Can Trust Instruments Be Utilized in Corporate Bankruptcy? (AI Translation)
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文｜财新周刊 丁锋 王娟娟
By Caixin Weekly's Ding Feng and Wang Juanjuan
“现在企业破产重整案中，越来越流行用破产服务信托了。”一位律师事务所合伙人告诉财新，“以前像海航、方正这类大型企业的破产重整案使用破产服务信托，现在上市公司用得也越来越多。”
“In current corporate bankruptcy and restructuring cases, bankruptcy service trusts are becoming increasingly popular,” a law firm partner told Caixin. “Previously, such trusts were mainly used in the bankruptcy restructuring of large companies like HNA Group and Founder Group. Now, even publicly listed companies are applying them with growing frequency.”
近日，被视为“地产重整第一股”的金科股份（000656.SZ），也引入了破产服务信托。2025年5月11日，金科股份公告称，重庆第五中级人民法院正式裁定批准其重整计划。按照方案，金科将剥离的20家子公司设立企业破产服务信托，向债权人分配信托受益权抵债；信托财产估值为17.44亿元，存续期为8年。金科股份的重整，涉及1470亿元债务和超过8400家债权人，是目前房地产行业规模最大的司法重整案件。
Recently, Jinke Property Group Co. (000656.SZ), regarded as “China’s First Listed Developer to Undergo a Court-Led Restructuring,” has also adopted a bankruptcy service trust in its restructuring process. On May 11, 2025, Jinke announced that the Chongqing No. 5 Intermediate People’s Court had officially approved its restructuring plan. According to the plan, Jinke will carve out 20 subsidiaries and establish an enterprise bankruptcy service trust, allocating trust beneficiary rights to creditors as debt repayment. The trust assets are valued at 1.744 billion yuan, with a duration of eight years. Jinke’s restructuring involves debts totaling 147 billion yuan and more than 8,400 creditors, making it the largest judicial restructuring case to date in China’s real estate sector.
除了金科股份，近两年公布重整计划的一些上市公司，如花王股份（603007.SH）、傲农生物（603363.SH）、东方园林（002310.SZ）、合力泰（002217.SZ）、中利集团（002309.SZ）等，也都在破产重整中使用了破产服务信托。
In addition to Jinke Co., several other publicly listed companies that have announced restructuring plans in recent years—such as Huawang Co. (603007.SH), Aonong Bio (603363.SH), Orient Landscape (002310.SZ), Helitai (002217.SZ), and Zhongli Group (002309.SZ)—have also utilized bankruptcy service trusts during their bankruptcy reorganizations.
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- Bankruptcy service trusts are increasingly used in China’s corporate restructurings, expanding from major cases like HNA Group to more listed companies; over 30 of 67 trust companies now offer such services.
- Trusts help isolate and manage difficult-to-dispose assets, allowing for more flexible and orderly repayments to creditors, but actual recoveries may remain low due to asset quality.
- Regulatory scrutiny is rising as trusts sometimes become major shareholders post-restructuring, and new rules now limit trusts’ roles in listed company control structures.
Bankruptcy service trusts have become an increasingly prominent feature in China’s corporate bankruptcy and restructuring landscape, expanding from their original use in the restructurings of large conglomerates like HNA Group and Founder Group to their more recent adoption by listed companies such as Jinke Property Group [para. 1]. On May 11, 2025, Jinke announced court approval for its restructuring plan, which involves carving out 20 subsidiaries and allocating trust beneficiary rights worth 1.744 billion yuan, as part of a debt-repayment scheme for its 147 billion yuan liabilities and over 8,400 creditors. This marks the largest judicial restructuring in the real estate sector to date [para. 2].
Several other listed companies—Huawang, Aonong Bio, Orient Landscape, Helitai, and Zhongli Group—have recently adopted similar bankruptcy trust structures [para. 3]. In a bankruptcy service trust, assets that are difficult to liquidate quickly, such as equity, real estate, and receivables, are placed under professional management in a trust. Creditors receive trust beneficiary rights in lieu of immediate repayment, allowing asset value to be realized over time [para. 4]. The accelerated timeline required by the Enterprise Bankruptcy Law (usually within nine months) incentivizes the use of trusts to avoid asset fire sales and delisting risks for listed companies [para. 5].
