Abstract: Due to the insufficient supply of the current liquidation system, investors of contractual private equity funds can only obtain relief through judicial channels when facing a liquidation deadlock. However, when judicial authorities handle such cases, they have not yet reached a consensus on whether investors can directly demand compensation from the fund manager and how to define the scope of investors'losses. This makes it difficult for investors to exit the fund by compensating for their losses in the event of a liquidation deadlock. The root cause of the current lack of uniformity in judicial decisions lies in the deviation in the understanding of the fund liquidation system, which has led to liquidation becoming a necessary procedure for determining losses. In this regard, starting from the function of the liquidation obligation, the liquidation deadlock should be transformed into the loss result of“inability to distribute the remaining distribution”, and based on the institutional principle of liability for breach of contract, the compensation liability of the manager should be reasonably determined, with the aim of solving the issue of investor protection.

Key words: contractual private equity funds, Liquidation deadlock, loss determination, investor protection