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	SUPPLEMENTARY NOTICE OF THE SUPREME PEOPLE'S COURT ON THE PURCHASE AND DISPOSAL OF NON-PERFORMING BANKING ASSETS BY FINANCIAL ASSET MANAGEMENT COMPANIES

	(No. 62 [2005] of the Supreme People's Court promulgated on May 30, 2005)


SUBJECT : FINANCIAL ASSET MANAGEMENT COMPANIES; NON-PERFORMING BANKING ASSETS
ISSUING DEPARTMENT : THE SUPREME PEOPLE'S COURT OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 05/30/2005
IMPLEMENT DATE : 05/30/2005
LENGTH : 393 words
TEXT :

For the purposes of deepening the financial reform and regulating the financial order, this Court successively issued the Provisions on Several Issues Concerning the Laws Applicable to the Trial of Cases of Financial Asset Management Companies' Purchase, Management and Disposal of Assets formed by Bad Loans of State-owned Banks, Reply To the Letter about Some Issues Relating to the Implementation of the "Twelve Articles" of Judicial Interpretations of the Supreme People's Court, and the Notice about the Payments of Litigation Fees for Cases Involving State-owned Financial Asset Management Companies' Disposal of Non-performing Assets of State-owned Commercial Banks. Under the overall deployment of the State Council for the stock reform of solely state-funded commercial banks, China Cinda Asset Management Corporation has recently purchased the non-performing assets separated from the Bank of China, China Construction Bank and the Bank of Communications. In order to ensure the safety of financial assets and reduce the costs of disposal of non-performing assets, you are hereby given a supplementary notice about the trial of cases of disputes over the financial asset companies' purchase and disposal of non-performing assets:

I.Where a state-owned commercial bank (including the state holding banks) assigns its non-performing assets to a financial asset management company, or where the financial asset management company disposes, by way of assignment of creditor's right, of the non-performing assets assigned to it, the above-mentioned provisions issued by this Court shall be applicable.

II. Where a state-owned commercial bank (including state holding banks) assigns its bad loans to a financial asset management company, or where a financial asset management company purchases or disposes of its bad loans, the secured creditor's right shall be simultaneously assigned, but it isn't required to obtain the consent of the guarantor, and the guarantor shall still bear the guaranty liabilities within the original guaranty scope. What the guaranty contract stipulates that to change the contract should be subject to the consent of the guarantor has no binding force to the assignment of creditor's right by the creditor.

III. Where a financial asset management company assigns or disposes of any non-performing creditor's right that is involved in legal proceedings such as litigation, execution or bankruptcy, the people's court shall, according to the agreement on the assignment of creditor's right and the application of the transferor or transferee, make a ruling to change the subject of litigation or execution.