China’s hidden bankruptcies reveal rising investor risks

Dalian, China – April 15 – When a Chinese pork company filed for bankruptcy in 2019, it shocked Alan Hill, a retired Apple executive from Albuquerque. He had invested around $100,000 in Dalian Chuming Meat Processing through Energroup Holdings, a U.S.-listed firm. While the company had stopped paying dividends years earlier, it had remained profitable as recently as 2016 and even supplied pork to major retailers like Walmart.

In 2021, a court in Dalian ordered Chuming’s liquidation. Over the next three years, the company auctioned assets and paid off debts, effectively ending any hopes that U.S. investors like Hill would recover unpaid dividends. Now 86, Hill says the financial loss has been deeply disappointing. “I feel cheated,” he said. “That money was supposed to go to my children.”

But what happened next surprised Hill even more. In June 2024 months after Chuming’s liquidation had supposedly ended China’s food regulator confirmed the company was still active. A health and safety certificate showed Chuming passed an inspection that same month. Photos reviewed by Reuters revealed pork bearing Chuming’s name was sold as late as November. However, regulators did not comment on the situation.

Reuters could not confirm whether Chuming was officially still in business. A visit to the company’s last known location in Dalian revealed a factory using the Chuming logo, but under a different name: Dalian Chengsan Chuming Food Processing. This new entity did not respond to questions about its connection to the original Chuming.

In several Dalian grocery stores and markets, pork bearing Chuming branding was still on display. However, the packaging listed the alternate company name in Chinese.

Through court documents and interviews with nine sources including investors and legal experts Reuters uncovered growing concern over China's handling of bankruptcies. Experts warn that weak enforcement of bankruptcy laws leaves investors exposed to dishonest practices and fraudulent filings by companies trying to dodge financial responsibilities.

In Chuming’s case, investors claim the company broke Chinese law by failing to get shareholder approval before filing for bankruptcy, refusing to allow financial inspection, and continuing operations after liquidation. Hill and other shareholders even sued Chuming executives in Nevada in 2018 for illegal asset transfers but say Chinese courts have not provided any compensation or legal remedy.

These cases, including another involving a real estate developer’s controversial bankruptcy, illustrate a broader risk. As economic pressures grow, so do questions about the transparency and integrity of China’s insolvency system. China’s justice ministry did not respond to requests for comment.