Trusts in China are legally defined structures, operational since 2001, with trust companies serving as professional trustees [para. 6][para. 7]. The Bohai Steel Group’s 2019 restructuring was the first major instance of a bankruptcy service trust in China, followed by similar applications in HNA Group’s massive bankruptcy, which involved over 746 billion yuan in confirmed creditor claims [para. 10][para. 12]. Initially, only a handful of large, complex cases used such trusts, but in the past two years, the number has rapidly risen as trust companies seek new business opportunities amid economic headwinds and new regulatory frameworks [para. 13][para. 16].
Key regulatory developments include the “three-category” trust classification promulgated in March 2023, officially permitting trusts as a vehicle for bankruptcy reorganization and recognizing them as ‘asset service trusts’ [para. 21]. Now, more than 30 of the 67 licensed trust companies in China are active in this space, with Guomin Trust leading 18 projects totaling over 100 billion yuan in claims [para. 24][para. 26]. Notably, the use of trusts in listed company restructurings has surged, with over 40% of court-approved restructuring plans in 2023 and 2024 including trust components [para. 28].
Despite their popularity, bankruptcy service trusts have limitations. Market recovery for creditors is often limited, especially given the low liquidity or overvaluation of underlying assets, and trust companies primarily handle administrative functions—not asset management, which usually remains with the enterprise’s original or newly designated asset managers [para. 32][para. 41][para. 44]. Fees for trust companies remain extremely low (commonly under 500,000 yuan per year), leading to a perception of these businesses as essentially loss-leaders for publicity [para. 47][para. 49].
Trusts do provide risk isolation and structured, orderly asset disposal, but their success in “buying time for maneuvering room” to maximize recovery for creditors is debated [para. 59][para. 62]. In some cases, as with Huachen Automotive’s failed attempt to use trust shares for >60 billion yuan debt repayment, creditors have resisted the trust mechanism, fearing ineffective resolution and poor transparency [para. 65][para. 66][para. 67]. Regulatory changes have tightened rules: as of March 2025, the controlling shareholder of a restructured listed company cannot be a trust or asset management plan [para. 72].
Summing up, bankruptcy service trusts are now a vital instrument in complex restructurings, offering innovative asset separation and risk mitigation. However, their practical value is undermined by limitations in asset management, low recovery rates, and ongoing regulatory scrutiny, making their long-term impact and optimal usage strategies an evolving issue in China’s bankruptcy system [para. 81][para. 87][para. 92].
- HNA Group
海航集团 - HNA Group used bankruptcy service trusts during its restructuring process. In 2022, CITIC Trust and Everbright Trust jointly established a special bankruptcy restructuring service trust for HNA, involving the largest scale of creditor claims among such trusts in China—approximately 746.7 billion yuan in confirmed claims and 89.6 billion yuan in pending claims. All repayments to creditors were made using trust shares, but the annual distribution rate was extremely low, only about a few thousandths.
- Founder Group
方正集团 - The article mentions Founder Group as an example of a large enterprise that previously used bankruptcy service trusts in its reorganization process. It is cited alongside HNA Group to illustrate that such trusts were initially applied in major corporate restructurings but are now increasingly used by publicly listed companies undergoing bankruptcy reorganization in China. No additional details specific to Founder Group's case are provided.
- Jinke Property Group
金科股份 - Jinke Property Group (金科股份, 000656.SZ), known as the "first real estate restructuring stock," introduced bankruptcy service trusts in its restructuring process. Approved by the Chongqing court in May 2025, it separated 20 subsidiaries into a trust valued at 1.744 billion RMB with an 8-year term, distributing trust interests to creditors. The case involves 147 billion RMB in debt and over 8,400 creditors, making it the largest judicial restructuring in China’s real estate sector.
- Huawang Co., Ltd.
