When losses pile up, follow the proper procedures: opt for simplified deregistration if possible, or file for bankruptcy when liabilities exceed assets — don’t leave things unattended.

Simplified deregistration can be handled on your own: just post the notice on the National Enterprise Credit Information Publicity System for 20 days. If there are still outstanding debts, you must first settle accounts — collect what’s owed and pay what’s due; this step is called liquidation. Filing for bankruptcy requires an application to the court, which can take several months. The real difficulty lies in the reluctance to face reality after suffering losses, leading many to delay necessary actions.

You have no debts to others, and others have no debts to you, or all have been fully repaid. No unpaid wages, no unpaid social security, and no unpaid taxes. All investors have signed written commitments. If these conditions are met, and no objections are raised during the 20 day public notice period, simplified deregistration can proceed. For individual industrial and commercial households, no public notice is required; if no objections are raised by the relevant authorities within 10 days, they will be deregistered directly. Companies that are unable to pay debts when due, or whose liabilities exceed their assets (insolvent), may apply to a court for reorganization, settlement, or bankruptcy liquidation. For companies that have been dissolved but not yet liquidated, and whose liabilities exceed their assets, the person responsible for liquidation should apply for bankruptcy liquidation. The consequences of leaving it unattended are as follows: failure to publish annual reports on time will result in being listed in the list of abnormal business operations. If an entity fails to file annual reports for 2 consecutive years, is included in the list of abnormal business operations and fails to rectify the situation, and cannot be contacted at its registered address, its business license will be revoked. Those serving as the legal representative of an enterprise with a revoked license, or those bearing personal responsibility for the situation, shall not again serve as a legal representative, director, supervisor, or senior management of a company within 3 years starting from the date of revocation. Entities already included in the list of abnormal business operations will be unable to undergo even the simplified deregistration process (nationwide).

国务院 (2021). 市场主体登记管理条例（国务院令第 746 号，第三十一、三十二、三十三条）. https://www.gov.cn/zhengce/zhengceku/2021-08/24/content_5632964.htm；市场监管总局等六部门 (2025). 企业注销指引（2025 年修订）（2025 年第 52 号公告）. https://www.gov.cn/zhengce/zhengceku/202512/content_7053238.htm；全国人大常委会 (2006). 企业破产法（第二、七条）. http://www.gov.cn/gongbao/content/2006/content_413952.htm；国务院 (2024 修订). 企业信息公示暂行条例（国务院令第 777 号修订，第十八条）：「企业因连续2年未按规定报送年度报告被列入经营异常名录未改正，且通过登记的住所或者经营场所无法取得联系的，由县级以上市场监督管理部门吊销营业执照」. https://flk.npc.gov.cn/detail?id=ff8081819c46fcc5019cd18fc6e9557d（国家法律法规数据库）；国务院 (2024). 关于修改和废止部分行政法规的决定（国务院令第 777 号）. https://www.gov.cn/gongbao/2024/issue_11246/202403/content_6941844.html；市场主体登记管理条例（第十二条第四项）与公司法（2023 年修订，第一百七十八条第一款第四项）：担任因违法被吊销营业执照的企业的法定代表人并负有个人责任的，自被吊销营业执照之日起未逾 3 年不得担任法定代表人和董事、监事、高级管理人员. https://www.gov.cn/zhengce/zhengceku/2021-08/24/content_5632964.htm；https://www.gov.cn/yaowen/liebiao/202312/content_6923395.htm

The Interim Regulations on Enterprise Information Disclosure were revised in 2024 by State Council Order No. 777, and came into effect on 5 month 1 day, with no further revisions since. The clause in the old version, Article 17, stating "enterprises listed in the list of serious illegal enterprises after 3 years of abnormal operations," has been deleted. The current list of serious illegal and dishonest acts governs enterprises that commit serious falsification in annual reports. Many online claims still refer to the old version; do not copy them blindly. The personal bankruptcy system (which includes sole proprietorships) is currently only being piloted in certain regions; the original text for this section was not verified, so it is not included here.