The measure is aimed at protecting creditors and workers of insolvent firms
China's top legislature yesterday announced passage of the much-anticipated Corporate Bankruptcy Law, which legislators said would provide protection to both creditors and workers of insolvent companies.
The law, which took 12 years to make its way through the legislative process in the National People's Congress, will take effect on June 1 next year. It will replace the Interim Enterprise Bankruptcy Law, which was primarily applied to state-owned enterprises.
The new law will apply to state-owned enterprises, private companies, financial institutions and foreign-invested companies.
Members of the Standing Committee of the NPC, speaking at a news conference in the Great Hall of the People, said any enterprise declaring bankruptcy would pay its creditors first, and could then use any remaining assets to pay laid-off workers. 'The provision is a compromise that aims to protect both creditors and workers of insolvent enterprises,' Cheng Siwei, a vice-chairman of the Standing Committee, told Xinhua.
Jia Zhijie , a member of the Standing Committee, said: 'The new law embodies the notion of putting people first, as it fully considers workers' interests. At the same time, it accords with standard international practice in better protecting lenders' interests.'
