Corporate Insolvency Law of the People's Republic of China (Trial)
Corporate Insolvency Law of the People's Republic of China (Trial)
Corporate Insolvency Law of the People's Republic of China (Trial)
Order of the President of the People's Republic of China No.45
December 2, 1986
(Adopted at the 18th Meeting of the Standing Committee of the Sixth National People's Congress and promulgated by Order No. 45 of the President of the People's Republic of China on December 2, 1986, for Trial Implementation Three Full Months After the Law on Industrial Enterprises with Ownership by the Whole People Comes into Effect)
Chapter I General Provisions
Article 1 This Law is formulated in order to suit the development of a planned socialist commodity economy and the needs of the reform of the economic structure, to promote the autonomous operation of enterprises owned by the whole people, to strengthen the economic responsibility system and democratic management, to improve the state of operations, to increase economic efficiency and to protect the lawful rights and interests of creditors and debtors.
Article 2 This Law applies to enterprises owned by the whole people.
Article 3 Enterprises which, owing to poor operations and management that result in serious losses, are unable to repay debts that are due shall be declared bankrupt in accordance with the provisions of this Law.
Enterprises for which creditors file for insolency shall not be declared bankrupt under any of the following circumstances:
1. public utility enterprises and enterprises that have an important relationship to the national economy and the people's livelihood, for which the relevant government departments grant subsidies or adopt other measures to assist the repayment of debts;
2. enterprises that have obtained guarantees for the repayment of debts within six months from the date of the application for insolency.
With respect to enterprises for which creditors file for insolency, insolency proceedings shall be suspended if the enterprise's superior departments in charge have applied for reorganization and if the enterprise and its creditors have reached a settlement agreement through consultation.
Article 4 The State through various means shall appropriately arrange for the reemployment of the staff and workers of bankrupt enterprises, and shall guarantee their basic living needs prior to reemployment; specific measures shall be separately stipulated by the State Council.
Article 5 Insolency cases shall be under the jurisdiction of the people's courts in the location of the debtor.
Article 6 Where this Law has not stipulated the procedures for insolency cases, the legal provisions for civil procedures shall apply.
Chapter II The Submission and Acceptance of Insolency Applications
Article 7 Where the debtor is unable to repay debts that are due, the creditors may file to declare the debtor bankrupt.
When the creditor is submitting the insolency application, it should provide relevant evidence relating to the amount of the claim, whether or not it is secured with property, and to the inability of the debtor to repay debts that are due.
Article 8 The debtor, upon the agreement of its superior departments in charge, may apply for the declaration of insolency.
When the debtor is submitting the insolency application, it shall explain the circumstances of the enterprise's losses and deliver relevant accounting statements, a detailed list of debts and a detailed list of claims.
Article 9 After the people's court has accepted a insolency case, it shall notify the debtor within ten days and make a public announcement. Within ten days after receiving the detailed list of debts delivered by the debtor, the people's court shall notify known creditors. The public announcement and notice shall stipulate the date of the first convening of the creditors' meeting.
Creditors who have been notified shall, within one month after receiving the notice, and creditors who have not been notified shall, within three months after the date of the public announcement, report their claims to the people's court and explain the amount of the claims, as well as whether or not they are secured with property, and also deliver relevant materials of proof.
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