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Courts to guide firms through debt problems

By CAO YIN | CHINA DAILY | Updated: 2021-09-04 07:09

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532 companies back to business thanks to judicial measures last year, official says

Chinese courts will continue handling civil disputes involving private enterprises to protect their rights in the market, revitalize their businesses and ensure their high-quality development, said an official from the country's top court.

Liu Guixiang, a member of the Adjudication Committee with the Supreme People's Court, told media on Friday that courts nationwide have helped more than 30 private enterprises with debts of more than 10 billion yuan ($1.5 billion) complete restructuring through judicial measures by the end of last year, to help them get rid of debt and turn losses into profits.

In 2020 alone, a total of 407 billion yuan of assets were revitalized and 532 enterprises were back to business, thanks to judicial restructuring, he added.

"What we want is to play the judicial role in supporting enterprises in difficulty, aiding them in attracting strategic investors and advanced technologies as well as in equity restructuring and getting rid of debt crises," he said.

He highlighted the importance of upholding a principle that gives equal protection to every market entity in dealing with cases, ordering courts across the country to be more prudent and humanized when urging enterprises to carry out verdicts.

"We need to improve the efficiency of ruling implementation, but excessively or improperly sealing up properties of enterprises must be prohibited," he said. "Each court should try the best to reduce the effect caused by verdict enforcement to the entrepreneurs' legitimate rights and their business."

Chinese courts also worked in recent years with some commercial institutes, such as the All-China Federation of Industry and Commerce and chambers of commerce, to solve disputes through mediation, and paid greater efforts to improve the professionalism of bankruptcy case hearing, he said.

Now, China has 14 bankruptcy tribunals, and judicial teams or panels specializing in liquidation and bankruptcy disputes have been established in nearly 100 courts, according to Lin Wenxue, chief judge of the top court's Second Civil Division.

"Bankruptcy is an inevitable social phenomenon of survival of the fittest in the market economy, but it doesn't always mean 'death' for enterprises," he said. "Bankruptcy reorganization and bankruptcy reconciliation, for example, are 'protection' and 'rescue' for enterprises."

While lauding the judicial efforts in enterprises' revitalization, he said the country's steps in solving personal bankruptcy cases have also been accelerated.

In July, Shenzhen Intermediate People's Court in Guangdong province concluded the nation's first case of personal bankruptcy in line with the city's regulation, which was also the country's first legal document on individual bankruptcy, he said.

Courts in some other areas, including those in Zhejiang, Jiangsu and Shandong provinces, are also exploring their own ways to help businesspeople withdraw from the market by rule of law, he said.

"The top court will further guide lower courts to research more on individual bankruptcy, hoping to accumulate experience to establish a national-level system in this regard," he added.

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