How to face the bankruptcy of foreign buyers

In the face of the bankruptcy of foreign buyers, the majority of export companies responded negatively or were unwilling to wait for the final allocation of bankruptcy procedures. The result was often a huge loss of money. What some export companies lack is the experience of dealing with the bankruptcy of foreign companies and the assistance of the necessary professional institutions. In this regard, China Credit Insurance has repeatedly assisted exporting companies to successfully handle overseas bankruptcy cases with its rich experience and global recovery network.

First, the basic case

After the export company signed a sales contract with the Brazilian buyer, it successively shipped the computer and accessories with a total amount of nearly 6 million US dollars to the buyer, and agreed to pay the account period of 120 days. Soon, the exporting company received a letter from the buyer telling him that it had filed for bankruptcy and reorganization in the local court, and the exporting enterprise immediately reported the loss to China’s credit insurance.

Second, investigate the progress of impairment

After China Credit Insurance passed the overseas channel investigation and verification, the buyer did apply to the Brazilian local court for bankruptcy reorganization procedures. The local court formally approved the bankruptcy reorganization application submitted by the buyer at the beginning of the year and designated the bankruptcy custodian.

In view of the buyer’s application for bankruptcy and reorganization, the exporting enterprise still has more than 3 million US dollars worth of goods not arriving in Hong Kong. In order to avoid the buyer’s refusal to pick up the goods after the arrival of the goods, the losses will be expanded, and at the same time, the creditor’s rights of the picked-up parts will be smoothly settled. For a time, I contacted the buyers through overseas channels to gain a favorable position. The buyer’s representative said that there is no clear debt restructuring plan yet. It only proposes that the general unsecured creditor needs to start repaying the debt after two years. It is expected that the debt will be paid off after more than six years. For creditors who can continue to supply, the buyer is willing to trade in cash and pay 7% of the contract amount to repay the old debt.


China Credit Insurance overseas channel lawyers subsequently negotiated with the buyer several times, not only to include the already picked up part of the bankruptcy claims, but also the buyer to promise to pay 13% of the new orders in the subsequent new orders; Under the premise of OA 180 days payment, the exporting enterprise has all released the goods to the buyer, and after the part of the accounts receivable expires, the buyer will give priority to the liquidation and will not be included in the bankruptcy claims. Both the buyer and the bankruptcy custodian have confirmed in writing all the debts under this case.

Third, the fixed loss program

After the case and the damage plan are basically clear, China Credit Insurance will pay the loss of nearly 6 million US dollars to the export enterprise according to the agreed compensation ratio.

Fourth, the revelation suggestion

In this case, after learning that the buyer filed for bankruptcy and reorganization, the exporting company acted quickly and notified the relevant information to China Credit Insurance on the same day. After receiving the case, China Credit Insurance immediately contacted the buyer through overseas channels, and under the active negotiation of professional lawyers, it ensured the rights and interests of the export enterprise bankruptcy claims to the greatest extent, while retaining the reorganization period with the buyer. Subsequent orders have further deepened the cooperation between the two parties in the risk and crisis.

In the daily trade process, it is recommended that the exporting enterprise: First, the agreement on the retention clause of the property right is added to the contract clause, but the laws of each country do not harmonize the validity and scope of the retention clause. Therefore, exporting companies need to be familiar with relevant legal knowledge and international trade practices of various countries, and formulate contract terms accurately and rigorously. Second, paying attention to the buyer's operating conditions in a timely manner, preventing the bankruptcy risks of old buyers and large buyers from causing sudden “death” of exporting enterprises. Third, after the bankruptcy case occurs, actively act as soon as possible, entrust professional institutions to intervene to maximize the rights and interests under bankruptcy claims and reduce losses.