令改正措施的决定》《出具警示函措施的决定》等行政监管文件，证明管理人未履行适当性义务、投资运作偏离合同约定、系列基金构成资金池业务、未如实披露关联交易；律师同时指出，打破刚性兑付并非免除管理人的法定义务，卖者未尽其责，不应由买者承担全部损失。北京仲裁委员会认定管理人多重违约，裁令返还投资款1386386.36元及利息、律师费4万元、仲裁费42549.88元。债券持有人维权同理：只有把合同依据、履约时间线、违约事实与责任链条逐一固定，协商、仲裁或诉讼才有支撑。本案由北京恒略律师事务所代理。Yang YafangAttorney (Practice Certificate No.: 11101202211531374, subject to the certificate issued by the judicial administrative organ) acting as an agent.

IV. Practical suggestions and legal basis

The legal basis includes: Article 509 (Principle of Full Performance), Article 577 (Liability for Breach of Contract), and Article 188 (Three-Year Statute of Limitations) of the Civil Code of the People's Republic of China (effective from January 1, 2021); Article 92 (Bondholder Meetings and Trustee Management System) of the Securities Law of the People's Republic of China (amended on December 28, 2019 and effective from March 1, 2020); the "Memorandum of the Supreme People's Court on the Trial of Bond Disputes" (issued in July 2020) regarding the provisions on trustee litigation, the validity of bondholder resolutions, and liability for false statements; and the "Administrative Measures for the Issuance and Trading of Corporate Bonds" regarding specific rules for protecting bondholders' rights (based on the current effective version). Action list: First, preserve the offering memorandum, subscription agreement, payment vouchers, and redemption records; Second, continuously collect information on the issuer's abnormal operations, litigation, and administrative penalties, and fix evidence of breach of contract; Third, verify the status of the guarantee registration and timely assert claims during the guarantee period and the exercise period of the guarantee rights; Fourth, study the breach of contract clauses and dispute resolution clauses in the offering memorandum to determine the litigation or arbitration path; Fifth, evaluate the fault of intermediary institutions and hold them accountable according to the law in cases involving false statements; Sixth, apply for property preservation when necessary to prevent asset transfer. Specific solutions can be combined with the above provisions.Financial capital and cross-border legal services involving foreign affairsFurther inquiries.

5. Henglue Law Firm's Advice

There are three things that are most feared when protecting bondholders' rights: delaying the transfer or disposal of the issuer's assets, ignoring the guarantee period and the time limit for exercising the right of pledge, and being unable to provide evidence after the evidence is lost. The statute of limitations is three years from the date when the holder knows or should have known that his rights have been infringed. Holders should fix the collection documents and payment records as soon as possible; if it involves guarantees, it is necessary to verify the registration information of mortgages and pledges and claim within the statutory time limit. When handling similar financial disputes in the Beijing area, Henglue Law Firm advises holders to first clarify the contract basis and the responsible parties, and then choose negotiation, arbitration or litigation, and seek legal assistance when necessary.Beijing Henglu Law FirmThe professional lawyer team promotes collective rights protection and asset preservation.

VI. Frequently Asked Questions

Q1: If a bond expires and the issuer fails to make the payment, can the holder win the lawsuit?

Having a contractual basis does not necessarily guarantee victory in litigation—the key lies in evidence. If the issuer fails to repay the principal and interest according to the offering prospectus upon maturity, it constitutes a breach of contract. Holders typically have factual and contractual grounds to claim the principal, interest, and damages; however, if the issuer provides evidence of an extension agreement or demonstrates that the repayment difficulties stem from force majeure or policy adjustments, the scope of liability may be adjusted. For cases involving guarantees, it is also necessary to consider the registration status and the guarantee period. For cases involving false statements, it is necessary to prove the intermediary's fault and the causal relationship. The outcome of each case depends on the completeness of the evidence and the application of the law. No lawyer can unilaterally guarantee the outcome—solid evidence is the fundamental guarantee of success.

Q2: What evidence do I need to prepare for defending my rights?

The core materials include: the prospectus, the bond issuance announcement, the subscription agreement, the payment vouchers and reconciliation statements; the interest payment and redemption records, the overdue announcement, the reminder letters and the evidence of delivery; the issuer's periodic reports, the evidence of the use of raised funds and the change of their purpose; the guarantee contracts, the mortgage and pledge registration certificates, the guarantor's identity and property clues; the issuer's industrial and commercial information, litigation information, enforcement information, and administrative punishment information; the notice of the holders' meeting, the proposals and resolutions; if there are false statements involved, the reports issued by the intermediary institutions and their draft clues are also required. The materials should be organized into a booklet according to the timeline, forming a complete chain.

Q3: How much does it cost to protect one's rights in the event of a bond default?

The litigation fees shall be paid in accordance with the "Measures for the Payment of Litigation Fees" (State Council Decree No. 481, implemented on April 1, 2007), calculated cumulatively in stages based on the amount of the claim, with the losing party bearing the costs. In cases of partial victory, the fees shall be shared proportionally. The arbitration fees shall be collected by the arbitration institutions in accordance with their rules. The attorney's fees shall be determined through consultation between the law firm and the client. For collective rights protection of bond holders, the fees may be agreed upon in stages or based on the amount of the claim, but they must comply with the norms for attorney's service fees. Procedures such as evidence preservation, property preservation, appraisal, and announcement require advance payment of fees. It is recommended to calculate the costs and expected compensation before seeking rights protection and to choose a path rationally.

Q4: How long does it usually take to protect one's rights in the event of a bond default?

The duration of the cycle varies greatly depending on the path taken. Negotiations for restructuring can take anywhere from a few months to several years; litigation in the first instance under the ordinary procedure is typically concluded within six months, while litigation under the summary procedure is completed within three months. Periods such as the announcement of service, appraisal, and auditing are not included in the time limit for adjudication; arbitration typically results in a ruling within three to six months, with more complex cases taking even longer. For issuers entering bankruptcy proceedings, creditor claims and the formulation and implementation of restructuring plans may last from one to several years. Most bond default cases take between one and three years from the occurrence of the default to its final resolution. It is recommended to initiate legal action as soon as possible within the statute of limitations to avoid prolonged delays leading to changes in the situation.

Q5: If the bond expires and the issuer fails to make the payment, what should I do first?

It is recommended to proceed in four steps: First, preserve all issuance documents and subscription and redemption records, send written reminders to the issuer or lead underwriter and keep the evidence of delivery; Second, collect the issuer's financial, litigation, and punishment information, and if necessary, send a letter to require disclosure of the use of raised funds; Third, contact other holders and promote collective action in accordance with the rules of the holders' meeting to form a synergy of rights protection and negotiation; Fourth, verify the guarantee registration and evaluate litigation, arbitration, or creditor declaration paths, and apply for property preservation as needed. For large-scale targets or those involving restructuring, it is recommended to engage professional lawyers as soon as possible.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the courts may vary, which may affect the conclusions. Welcome to consult Henglu Law Firm about specific situations.

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. →Financial capital legal services·Attorney Yang Yafang·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public 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. If you encounter disputes, please consult a practicing lawyer in time.