[Direct answer]Yes. If you discover that the other party has transferred or hidden their assets, you can apply for property preservation before initiating litigation or applying for arbitration, or during the litigation process. According to Articles 103 and 104 of the Civil Procedure Law of the People's Republic of China (amended in 2023 and implemented on January 1, 2024), interested parties may, in case of an emergency, apply for pre-litigation preservation of the assets located at the place where the assets to be preserved are located, the defendant's residence, or the court with jurisdiction over the case; they may also apply for preservation during the litigation process. The applicant shall provide a guarantee and provide clear clues to the assets. After the court makes a ruling, the enforcement of the seizure, freezing, and attachment shall begin immediately. It should be noted that if the preservation results in losses to the defendant, the applicant shall compensate for them. For more details, please refer to the Civil Procedure Law of the People's Republic of China.Legal services for corporate commercial and contract disputes.

1. Problem background and typical scenarios

When a creditor's claim is about to expire or has already been breached, and the debtor starts to "transfer assets", this is one of the most worrying scenarios in commercial disputes. Typical cases include: the debtor suddenly liquidating the company, transferring account funds; transferring the property to relatives at a clearly unreasonably low price; changing the legal representative and withdrawing investment; transferring the accounts receivable to related companies. At this time, if we wait until the judgment takes effect before enforcement, we often end up in a situation where "we win the lawsuit but cannot get the money". Property preservation is a legal procedure to "freeze" the debtor's assets. For more information, please refer to the relevant rules.Legal services for corporate commercial and contract disputes.

II. Key points of contention

The controversy focuses on four points. Firstly, the choice of the timing of the application: if the situation is urgent and failure to immediately preserve the evidence will result in irreparable damage, then pre-litigation preservation should be applied; if the case has already entered the litigation process, then in-litigation preservation should be applied. Secondly, the provision of guarantees: in principle, the applicant should provide guarantees, and the amount and form of the guarantees shall be reviewed by the court. Malicious or obviously excessive preservation may be rejected. Thirdly, the clarity of the property clues: merely claiming in general terms that "the other party has property" is not sufficient to initiate the process. Specific clues such as account numbers, the location of real estate, and equity registration are required. Fourthly, the responsibility for erroneous preservation: if the applicant loses the case or the preservation is improper, they shall compensate the respondent for the losses caused by the preservation. Beijing district courts are increasingly standardizing the review of preservation orders, and the key to obtaining approval lies in providing authentic clues and sufficient guarantees.

III. Professional analysis by Henglue Law Firm

A film and television investment arbitration case handled by Attorney Xiong Binrong vividly demonstrates the practical value of promptly identifying the liable parties and assets when the debtor is deregistered and the assets face the risk of being lost. On May 20, 2022, Wang * signed a "Transfer Contract for Online Film Revenue Rights" with Beijing B Culture Media Co., Ltd., investing 800,000 yuan and holding a 3.6% stake in the project. A supplementary contract stipulated that if the revenue was less than 800,000 yuan, B Company would make up the difference. Beijing A Holding Group Co., Ltd. issued a "Guarantee Letter" to assume joint and several liability. Subsequently, B Company deregistered on May 12, 2023, before the film was released, without conducting any revenue accounting, and Wang *'s investment seemed to be lost. Wang * previously sued the People's Court of Chaoyang District, Beijing City, but the court ruled that the case should be resolved through arbitration due to the existence of an arbitration clause in the contract. Attorney Xiong Binrong then represented him in applying for arbitration to the Beijing Arbitration Commission, listing B Company's shareholders and guarantors as respondents and claiming the return of the principal of 800,000 yuan and the payment of attorney fees and arbitration fees. The arbitration tribunal supported the applicant's claims. This case was handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice license number: 11101202211410897, subject to the certificate issued by the judicial administrative organ) acts as the agent. Note: When there are obvious signs of the other party's liquidation or transfer of assets, it is necessary to secure or trace the responsible assets as soon as possible to avoid having no assets available for enforcement after winning the lawsuit.

IV. Practical suggestions and legal basis

The legal basis includes Article 103 of the Civil Procedure Law of the People's Republic of China (amended in 2023 and implemented on January 1, 2024) on the scope and application of preservation measures, Article 104 on pre-litigation preservation, and Article 105 on compensation for preservation errors: if the applicant makes a mistake in the application, the applicant shall compensate the respondent for the losses suffered due to the preservation measures; and the provisions on guarantees, clues, and review in the "Regulations of the Supreme People's Court on Several Issues Concerning the Handling of Property Preservation Cases by People's Courts" (implemented on December 1, 2016 and amended on December 23, 2020). Action list: First, immediately fix evidence of transfer, such as industrial and commercial changes, transfer records, and transfer information; Second, sort out and verify the accounts, real estate, equity, and vehicle clues under the other party's name; Third, prepare guarantee materials and consider purchasing litigation liability insurance; Fourth, file a lawsuit or initiate arbitration within 30 days after pre-litigation preservation, otherwise the preservation will be lifted; Fifth, continuously monitor property changes after preservation, details of which can be referred to...Legal services for corporate commercial and contract disputes.

