NPC review of draft bankruptcy law is key step forward
The mainland's draft bankruptcy law will face a preliminary review by the National People's Congress Standing Committee next week during a regular five-day session in Beijing.
Xinhua reported yesterday that the draft law - a priority legislation during the term of the 10th NPC - would be of great importance in 'regulating company bankruptcy' and 'safeguarding the order of the socialist market economy'.
NPC vice-chairman Li Tieying was quoted by Caijing magazine as saying last month that the bankruptcy law, an important step in setting up a market economy, should be introduced as soon as possible.
Li Shuguang , who participated in preparing the draft law, told the 21st Century Business Herald that a strong bankruptcy law was a basic requirement of a market economy.
'Our country was not seen as qualified to be recognised as a market economy during the [World Trade Organisation membership] talks. One of the most important reasons was because we do not have a unified bankruptcy law,' said Professor Li, of the China University of Politics and Law in Beijing.
According to the Caijing report, the new legislation would cover all companies, including state-owned and private firms, a groundbreaking extension from the current law on enterprise bankruptcy.
The present law, introduced in 1986, only applied to state-owned enterprises, while bankruptcies involving other companies were subject to the company law, Professor Li said.
State-owned enterprises are obliged to give priority to helping staff instead of paying off debts when they go bankrupt and this was not in the interests of creditors, he noted.
Despite his optimism about the law, Professor Li conceded that the regulation - which has been delayed for years - still failed to satisfactorily address some thorny issues such as settlement and compensation for employees of state-owned enterprises that go bankrupt.
The new law would also not cover bankruptcies of banks and other financial institutions.
Any new bankruptcy law is not expected to be introduced before summer next year, because all legislation on the mainland must go through at least three reviews by the top lawmaking body.
