New China bankruptcy law takes effect Michael Sung at 12:41 PM ET
[JURIST] China's new "Enterprise Bankruptcy" law came into effect Friday, officially introducing broad sweeping regulations governing the resolution of outstanding business debts for the first time in China [JURIST news archive], which is gradually amending its laws to address the changing conditions brought about by China's quick transition to a market economy. The regulations, which will allow creditors to attach assets of debtors that declared bankruptcy, gives the local People's Court the authority to nullify business transactions up to one year before a bankruptcy declaration. The measures were designedly largely to address "fraudulent bankruptcies" that previously allowed debtors to escape liability by declaring bankruptcy and transfer company assets to third parties without explanation or under the guise of business transactions or settling non-existent debts.
The bankruptcy law also imposes a duty on company supervisors to preserve property and financial records, as well as to respond to creditors interrogatories. High-level officials of companies that declared bankruptcy are also restricted from leaving the jurisdiction of their place of residence without permission from the People's Court, and are prohibited from assuming other high-level positions at other enterprises. BBC News has more. Xinhua has local coverage.
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