5. Henglue Law Firm's Reminder

Preservation of evidence is a double-edged sword: if used properly, it can protect the creditor's rights; if used improperly, it will result in financial losses. The core risks are "preservation without basis" and "preservation exceeding the standard" - applying for preservation solely based on suspicion and lacking a real creditor's right basis. Once the application fails or the seizure is incorrect, the applicant must compensate the other party for the losses. It is recommended to first confirm that the evidence of the creditor's right is solid, the property clues are specific, and sufficient guarantees are provided before applying for preservation. When handling similar cases in the Beijing area, the applicant can apply for preservation at the Beijing Intellectual Property Court.Beijing Henglue Law FirmUnder the assistance of professional lawyers, evaluate the necessity of preservation and the guarantee plan.

VI. Frequently Asked Questions

Q1: If I discover that the other party is transferring their assets, can I apply for property preservation immediately?

In urgent situations where failure to immediately preserve evidence may result in irreparable damage to legitimate rights and interests, parties may apply for pre-litigation preservation before filing a lawsuit or initiating arbitration. If the case has already entered the trial process, parties may apply for preservation during litigation. Pre-litigation preservation must be filed with the court located in the jurisdiction of the property to be preserved, the defendant's residence, or any other court with jurisdiction. The party must file a lawsuit or initiate arbitration within 30 days after the court takes preservation measures. If no action is taken within the time limit, the court will lift the preservation order. Whether the situation is "urgent" will be determined by the court based on the evidence of transfer of assets.

Q2: What do I need to prepare for applying for property preservation?

There are four types of core materials: First, contracts, transfer vouchers, reconciliation letters, etc. that prove the existence of creditor's rights; Second, specific property clues, including bank accounts and their opening banks, real estate locations and property rights certificate numbers, the proportion of shares in the company where the shares are located, and vehicle license plate numbers; Third, guarantee materials, such as cash, guarantee letters, or litigation liability insurance policies; Fourth, preservation applications, which specify the request, facts, and emergency situations. The more specific the clues are, the easier it is for the court to quickly rule on the execution.

Q3: How much does it cost to apply for a preservation order?

The application fee for preservation of property shall be paid in accordance with the "Measures for the Payment of Litigation Costs" (State Council Decree No. 481, implemented on April 1, 2007) based on the actual amount of property preserved, and shall be paid in stages. The applicant shall pay the fee in advance, and it will generally be included in the sharing of litigation costs. If a guarantee or litigation liability insurance is provided separately, the applicant shall bear the related costs. Compared with the risk of having no property available for enforcement in the future, the upfront cost of preservation of property is usually worth the investment, but the applicant should evaluate the match between the amount of the creditor's claim and the scope of preservation.

Q4: How long does it usually take to seal up the property after the preservation order is issued?

The court shall make a ruling on the pre-litigation preservation within 48 hours, and the ruling shall be implemented immediately. The intra-litigation preservation shall be implemented promptly after the review and approval. The actual speed of the seizure depends on the accuracy of the clues and the efficiency of the assisting execution units. Bank accounts and online funds are usually seized faster, while real estate and equity require the cooperation of the registration authorities. The more accurate the clues provided by the applicant are, the faster the seizure will be implemented; if the clues are vague, a preliminary investigation order may be needed to supplement them.

Q5: If I make a mistake in the application for insurance coverage, do I have to compensate the other party for their losses?

Yes. According to Article 105 of the Civil Procedure Law, if there are errors in the application for preservation, the applicant shall compensate the respondent for the losses suffered due to the preservation. Common errors include the lack of a valid basis for the creditor's claim, seizure of assets exceeding the scope of the claim, and errors in the objects of preservation. Therefore, preservation must be based on a genuine and well-founded creditor's claim, and the scope of preservation must be reasonably determined. If there are concerns about risks, it is possible to reduce the likelihood of being deemed "erroneous" by providing full guarantees and accurate clues.

The above Q&A is mainly based on the judicial practice in the Beijing area. There may be differences in the adjudication standards 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, to avoid missing the statutory time limit. →Business and commercial legal services·Attorney Xiong Binrong·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.