花王股份 - According to the article, Huawang Co., Ltd. (花王股份, 603007.SH) is one of the listed companies that, in recent years, have adopted bankruptcy service trusts during their restructuring processes. This trust mechanism is used to manage and distribute assets to creditors, reflecting a growing trend among Chinese listed companies undergoing bankruptcy reorganization.
- Aonong Biological
傲农生物 - Aonong Biological (傲农生物, stock code 603363.SH) is among the listed companies that have adopted bankruptcy service trusts during their restructuring process in recent years. The company used the trust mechanism to manage and distribute its assets to creditors as part of its bankruptcy reorganization, reflecting the increasing use of such trusts in listed company restructurings in China.
- Orient Landscape
东方园林 - Orient Landscape (东方园林, 002310.SZ) adopted bankruptcy service trust in its restructuring plan. Their plan specifies that the asset management will be conducted by the existing operations and management team of Orient Landscape and platform companies. These teams will continue to manage the underlying enterprises and assets held within the trust, ensuring stable asset operations during the trust period.
- Holitech Technology
合力泰 - According to the article, Holitech Technology (合力泰, stock code 002217.SZ) is one of several listed companies that have recently adopted bankruptcy service trusts during their restructuring process. This approach involves placing certain assets into a trust, managed by a professional trustee, and distributing trust beneficiary rights to creditors as a means of debt repayment.
- Zhongli Group
中利集团 - According to the article, Zhongli Group (中利集团, stock code 002309.SZ) is among the listed companies that have used bankruptcy service trusts during their restructuring process in recent years. This tool involves placing assets into a trust managed by a trust company to distribute repayment resources to creditors, especially when assets are hard to liquidate quickly. No further details on Zhongli Group's specific restructuring process are provided.
- Bohai Steel Group
渤海钢铁集团 - Bohai Steel Group (渤海钢铁集团) was the earliest case in China to use bankruptcy service trusts during its 2019 restructuring. With liabilities nearing 300 billion yuan, its core steel assets were separated and acquired, while over 120 billion yuan of non-steel assets and liabilities were placed into a decade-long trust plan, designed by CICC and implemented by Jianxin Trust’s “Caidi” series trust schemes.
- CCB Trust
建信信托 - According to the article, CCB Trust (建信信托) was among the earliest institutions to participate in bankruptcy service trusts, notably through its “Caidie” series in the 2019 Bohai Steel Group restructuring case. CCB Trust also continues to be active in this field, launching additional “Caidie” trust plans for other companies undergoing restructuring. The firm mainly handles trust setup, information disclosure, benefit distribution, and account management in such cases.
- Ping An Trust
平安信托 - According to the article, Ping An Trust participated in the bankruptcy restructuring of Jinggong Group, primarily due to collaboration with Ping An Real Estate. However, in recent years, the use of bankruptcy service trusts by institutions like Ping An Trust was relatively limited and often connected to internal group synergy, rather than a standalone or large-scale market presence.
- Jinggong Group
精功集团 - Jinggong Group (精功集团) is mentioned in the article as one of the companies where Ping An Trust participated in its bankruptcy restructuring. This involvement was primarily due to the collaboration with Ping An Real Estate. The context highlights that, in previous years, bankruptcy service trusts were relatively uncommon and were often arranged through institutional cooperation as seen in Jinggong Group’s case.
- China Foreign Economy and Trade Trust (FOTIC)
外贸信托 - China Foreign Economy and Trade Trust (FOTIC) is one of the active trust companies participating in bankruptcy service trust businesses in China. As noted in the article, FOTIC has been involved in setting up specialized bankruptcy service trusts, increasingly participating in this sector as demand grows and more trust companies establish departments to handle such business.
- National Trust
国民信托 - According to the article, National Trust (国民信托) is one of the most active companies in the bankruptcy service trust sector in China. By the end of 2024, it had participated in 18 enterprise bankruptcy service trusts, involving over 100 billion yuan in debt. The companies involved include *ST Hetai, Aonong Bio, Chongqing Loncin, Guoan Chemical, and Hougu Coffee.
