After Shenzhen passed the first personal bankruptcy regulations, Chengdu also officially opened exploration in relevant fields.

On February 23, the Red Star capital Bureau learned from the official wechat of Chengdu bankruptcy administrator association that the Chengdu Intermediate People’s Court issued the notice on the operation guidelines for centralized liquidation of personal debts (Trial) (hereinafter referred to as the operation guidelines). According to the notice, due to enterprise bankruptcy, personal difficulties and inability to repay debts, the due debts could not be paid off, The debtor may apply for repayment in five years after reducing the principal and exempting interest. After the execution of the debt liquidation plan approved by the court, the unpaid debts included in the procedure need not be repaid.

According to the Red Star capital Bureau, Shenzhen took the lead in issuing the country’s first regulations on personal bankruptcy of Shenzhen Special Economic Zone, which will be officially implemented on March 1, 2021.

“Shenzhen and other cities have piloted the personal bankruptcy system and improved the bankruptcy law system.” Some insiders mentioned in the interview that China’s current bankruptcy law system is only the enterprise bankruptcy law, and there is no personal bankruptcy system, which makes natural persons in debt difficulties unable to obtain effective legal relief. With the introduction of policies related to personal bankruptcy in various places, China’s personal bankruptcy system is about to kick off.

Chengdu “personal bankruptcy” operation guidelines:

After limiting high consumption and bankruptcy, they shall not be appointed as “Directors and supervisors”

According to the operation guidelines, the Red Star capital Bureau learned that its scope of application includes: the property of shareholders and the property of bankrupt corporate enterprises are mixed; The investors and partners of a sole proprietorship enterprise, partnership enterprise and other unincorporated enterprises bear unlimited liability for the debts of the bankrupt enterprise; Providing guarantee for the debts of bankrupt enterprises; Unable to pay debts due to difficulties in life.

According to the official wechat of Chengdu bankruptcy administrator Association

If the due debts cannot be paid off due to the above reasons, and the assets are insufficient to pay off all the debts or obviously lack the ability to pay off, an application may be made.

Who can apply? According to the “operation guidelines”, the applicable persons are natural persons with registered residence in Chengdu, who live in Chengdu and participate in Chengdu social insurance or pay personal income tax for three consecutive years, and individual business owners registered in Chengdu. It is reported that if the debtor’s property is indeed insufficient to pay off all debts after enforcement, the executive board may transfer it for examination with the consent of the debtor. If it meets the requirements, the maximum repayment period shall not exceed five years according to the debt repayment plan.

According to the restrictions, during the centralized liquidation of debts, high consumption and consumption behaviors that are not necessary for life or work are prohibited, and they are not allowed to serve as directors, supervisors and senior managers of the enterprise.

According to the Red Star capital Bureau, as early as December 2021, Chengdu issued the operation guidelines on centralized clearing of personal debt, which has been implemented. “The centralized liquidation of personal debts is not completely equivalent to ‘personal bankruptcy’, but they are similar. They are both a way to deal with personal debts.” Zhang Fengyu, a lawyer at Sichuan JUNHE law firm, said.

China’s first personal bankruptcy case concluded in Shenzhen

Previously, Shenzhen conducted a pilot in the field of personal bankruptcy. The regulations of Shenzhen Special Economic Zone on personal bankruptcy came into force on March 1, 2021.

In November 2021, Shenzhen intermediate people’s court ruled on the country’s first personal bankruptcy liquidation case. According to the report of the people’s court, the debtor Liang Moumou faced debt difficulties due to the failure of investment and entrepreneurship. He fairly cleared up his creditor’s rights and debts through personal bankruptcy procedures, and paid off his debts as much as possible with the income of himself and his spouse within a certain period of time in the future, avoiding the burden of frequent recourse by creditors and even the pain of being forced into debt in various forms.

After Shenzhen “broke the ice” in the field of personal bankruptcy, some cities began to explore one after another.

Red Star capital Bureau noted that, unlike Shenzhen, the Chengdu pilot operation guidelines set the repayment period as “no more than 5 years”. Previously, the exemption inspection period of the regulations of Shenzhen Special Economic Zone on personal bankruptcy was 3 years. In this regard, some insiders said that “a longer term is beneficial to creditors and debtors have more time to repay their remaining debts”.

Conducive to increasing market vitality

But they are also wary of becoming a hotbed for “old Lai people”

Zhang Huaxin of the enterprise reorganization Department of Jingheng Zhengzhou told the Red Star capital bureau that the personal bankruptcy system (centralized liquidation of personal debts) reduces the burden of “honest and unfortunate” debtors, makes market players enter and exit, and increases market vitality.

“Shenzhen and other places have piloted the individual bankruptcy system and improved the bankruptcy law system. Because China’s current bankruptcy law system only has the enterprise bankruptcy law, there is no individual bankruptcy system. The enterprise bankruptcy law is not applicable to individuals (natural persons) 。 After an individual has become an important economic subject in the socialist market economy, he cannot obtain the protection and relief of the bankruptcy law when his solvency is in crisis or dilemma. “ Zhang Huaxin said,

At the same time, many insiders mentioned that the threshold of personal bankruptcy must be high, otherwise it will become a hotbed for “old Lai people”.

An Guangyong, an expert of the credit management committee of the all union M & A Association, mentioned to the Red Star capital bureau that the introduction of the personal bankruptcy system is likely to attract “Laolai” groups. Only strict systems, approval processes and supporting online and offline tracking and supervision systems are strictly checked at all levels, can we effectively safeguard the interests of creditors and debtors.

Red Star News Reporter Yu Yao Shen Mengyun

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