Bankruptcy Perils in China: The GITIC Tale

The 1999 bankruptcy of Guangdong International Trust & Investment Corporation (GITIC) remains as China’s largest bankruptcy of a state owned enterprise. Passive foreign investors constituted the majority of the general creditors. This article recounts some particulars of contentious issues which were decided adversely to the general creditors. Some shortcomings of the proceedings are explained, especially relating to the identification of the Chinese governmental entities which owed large amounts of money to GITIC. Questions are raised regarding possible application of the GITIC decision‐making process to bankruptcies involving non‐state owned enterprises.