PRC sets up bankruptcy courts, launches info website

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The People’s Republic of China recently launched two initiatives that are related to enterprise bankruptcies. On 1 August 2016, the Supreme People’s Court (SPC) launched the Information Website for National Bankrupt Enterprises Recombinational Cases.

The website will be used as a centralised information system through which information and actions relating to enterprise bankruptcy proceedings will be published and undertaken.

story_1On 27 September 2016, Beijing established the first specialised bankruptcy court in China, under its No. 1 Intermediate People’s Court, Shanghai, in Tianjin and Chongqing. Eleven other provinces are also expected to set up specialised bankruptcy courts under their respective intermediate people’s courts later this year.

POSITIVE IMPLICATIONS

The launch of the website, the setting up of specialized bankruptcy courts and increased judicial staffing in the PRC is a positive step forward for both applicants and creditors when they seek to exercise their respective rights during the enterprise bankruptcy process.

The website seeks to expedite enterprise bankruptcy proceedings and improve transparency by allowing traditional processes to be carried out through online platforms.

The website allows applicants to submit their applications for compulsory enterprise bankruptcy and creditors to submit their claims online, among other functions.

With the increase in enterprise bankruptcy cases in the PRC in recent years, these measures indicate that the central government is investing considerable efforts into resolving bankruptcy proceedings in an effective and efficient manner.

However, due to the infancy of both initiatives, the empirical effects of both the website and the new bankruptcy courts will become more apparent over time.

Instead of having to apply or claim through tradition means, applicants and creditors can now make applications and claims more conveniently through the website.

The setting up of dedicated judicial resources for enterprise bankruptcy proceedings will better position the PRC for the increasing number of enterprise bankruptcy cases.

Despite the convenience, applicants and creditors should still obtain legal advice before utilizing the website to exercise their rights.

Although the practical impact of the website and bankruptcy courts will not be clear for some time, these initiatives are positive steps forward for the PRC and promote greater supervision, efficiency and transparency in the enterprise bankruptcy process.

Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: [email protected]