Can the Day Understand the Night? Brief Introduction into Problems of the Current Insolvency System in China

Abstract

The national insolvency system in China has developed synchronously with its economic reform. The current insolvency system is established on the basis of the Enterprise Bankruptcy Law of the P.R.C. (EBL), which was adopted in 2006. Almost one decade after its implementation, despite of more specific and systematic arrangements under the current insolvency system, the caseload of insolvency proceedings continues to decline annually in China. Moreover, the cross-border elements in the course of global economic contact make different insolvency systems from different jurisdictions interactive. It is observed that China’s jurisdiction on insolvency proceedings has been intentionally avoided due to lack of confidence in its insolvency system on international level. This article briefly discusses a few problems concerning China’s current insolvency system, including participation in distribution system, involvement of the government, cautious attitudes of the courts towards insolvency cases, and attempts to promote mutual understanding by providing insight into the reasons behind those problems.