- Kunlun Trust
昆仑信托 - According to the article, Kunlun Trust is among the trust companies that have started to actively engage in bankruptcy service trusts in recent years. While the article does not provide detailed case studies about Kunlun Trust specifically, it lists Kunlun Trust alongside other companies as expanding their presence in this field, reflecting the growing trend of trust companies participating in bankruptcy restructuring cases in China.
- Zhongcheng Trust
中诚信托 - According to the article, Zhongcheng Trust (中诚信托) is one of the trust companies in China that has recently started to actively engage in bankruptcy service trust (破产服务信托) business. This indicates Zhongcheng Trust is expanding its involvement in managing assets associated with bankruptcy restructuring cases, keeping pace with the growing trend among over 30 licensed trust companies in this area.
- Jingu Trust
金谷信托 - Jingu Trust is mentioned in the article as one of the trust companies that have recently become active in the field of bankruptcy service trusts in China. Alongside companies like Kunlun Trust, Zhongcheng Trust, and China Resources Trust, Jingu Trust is capitalizing on the rising trend of using trust plans to handle difficult-to-dispose assets in corporate bankruptcy restructurings, especially after the implementation of the new "three-classification" trust regulations.
- China Resources Trust
华润信托 - According to the article, China Resources Trust (华润信托) has recently begun to actively engage in the field of bankruptcy service trusts in China, joining other licensed trust companies such as BuildTrust, China Foreign Economy & Trade Trust, and National Trust that are participating in this emerging segment.
- Guotong Trust
国通信托 - Guotong Trust is mentioned as one of the trust companies that have recently started to focus on bankruptcy service trusts in China. Alongside others like Kunlun Trust, Zhongcheng Trust, Jinggu Trust, and Huaren Trust, Guotong Trust is actively developing its role in this growing area, establishing special asset investment departments or designating teams for such business according to the article.
- Chongqing Loncin
重庆隆鑫 - According to the article, Chongqing Loncin is one of the companies involved in corporate bankruptcy service trusts in China. Specifically, it is mentioned that Guomin Trust has won 18 enterprise bankruptcy service trust projects, including for Chongqing Loncin, dealing with over 100 billion yuan in claims. This indicates Chongqing Loncin underwent bankruptcy restructuring utilizing a trust mechanism for asset and debt resolution.
- Guoan Chemical
国安化工 - Guoan Chemical is mentioned as one of the companies involved in bankruptcy service trusts. According to the article, Guoan Chemical is among the cases where Guomin Trust has been involved, having won bids for 18 corporate bankruptcy service trust projects in total, with a total debt scale exceeding 100 billion yuan.
- Hougu Coffee
后谷咖啡 - Hougu Coffee is mentioned in the article as one of the companies involved in bankruptcy service trusts. According to public data, Guomin Trust has undertaken over 18 enterprise bankruptcy service trusts, covering more than 1,000 billion yuan in debt, and Hougu Coffee is listed as one of the companies included in these trust cases. No further details about Hougu Coffee are provided in the article.
- Kangmei Pharmaceutical
康美药业 - According to the article, Kangmei Pharmaceutical introduced a service trust mechanism during its restructuring process. Among several trust plans received by creditors, Kangmei was notable because its underlying assets included some accounts receivable, allowing for slightly higher recovery rates for creditors compared to other cases like HNA Group, where annual distributions from trust shares were extremely low.
- Brilliance China Automotive Holdings Limited
华晨汽车集团控股有限公司 - According to the article, Brilliance China Automotive Holdings Limited (华晨汽车集团控股有限公司) attempted in 2022 to use trust beneficiary rights as repayment for over 60 billion yuan of ordinary debt during its restructuring. This proposal was criticized as a way to evade debt and ultimately did not gain enough votes to pass, so the plan was not implemented.
- Modern Group
当代集团 - Modern Group, the largest private enterprise in Hubei, faced a debt crisis starting in 2022, with declared claims exceeding 1500 billion yuan by February 2025. The group’s restructuring attracted China Merchants Innovation Technology, which invested 11.8 billion yuan and gained control over 23.7% of Renfu Pharmaceutical. Most creditors were repaid using a combination of small amounts of cash and trust shares under the restructuring plan.
