What if the equity pledge company goes bankrupt?

Legal analysis: If a shareholder's equity pledge company goes bankrupt, creditors can realize equity pledge through equity transfer. Creditors have the priority to be compensated for the equity, and they can negotiate with the pledger to discount the equity, or they can get the priority to be compensated for the proceeds from the equity auction or sale. Auction or sale of equity shall comply with the relevant provisions on equity transfer.

Legal basis: Article 436 of the Civil Code of People's Republic of China (PRC).

Where the debtor performs the debt or the pledger pays off the secured creditor's rights in advance, the pledgee shall return the pledged property.

According to the agreement of the parties, if the debtor fails to perform the due debts or realize the pledge, the pledgee may agree with the pledgor to discount or give priority to the payment with the proceeds from auction or sale of the pledged property.

Where the pledged property is discounted or sold, it shall refer to the market price.