Shanghai court restricted exit of foreign company executive due to RMB 500,000 in wage arrears. After asset seizure and enforcement pressure, all 14 cases were settled and restrictions lifted.
Source: OT-Team(G), 上海高院
The Shanghai High People's Court on February 2 disclosed details of a wage arrears enforcement case, narrated from the perspective of an enforcement judge.
Multiple Wage Claims Emerge
In April 2025, the enforcement judge received two applications to enforce labor arbitration awards against a Shanghai-based electrical appliance company. Wage-related cases are treated as a priority in enforcement work.
After unsuccessful attempts to contact the company, the court initiated asset investigation and control procedures. No real estate, vehicles, or other readily executable assets were found under the company's name, and its bank accounts showed either negligible or negative balances.
The two applicants indicated that many of their colleagues were in a similar situation. This proved accurate: between April and July 2025, the court accepted a total of 14 enforcement applications related to labor arbitration awards against the same company, involving about RMB 500,000 in unpaid wages.
Initial Measures and Emerging Risks
Following standard procedure, the court froze the company's bank accounts and imposed consumption restrictions on both the company and its legal representative, identified as P.
Further communication with the workers and their lawyers revealed that the company and two subsidiaries operated factories in a Shanghai district but had suspended production. A large number of employees were owed wages. Although there were plans to introduce new capital and revive operations, most of the company's accounts were already subject to judicial freezes. P, a foreign national, was reportedly planning to leave China.
Out of caution in applying enforcement measures to operating enterprises, the company was not initially placed on the list of dishonest judgment debtors. However, during enforcement, the company changed its legal representative under P's direction, a move the court regarded as a clear attempt to evade debt obligations.
Stronger Compulsory Actions
The judge submitted the situation to a collegiate panel. The panel determined that all 14 debts and the related arbitration proceedings occurred during P's tenure as legal representative, and that P exercised actual control over the company. As a person directly responsible for influencing debt performance, P was deemed subject to stricter measures to prevent evasion of liability.
The court therefore imposed an exit restriction on P and issued a consumption restriction order against the new legal representative, Liu. The impact was immediate: P was intercepted by border inspection authorities at Shanghai Pudong International Airport, while Liu's restricted status limited his ability to travel by high-speed rail and other means.
Under pressure, the two individuals closely tied to the company contacted the court, expressing difficulties and promising to pay the outstanding wages. They did not, however, fulfill this commitment on schedule.
On-Site Investigation and Asset Seizure
To further urge compliance, enforcement officers conducted an on-site investigation at the company's factory. The premises showed signs of prolonged suspension: dust accumulation, stale air, and empty workstations, with only a few offices still in use.
At the same time, the court found three production lines that had not yet been put into operation and industrial finished goods stored in the warehouse. These findings indicated that the company still possessed the capacity—and apparent intention—to resume operations.
Despite sympathy for the company's situation, the court prioritized the protection of workers' lawful rights. In accordance with the law, it sealed the production lines, machinery, and industrial products on site, fully explaining the legal basis and potential consequences. The legal representative of a subsidiary signed an enforcement guarantee, again committing to complete payment in all 14 cases within half a month.
Managing Tensions During the Waiting Period
During the following two weeks, the judge maintained close contact with the company. Some unpaid employees, anxious about the outcome, locked the factory gates, preventing on-duty staff, including finance personnel, from working. The judge promptly communicated with the applicants and their lawyers to calm emotions and prevent escalation, thereby creating conditions for the company to arrange payment.
Full Payment and Lifting of Restrictions
When the half-month deadline expired, the company complied. All 14 labor arbitration enforcement cases were fully performed, and approximately RMB 500,000 in wage payments was made.
The court subsequently lifted the exit restriction on P, the consumption restriction on Liu, and the seizure and freezing measures on the company's bank accounts, production lines, machinery, and industrial products.
With enforcement completed, the workers recovered their unpaid wages, and the company began steadily advancing plans to resume production.
No comments:
Post a Comment