From Global Convergence in China's Enterprise Bankruptcy Law 2006 to Divergent Implementation: Corporate Reorganisation in China

Abstract

The enactment of China's Enterprise Bankruptcy Law in 2006 after debates spanning two decades was a milestone in the development of China's market-based economy. Bankruptcy laws have served as a key mechanism for market economies to adhere to their stated goals. One way of softening the harsh effects of insolvency is to develop a system of corporate reorganisation or rescue; China has also sought to move in this direction through its bankruptcy law reforms. However, the implementation of these laws has revived many of the older debates that undermined the law reform process. Paradoxically, although the Chinese economy has slowed considerably with the continued global financial crisis, there has been a very limited use of company reorganisation procedures and insolvency administrators in China. This demonstrates the limits to which external legal models will be effective in China and the complexity of the problems that remain to be resolved.