Perspective | Exploring Enforcement Paths Involving State-Owned Urban Investment Companies as the Enforced Parties

Handling cases in which urban investment companies serve as the party subject to enforcement is far more complex than dealing with those involving ordinary market entities. The difficulties they face stem from multiple dimensions—legal, economic, and social—each interwoven with the others, thus creating significant challenges in enforcement. A thorough analysis of these difficulties is a prerequisite for developing effective enforcement strategies.

The assets of municipal investment companies exhibit a dual characteristic: strong public attributes and low liquidity, making conventional enforcement measures difficult to apply. First, the core assets are predominantly public-service facilities—such as water supply systems, sewage treatment plants, and public parking lots. Although these assets hold immense value, directly auctioning or selling them off could jeopardize basic livelihoods. For example, the municipal investment company in Chongxin County operates the urban tap-water supply system, four sewage treatment plants, and property services for 43 residential communities. The execution of such assets must prioritize ensuring the continuity of public services. Second, some assets have unclear ownership—for instance, properties built on allocated land or public-benefit facilities—leading to numerous legal obstacles in their disposition. Third, even assets that could be commercially disposed of often end up going unsold due to factors such as their large scale and information asymmetry.

As illustrated by a typical case, in the enforcement proceedings conducted by the Yingcheng Court against a certain hotel company, despite the assets being located in a prime downtown area and having an appraised value of 63.7 million yuan, they repeatedly failed to sell at auction due to insufficient market liquidity. A similar situation also arose in the enforcement proceedings handled by the Chuanying Court in Jilin City in a case involving a certain group, where the debt amounted to 83 million yuan and the debtor’s property holdings were highly complex, encompassing numerous real estate properties. These cases underscore the unique challenges involved in disposing of assets held by municipal investment companies.

Among the debts of urban investment companies, it is often unclear where the line lies between those that constitute implicit government liabilities and those that are purely the result of enterprises’ independent operations. In practice, creditors frequently extend financing precisely because they anticipate an “implicit guarantee” from the government; yet when disputes arise, they find themselves caught in a dilemma: the government’s creditworthiness is separated from the enterprise’s liability. According to relevant provisions of the “Enforcement Basis,” the enforcement basis must be a debt established by a legally effective document. However, government commitments and official letters are rarely directly recognized as enforceable bases. This gap between legal reality and market expectations further complicates the handling of these debts.

Meanwhile, the debt structure of municipal investment companies is complex, encompassing both standardized debts formed through bonds and notes, as well as traditional financing from financial institutions, and also including ordinary debts such as payments for construction projects and procurement. Given the differences among various creditors in terms of repayment priority and the strength of their protection, striking a balance among the interests of these different creditors during enforcement proceedings has become a particularly challenging issue.

When taking enforcement measures against urban investment companies, it is necessary to balance multiple objectives—including the realization of creditors’ rights, business operations, public services, and financial stability—often placing courts in a difficult dilemma. If strictly adhering to statutory procedures and comprehensively seizing, detaining, or freezing assets, the company’s operations could come to a standstill, triggering a cascade of adverse effects. On the other hand, if enforcement measures are too lenient, it could undermine the credibility of the judiciary and result in the loss of state-owned assets.

In an enforcement case involving a shareholding dispute between a state-owned enterprise and a private enterprise, handled by the Changning District Court in Shanghai, the judge found that a straightforward disposal of the judgment debtor’s assets—given the case involved an amount in the tens of millions—would plunge a highly competitive, high-tech enterprise into financial distress. Similarly, in a typical case released by the Guangxi Higher People’s Court, a port group served as the judgment debtor; the case concerned a principal sum of 378 million yuan plus interest, and the enforcement process proved to be complex and protracted. These cases highlight the practical difficulties encountered when urban investment companies serve as judgment debtors and the challenges in advancing the enforcement procedures.

Table: A Comparison of the Main Dilemmas Faced by Urban Investment Companies as the Enforced Parties

In response to the unique challenges faced by urban investment companies when they serve as the judgment debtors, we need to abandon the “one-size-fits-all” approach to enforcement and instead develop diversified enforcement strategies that are tailored to their specific characteristics. Based on practical explorations conducted by courts across various regions, the following enforcement approaches have demonstrated promising results.

The unique characteristics of municipal investment companies mean that relying solely on judicial measures is unlikely to effectively resolve enforcement issues; therefore, it is necessary to bring in administrative forces and create synergies. The “Three-Chain Coordination” model explored by the city’s courts provides a valuable example: by establishing three key chains—information sharing, procedural coordination, and rights protection—it achieves complementary advantages between judicial and administrative approaches.

The information-sharing network serves as the foundational link. The court and government departments have established a dual-connector mechanism—“enforcement judge + government commissioner”—to regularly share lists of assets. In the Yingcheng case, the court proactively prepared an “Asset Valuation Analysis Report,” providing detailed explanations of key information such as the location advantages of the assets and the feasibility of their renovation, thereby offering precise support for government decision-making. This mechanism of mutual information exchange helps break down departmental barriers and enhance the efficiency of asset identification.

