The Reform of PRC Corporate Bankruptcy Law: Slowly but Surely

October 02, 2002 | BY

clpstaff &clp articles

With the promulgation by the Supreme People's Court (SPC) of the Several Issues on Trial of Enterprise Bankruptcy Cases Provisions (the Provisions), the PRC is demonstrating that attempts are being made to reform bankruptcy law.

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By Chua Eu Jin, Clifford Chance, Shanghai

Some observers claim that PRC corporate bankruptcy laws are inadequate.  In fact, PRC corporate bankruptcy laws share many features in common with other jurisdictions, even though the PRC laws are modified to take into account the stage of the country's economic development and its approach towards debt and debt resolution (as do the insolvency laws of most developed countries).

Background

One general criticism of PRC corporate bankruptcy laws is that, prior to the issuance of the Provisions on September 1 2002, different laws have governed corporate bankruptcy depending on whether or not the distressed entity was a state-owned enterprise (SOE).    The PRC, State Enterprise Insolvency Law (Trial Implementation) of 1986 (the EIL) and the SPC' s 1991 Opinion on this law have governed the bankruptcies of SOEs.  The PRC Civil Procedure Law  (中华人民共和国民事诉讼法) of 1991 (CPL) and the SPC's Application of the«Civil Procedure Law» Several Questions Opinion from 1992 have governed non-SOEs (which includes domestic companies and also foreign-invested enterprises).

The provisions of the EIL and the related SPC opinion (a total of 121 articles) are far more comprehensive, having dealt with