New bankruptcy law faces severe test

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clpstaff &clp articles

Lack 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.

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