The program coordination chain is the core of the coordinated approach. We have innovatively introduced a “pre-collection and storage review” system, under which the government takes over and assesses assets within 48 hours after a judicial auction fails to attract any bids. For example, in an enforcement case handled by the Yingcheng Court, the Urban Investment Company assembled a specialized team to conduct on-site inspections and completed a feasibility study within seven working days, significantly shortening the asset disposal cycle—by one unit. This rapid-response mechanism prevents assets from remaining idle for extended periods and also buys valuable time for creditors to realize their rights and interests.

The rights and interests protection chain serves as a coordinated objective. By holding “pricing hearings,” we ensure that asset transfer prices comply with market norms; we respect the wishes of creditors—for instance, if banks agree to use the last unsuccessful auction reserve price as the benchmark for transfer. At the same time, we pay close attention to social interests: the state-owned asset acquirer and the judgment debtor negotiate to share the appraisal fees, and the acquirer commits to giving priority consideration to re-employing the original enterprise’s employees. These measures strike a balance among multiple stakeholders, achieving a harmonious integration of legal and social outcomes.

Scientifically classifying municipal investment company assets according to their nature and debt types, and adopting differentiated disposal strategies, is key to enhancing enforcement efficiency.

Public-service assets—such as water treatment plants, sewage treatment facilities, and public parking lots—are, in principle, not subject to enforcement measures aimed at terminating their functions. In this regard, we can draw on the experience of Shenyang Urban Investment Group, which has revitalized existing assets through asset securitization and policy-based financial instruments. The “Phase I Project of Core Area Public Parking Lots” undertaken by Shenyang Urban Investment Group received 176 million yuan in funding from national policy-based financial instruments, thereby alleviating financial pressures and ensuring the continuity of public services. Similarly, Chongxin County Urban Investment Company has achieved scaled operations and enhanced its overall debt-servicing capacity by integrating public-service assets such as water supply and property management.

Commercial operating assets—such as hotels, retail stores, and idle real estate—can be actively disposed of by leveraging market-oriented approaches. In the enforcement of an 83-million-yuan state-owned enterprise debt case, the Chuanying Court of Jilin City has pioneered an innovative rapid asset-disposal model: First, it facilitated a consensus-based pricing approach by inviting experts to provide reference prices from perspectives including design, planning, and anticipated appreciation potential, thereby enabling both parties to reach agreement on the valuation of 64 properties; second, it enhanced auction efficiency by coordinating with mutually agreed-upon appraisal institutions, reducing the time from seizure to the issuance of the auction notice to just 35 days; and third, it made thorough preparations for subsequent debt-to-asset swaps by proactively communicating with the Real Estate Registry and tax authorities to streamline post-swap procedures. This comprehensively optimized working methodology has significantly boosted the efficiency of asset disposal.

Innovative financial assets, such as those developed by Qingdao City Investment Group through the establishment of a supply-chain finance platform— Qing Tou Yi Rong Tong This approach helps upstream and downstream enterprises resolve their financing challenges while also playing a role in “strengthening” and “stabilizing” the core enterprise’s supply chain. Similar financial assets can be handled through methods such as debt transfer and asset securitization, thereby avoiding direct disposal that could disrupt the industrial chain.

Table: Implementation Strategy for Asset Classification of Urban Investment Companies

To address the special challenges arising in cases where urban investment companies serve as the judgment debtors, courts across various regions have explored a series of innovative enforcement methods and achieved positive results.

Flexible preservation and enforcement measures are key to striking a balance between protecting creditors’ rights and ensuring the smooth operation of enterprises. In handling enforcement cases involving private enterprises, the Changning District Court in Shanghai swiftly takes freezing and seizure measures against assets such as real estate, vehicles, and equity interests—but without directly disposing of these assets. Instead, with the consent of the applicant enforcing the judgment, the court grants the debtor a certain grace period, enabling the enterprise to continue its daily operations. This “dynamic sealing and attachment” approach is equally applicable to urban investment companies: it not only prevents asset transfers but also creates favorable conditions for enterprises to improve their operations and enhance their ability to repay debts.

The “cash plus debt-to-equity conversion” settlement approach plays a positive role in resolving massive debts. In the enforcement case involving a certain port group handled by the Beihai Maritime Court, an innovative “cash plus debt-to-equity conversion” method was adopted: the judgment debtor paid 380 million yuan in cash, and its parent group company coordinated the transfer of equity worth 20 million yuan to an entity designated by the applicant for enforcement. This approach not only enabled the applicant for enforcement to realize part of its successful claims but also, through the introduction of equity arrangements, offered creditors the potential for long-term value sharing, thereby alleviating the immediate payment pressure on the judgment debtor.

Phased fulfillment coupled with a positive incentive mechanism can effectively promote debt repayment. In handling cases, the Changning District Court facilitated an agreement between the parties to lift coercive measures in stages, based on the progress of performance. On the basis of ensuring that the judgment debtor repays the debt on time, this approach appropriately incentivizes the debtor to proactively fulfill their obligations. This gradual approach to lifting coercive measures provides urban investment companies with clear expectations and strong motivation to meet their contractual obligations.

