New bankruptcy law faces severe test
December 18, 2008 | BY
clpstaff &clp articlesLack of confidence will lead to alternative methods of resolution
The Enterprise Bankruptcy Law (中华人民共和国企业破产法) (EBL) is being tested, and will come under more pressure in 2009. This will lead to more companies adopting consensual methods to deal with their problems.
The EBL was introduced in June 2007, and was regarded by many as a step in the right direction for China. For the first time, any company unable to pay its debts, and its creditors, can apply to the court for restructuring. However, the EBL and related stock market regulations have come under pressure a lot sooner than expected.
“Due to lack of consistency in relevant regulations and rules and inexperience of our practitioners, we have encountered many unexpected obstacles and problems,” says Yin Zhengyou, executive chairman of China Bankruptcy Law Forum.
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