the supreme people’s court issued the Regulations on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People’s Republic of China (3) (Judicial Interpretation 3) on 28 March, focusing on the relevant legal issues concerning the exercise of creditor rights, which triggered a heated discussion in the industry.
Dentons China selected the topic of “Corporate bankruptcy: how to deal with non-performing assets and disputes” and invited experts and scholars to analyze the judicial interpretation for afternoon session of CBLJ Forum 2019. Dentons senior partners Gao Meili, Zheng Zhibin, Lu Shaohong, Emilia Shi and Huang Jianzhou, and Professor of Peking University Law School Xu Defeng, participated in the discussion.
Zheng raised two questions on the issue of borrowing by the debtor: (1) the borrowing will be preferentially compensated with reference to the common debt, but it is obviously not classified as a common debt; and (2) the borrowing needs to be subject to the creditors’ meeting, which in turn has increased the difficulty of borrowing.
“In our current bankruptcy process, the creditors’ meeting is basically ineffective,” he said. As such, he suggested working with creditor committees of financial institutions, which hold 70% to 80% of the total credits.
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