* Local govts to prepare lists of zombie firms within 3 mths

* Firms must draw up restructuring plans within 6 months

* Those meeting bankruptcy conditions to be eliminated immediately (Adds detail, background)

SHANGHAI/BEIJING, Dec 4 (Reuters) – China will encourage zombie firms that still retain business value to restructure and woo strategic investors to cut debt to reasonable levels, the state planner said on Tuesday.

As part of its efforts to curb soaring corporate debt and tackle price-sapping capacity gluts in sectors such as steel and coal, China has promised to improve bankruptcy procedures and allow vast numbers of loss-making zombie companies to close.

But Beijing has also sought to ensure a smooth exit for hundreds of insolve…

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