Meaning
Statutory provisions under Chinese insolvency regulations permit owners of third-party property held by a bankrupt enterprise to reclaim their assets through the insolvency administrator. A foreign brand owner invokes chinese enterprise bankruptcy law article 38 to retrieve injection molds or tooling stored at a bankrupt Chinese manufacturing supplier. This provision protects the proprietary tooling from being incorporated into the bankrupt supplier’s liquidating assets.
It represents a vital safeguard for international supply chains that rely on Chinese injection molders.
Right of Separation
Clear documentation is required to establish ownership of the asset. The claimant must present purchase orders, proof of payment, and mold-making agreements that prove ownership. Under chinese enterprise bankruptcy law article 38, the administrator will only release the asset if ownership is proven.
Owner Petition
Insolvency administrators are legally obligated to review and execute these reclamation requests. If the administrator rejects the claim, the mold owner can file a lawsuit in the local people’s court to enforce their rights. This legal recourse prevents the bankrupt factory from withholding the tooling to coerce the owner into paying unrelated debts.
Custody Return
Recovery operations can be delayed by logistical and administrative processes in the local jurisdiction. Outstanding payments for molding services or mold modifications must often be resolved before the administrator releases the mold. Securing the physical release of the tool allows the buyer to transfer it to a new molding vendor and resume production.
