After twelve years of discussion the new Enterprise Bankruptcy Law came into effect on 1 June 2007.

The New Bankruptcy Law applies to all entities that hold legal person status, including private companies, foreign enterprises, limited liability companies, and companies limited by shares, as well as state owned enterprises (SOEs).

However, the New Bankruptcy Law does not apply to insolvent partnerships and individuals and at present, there is no personal bankruptcy system in China.

The new Bankruptcy Law provides for structured regimes of bankruptcy, restructuring and conciliation and brings China’s bankruptcy legislation more in line with international practice. The new legislation is an improvement over the previous 1986 legislation, however there are still question marks particularly over the effectiveness of enforcement of rulings.

This article was created on: 2017.07.31