China court issues first systematic guidance on developer bankruptcies

The Supreme People's Court of China issued its first comprehensive judicial guidance specifically governing bankruptcy proceedings for property developers. The framework distinguishes between viable companies requiring timely reorganization and those lacking sustainable value, which will face prompt liquidation. Asset management firms and institutional investors will receive priority in repayment when participating in the continuation of stalled projects through these mechanisms. Officials stated this approach aims to improve creditor security and attract more capital for home delivery guarantees. The guidance addresses inconsistent practices that previously slowed property disposals and deterred investment. This moves five years into the China Evergrande crisis, where regulators have deployed measures to stabilize the market. Courts are currently processing liquidation petitions related to major developer failures, such as Hengda Real Estate's main onshore unit.