By Zhang Baosheng, Liu Bin and Zhu Jinshu King & Wood Mallesons‘ Dispute Resolution Group
On 31 March, 2015, the Supreme People’s Court issued four model cases, including Shagang LLC. (Shagang) v. Kaitian LLC.(Kaitian), a case in relation to an objection to enforcement of a distribution plan. In the case, the Court has referred to the Deep Rock Doctrine originated from the United States, states for the first time that shareholders whose capital contribution is insufficient shall be subordinated to external creditors of the company with respect to their payable debts. The Deep Rock Doctrine, as a rule established in other jurisdictions, shall be applied and considered in China legal practice with prudence and comprehensive consideration.
Continue Reading When equities no longer equitable: applying the Deep Rock Doctrine in PRC