The 1st personal bankruptcy case marks a legal breakthrough
The first court ruling in a personal bankruptcy case in China came on Monday, four months after local regulations on personal bankruptcy cases in Shenzhen came into effect in March.
Plaintiff Liang Wenjin, a 35-year-old resident of Shenzhen who struggled with debts amounting to 750,000 yuan ($ 115,621) after a failed business enterprise, submitted a plan to reorganize the company. personal bankruptcy at the Shenzhen Intermediate People’s Court in March.
Since he found a job after his start-up went bankrupt and now earns around 20,000 yuan per month, the court granted him restructuring proceedings while allowing him to renegotiate a repayment plan. with its creditors.
The “first two” in China (promulgation of personal bankruptcy regulations and a local court ruling in a personal bankruptcy case) underscore Shenzhen’s success in steering the resolution of such cases.
Both individuals and businesses play a central role in economic activity, so their financial difficulties must be alleviated. As flexible employment becomes more and more popular, the number of self-employed people has increased, giving rise to debt disputes.
However, China only has a corporate bankruptcy law, but no personal bankruptcy law. Therefore, while insolvent companies can file for bankruptcy, heavily indebted people do not have such an orderly market exit channel.
The Shenzhen Personal Bankruptcy Regulations fill this gap, as a person who has lived and been covered by the Shenzhen social insurance system for three consecutive years can apply for bankruptcy liquidation, restructuring or reconciliation if they are. went bankrupt.
The regulation is not a “fire escape” for confidence breakers but “social insurance” for those who run start-ups, and an effort to improve the market exit mechanism and social credit system for the details. No one can use the settlement to evade debt repayment, as the settlement requires debtors to honestly declare their property, while also linking the bankruptcy registration system to the personal credit investigation system, putting in place procedures. liquidation incentives and stipulating that debtors forgo luxury consumption.
Personal bankruptcy does not mean unconditional relief from debt, but a reorganization of bankruptcy to encourage the debtor to actively raise funds to repay debts. The personal bankruptcy system holds the debtor responsible for debts and, by establishing appropriate procedures, encourages the debtor to actively raise funds and repay debts, protecting the legitimate rights of creditors.