A comparative study of the corporate bankruptcy reorganization law of the U.S. and China

PhD ceremony: Ms. Y. Ren, 14.45 uur, Doopsgezinde kerk, Oude Boteringestraat 33, Groningen

Dissertation: A comparative study of the corporate bankruptcy reorganization law of the U.S. and China

Promotor(s): prof. F.M.J. Verstijlen, prof. O. Couwenberg

Faculty: Law

The US and Chinese bankruptcy reorganization laws are quite similar in respect of the main structures, concludes Yongqing Ren. The Chinese bankruptcy reorganization law is basically a product of transplanting the US law. In the transplantation, the Chinese legislators made certain modifications. Some valuable parts of the US law are not properly incorporated into the Chinese law. This leads to the problematic designs of the Chinese bakruptcy law (EBL), the most prominent being the inadequate protection of the creditors’ interest under the automatic stay, the unreasonable classification, improper design of the shareholders’ voting right, the loose confirmation requirements. On the whole, the comparison has showed that the Chinese law and practice are much less developed than its US counterparts. The prominent manifestation of the immature nature of the Chinese reorganization law and practice is the lack of the best-interest test and feasibility test for consensual plans, the lack of a complete provision on the absolute priority rule, the loose feasibility standards, and the negligence of the proper valuation of the debtor’s reorganization value. The Chinese reorganization law needs to be improved in many aspects and that at the early stage of the reorganization practice, the reorganization proceeding is just a device of legally getting rid of unsecured debts. Taking into account that a market economy based on the rule of law has not been completely established in China and that market-based bankruptcy reorganization law has a history of less than four years, the immature nature of the Chinese law and practice is understandable and the achievement of the Chinese legislative achievement is great, concludes Ren.