Investing in Distressed Assets in Mainland China: Outlook for 2020
China’s distressed asset pool is expected to grow in 2020, following the China-U.S. trade dispute, the recent crackdown on shadow banking, more stringent regulation of financial institutions, increasing bond defaults and, most recently, the outbreak of COVID-19.
While foreign investors have been allowed to invest in distressed assets in China on a cross-border basis for some time, the lack of an onshore licenced platform has limited foreign investors’ interest and capability to further invest in this market. However, following several structural reforms and other regulatory and judicial developments, interested foreign investors should be aware of the new onshore opportunities and other changes that may facilitate the acquisition and recovery of distressed assets in China.
This alert examines some key issues to be considered when foreign investors explore these structural reforms as well as highlighting those changes that may facilitate the acquisition and recovery of distressed assets. Our team of experienced legal practitioners across our China offices would be delighted to provide further details should you wish to discuss this more.