Asset management companies (AMCs) have been widely used in around the world for more than two decades to remove non-performing loans (NPLs) from troubled banks and resolve them outside of the banking sector. Yet, systematic evidence for how this AMC model works has been scarce due to narrow and limited use cases. Using proprietary data from NPL transactions in China, the authors study the effectiveness of the AMC model in NPL resolution. They find that banks use NPL transactions to conceal non-performing assets from regulators as (i) transaction prices do not compensate for credit risks; (ii) banks fund the NPL transactions and remain responsible for debt collection; and (iii) 70% of NPL packages are re-sold at inflated prices to bank clients. Recognizing the hidden NPLs implies that total NPLs in China is two to four times the reported amount. Their results suggest that an unregulated resolution mechanism in an environment with binding financial regulations may distort banks' incentives to simply conceal distressed assets.