China’s New Bankruptcy Law
by Maria Antonietta Tanico
Studio Legale Tanico; Roma, Italy
On Aug. 27, 2006, the People’s Republic of China passed a new bankruptcy law that will become effective on June 1, 2007. The concept of bankruptcy law is not new in Chinese law. The first bankruptcy law, called the “Qing Law,” dates from 1906, near the end of Qing dynasty. Before that, the issue was governed by an ethical precept, according to which “the debts of the father are to be paid by the son.” But the Qing Law had a short duration and was abolished with the fall of the empire around 1912. In 1935, under the Nationalist government, China enacted a bankruptcy law that is still enforced today in Taiwan.
New China
Isaac Rothschild
Law Clerk at Mesch, Clark, & Rothschild PC; Tucson, Ariz.
By all accounts the Chinese Bankruptcy Law needed reform, and on June 1, 2007 the new bankruptcy law will take effect. Although the old law will still apply to state-owned enterprises (SOEs) until 2008, some experts believe the SOE exception for SOEs will be extended beyond 2008.
When the new bankruptcy law does begin to apply to SOEs, China will have, for the first time, a bankruptcy law that applies to both SOEs and certain private enterprises. The old law only applied to SOEs. However, the New Chinese Bankruptcy Law does not apply to partnerships or sole proprietorships, nor does the new law create a structure for personal bankruptcy. Currently the National People’s Congress (NPC) has approved more than 2,000 unproductive SOEs to file before the exception period ends.
Update on Canadian Insolvency Reform
by John N. Birch
Cassels Brock & Blackwell LLP; Toronto
The reform of Canada’s insolvency laws continues to move forward slowly. In an article published in a previous edition of this newsletter, I outlined the proposed amendments to Canada’s two major insolvency statutes, the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) under Bill C-55. The Canadian Parliament enacted Bill C-55 in November 2005, shortly before Canada’s federal election, on the understanding that it would not come into force until further Parliamentary hearings were held after the federal election and in any event not before June 30, 2006.