Enterprises with legal entity status in China (that is, limited liability companies and joint stock limited companies) should repay their debts with all the companies' registered assets. For enterprises without the status of a legal entity, the investors involved should bear unlimited liability for debt repayment and other related liabilities.
In a Sino-foreign cooperative JV where it is stipulated in the contract that the foreign party can recover its investment with priority during the term of the cooperation and that all the fixed assets will be handed over to the Chinese party upon expiry of the JV, both the Chinese and foreign should be jointly liable for debt repayment in the event of liquidation.