The effective implementation of diversified execution paths requires robust supporting institutional frameworks. Based on current practices, at least three aspects need to be improved to enhance the safeguard mechanisms.

It is recommended that, during the legislative process of the Civil Enforcement Law, full consideration be given to the regulation of enforcement issues involving special entities, providing a specific legal basis for urban investment companies as judgment debtors. The criteria for identifying public-service assets and the scope of enforcement exemptions should be clearly defined, and the boundaries of the government’s liability for the debts of urban investment companies should be standardized, thus offering clear guidance for judicial practice.

Meanwhile, it is important to strengthen the alignment between judicial processes and public policy. The practice of the Yingcheng Court and the municipal government jointly establishing a “Center for Reviving Dormant Assets” is worth promoting. This institutionalized cooperation platform can systematically address the issue of revitalizing assets held by urban investment companies. In addition, a special reporting mechanism could be established for enforcement cases involving urban investment companies. For major and sensitive cases, the enforcing court should promptly report to the local Party committee and the higher-level court to prevent systemic risks.

As the judgment debtor in cases involving urban investment companies, multiple parties’ interests are at stake, necessitating the establishment of a cross-departmental collaborative regulatory mechanism. The courts, together with departments such as state-owned assets management, finance, and financial supervision, should join forces in regulation, share information, and coordinate their actions uniformly. During the enforcement process, the Chuanying Court regularly informs the State-owned Assets Supervision and Administration Commission, the Political and Legal Committee, and other relevant authorities about the progress of case handling. It also collaborates closely with public security agencies and invites deputies to the People’s Congress to participate in the enforcement proceedings—thus not only supervising the enforcement process but also enhancing the social impact of debt collection and disposal efforts.

Regarding potential financial risks, we can draw on the innovative experience of Qingdao Urban Investment Group and use green finance instruments and supply-chain finance to alleviate debt pressures. Qingdao Urban Investment City Gold Holding Group is actively expanding its business. Green leasing business We have provided green leasing services to a total of 161 customers, and since 2024, the cumulative amount deployed has approached 100 million yuan. While achieving economic benefits, this initiative also supports enterprises in their low-carbon development.

It is crucial to enhance the courts’ capacity to handle complex enforcement cases. The Chuanying Court has established a special task force and introduced a “five-fixed” approach—“fixed time, fixed personnel, fixed responsibilities, fixed tasks, and guaranteed case closure”—to ensure that each case is thoroughly resolved. Four fixed items in one package The working mechanism adopts a “visualized operations” approach, compelling enforcement efforts to be precisely targeted and executed according to a coordinated schedule. This specialized, team-based working model helps address the complexity of cases involving municipal investment companies.

Meanwhile, efforts should be stepped up to strengthen the professional development of the enforcement team and cultivate multidisciplinary enforcement judges who are not only familiar with the law but also proficient in finance and state-owned asset management. It is advisable to bring in third-party specialized agencies—such as asset appraisal firms, auditing firms, and auction houses—to enhance the efficiency of asset identification, valuation, and disposal. The Chuanying Court has invited organizations like the Real Estate Appraisal Association to jointly establish an expert panel that conducts multi-faceted assessments of property values, providing parties with professional reference for negotiation. This approach is worth emulating.

Exploring enforcement pathways for urban investment companies as the party being enforced against is an important issue for optimizing the rule-of-law business environment and promoting high-quality economic development. By analyzing current challenges, constructing diversified enforcement paths, and proposing institutional safeguards, this article arrives at the following conclusions:

First, in handling cases where urban investment companies serve as the party being enforced against, special principles must be followed and the general enforcement models applicable to ordinary market entities cannot be simply applied. Instead, based on their public functions, asset characteristics, and debt structure, differentiated enforcement strategies should be adopted to strike a balance between realizing creditors’ rights and safeguarding public interests.

Second, the coordinated mechanism of “judicial + administrative” collaboration represents an effective approach to overcoming enforcement challenges. By establishing three key links—information sharing, procedural coordination, and rights protection—this mechanism enables the complementary strengths of judicial authority and administrative resources, thereby facilitating the transformation of “dormant assets” into productive resources.

Third, innovating execution methods and adopting differentiated disposal strategies are key to enhancing enforcement effectiveness. By flexibly employing diversified measures such as “dynamic freezing and seizure,” “cash plus debt-to-equity swaps,” and phased performance, we can match appropriate disposal approaches to the characteristics of the assets, thereby optimizing enforcement outcomes.

Looking ahead, as state-owned enterprise reform deepens and the rule of law continues to advance, the enforcement system applicable to urban investment companies as debtors will be further refined. In the short term, specific rules for enforcing against urban investment companies can be clarified through judicial interpretations and guiding opinions. In the medium term, it will be necessary to promote relevant legislation and establish a comprehensive, hierarchically structured legal framework for the enforcement of special entities. In the long term, as urban investment companies undergo a transformation into fully market-oriented entities, the unique enforcement challenges they currently face will gradually diminish, eventually becoming fully integrated into the general corporate enforcement system framework.