The assumption of debts in a merger or acquisition

By Li Jian, Concord & Partners

After the completion of a merger or acquisition, disputes often arise among the creditors, the acquirer and the acquired party over who should assume the pre-existing debts of the acquired party.

Whether an acquirer should assume the acquired party’s existing debts depends on the form and circumstances of the merger or acquisition, according to the laws and regulations currently in force.

Merger scenarios

The PRC Company Law stipulates that when an incorporated company completes a merger by absorption or by the establishment of a new company, the claims and debts of the parties involved should be inherited by the surviving company or the newly established company.

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Li Jian is a partner at Concord & Partners in Beijing

Suite 1930, Beijing Sunflower Tower, 37

Maizidian Street, Chaoyang District, Beijing

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