Legal basis: Article 187 of the Company Law of People's Republic of China (PRC). After clearing up the company's assets, compiling the balance sheet and list of assets, the liquidation group finds that the company's assets are insufficient to pay off debts, and shall apply to the people's court for bankruptcy according to law.
After the company is declared bankrupt by the people's court, the liquidation group shall hand over the liquidation affairs to the people's court.
Article 113 of the Enterprise Bankruptcy Law of the People's Republic of China * * * After paying off the bankruptcy expenses and the beneficial debts, the bankruptcy property shall be paid off in the following order:
(1) Wages, medical care, disability allowance and pension expenses owed by the bankrupt to employees, basic old-age insurance and basic medical insurance expenses owed to employees' personal accounts, and compensation that should be paid to employees according to laws and administrative regulations;
(2) Social insurance premiums and taxes owed by the bankrupt other than those specified in the preceding paragraph;
(3) Ordinary bankruptcy claims.
If the bankruptcy property is insufficient to pay off the repayment requirements in the same order, it shall be distributed in proportion.
The wages of directors, supervisors and senior managers of bankrupt enterprises shall be calculated according to the average wages of employees of the enterprise.