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Bankruptcy Proceedings in China

By:   •  February 27, 2013  •  Essay  •  261 Words (2 Pages)  •  1,540 Views

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Bankruptcy proceedings in China

According to the World Bank Doing Business, China is ranked 14 in resolving insolvency in

2011. It takes 1.9 years, costs 4% of estate and the recovery rate is 82.1.

China had no bankruptcy law for a long time until the Enterprise Bankruptcy Law

promulgated in 1986 which only applied to state-owned enterprises (SOEs). Since 2007, a

new Enterprise Bankruptcy Law has been promulgated and applies to all legal entities

(including Foreign Invested Enterprises). The new law is modeled on the U.S. law.

The law utilizes an administrator who's role is to help the creditors and to assist in assuring

the bankruptcy runs the way it should. Administrators are usually lawyers or accountants.

The new law recognizes reorganization as a legal option. In case of reorganization, a company

is given protection from creditors while still being able to continue operating.

The new law gives secured claims priority over employee, tax, and general claims, unlike the

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