- Renfu Pharmaceutical
人福医药 - Renfu Pharmaceutical (人福医药, 600079.SH) is mentioned as a leading enterprise in anesthetic drugs and is controlled by Contemporary Group ("当代系"). During Contemporary Group's debt restructuring, China Merchants Innovation Technology (a subsidiary of China Merchants Group) took a controlling interest in Renfu Pharmaceutical by investing 11.8 billion yuan and ultimately controlled 23.7% of Renfu’s shares.
- China Merchants Innovative Technology (Group) Co., Ltd.
招商局创新科技（集团）有限公司 - China Merchants Innovative Technology (Group) Co., Ltd. (“招商局创新科技” or “招商创科”) is a wholly owned subsidiary of China Merchants Group, a major Chinese state-owned enterprise. In the context of the article, it participated in the restructuring of Dangdai Group by investing 11.8 billion yuan and took control of a significant stake (23.7%) in Renfu Medicine, a leading pharmaceutical company, primarily through direct ownership and voting rights entrusted via trust plans.
- October 1, 2001：
- The Trust Law came into effect in China, providing the legal definition and framework for trusts.
- 2019：
- The earliest use of bankruptcy service trusts in China began with the bankruptcy reorganization of Bohai Steel Group.
- April 2022：
- The former China Banking and Insurance Regulatory Commission (CBIRC) issued the draft for public comment on the 'Notice on Adjusting Matters Related to the Classification of Trust Business'.
- 2022：
- CITIC Trust and Everbright Trust jointly established a special service trust for bankruptcy reorganization during HNA Group's bankruptcy, the largest by creditor claims managed by a trust to date in China.
- 2022：
- Contemporary Group officially plunged into a debt crisis as all wealth management products defaulted, followed by public market debt defaults.
- 2022：
- Huachen Automotive Group Holdings attempted to use trust beneficiary rights as compensation for over 60 billion yuan in ordinary debt during restructuring, but the plan was ultimately rejected in a creditor vote.
- late 2022：
- The draft of the 'Notice on the Regulation of Trust Companies’ Business Classification' (three-category trust classification) was released, clarifying that trust companies may provide trustee services for bankrupt enterprises.
- June 1, 2023：
- The formal document for the three-category trust regime was published and officially came into effect.
- 2023：
- According to public data, 12 listed companies had court-approved restructuring plans, with 5 introducing trust schemes.
- 2024：
- According to public data, 12 listed companies had court-approved restructuring plans, with 5 introducing trust schemes.
- By end of 2024：
- Guomin Trust had won bids for a total of 18 corporate bankruptcy service trust projects, involving claims exceeding 100 billion yuan.
- December 31, 2024：
- The Supreme People's Court and the CSRC jointly released the 'Minutes of the Symposium on Effectively Adjudicating Listed Company Bankruptcy Reorganization Cases', and the CSRC issued the draft 'Regulatory Guideline for Listed Companies No. 11'.
- December 31, 2024：
- Dangdai Group originally planned to evaluate strategic investors and finalize its restructuring deal structure, but regulatory changes required the introduction of a limited partnership platform.
- As of December 31, 2024：
- The Kangmei Pharmaceutical CCB Trust—Caidie No. 7 Property Rights Trust Plan was originally set to mature.
- By February 2025：
- A restructuring proposal was introduced for Contemporary Group, with creditor claims exceeding 150 billion yuan.
- March 14, 2025：
- 'Regulatory Guideline for Listed Companies No. 11—Matters Related to Listed Company Bankruptcy Reorganization' officially took effect.
- March 2025：
- Meng Fanke, Business Director at Waimao Trust, noted at a seminar that demand for bankruptcy service trusts has been steadily increasing.
- May 11, 2025：
- Jinke Property Group Co. announced that the Chongqing No. 5 Intermediate People’s Court officially approved its restructuring plan involving a bankruptcy service trust.
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