The Chinese Approach Toward Cross‐Border Bankruptcy Proceedings: One Progressive Step Ahead

• DOI: http://doi.org/10.1002/iir.1231
• Date: 01 March 2015
• Author: Guangjian Tu,Xiaolin Li
• Published date: 01 March 2015

The Chinese Approach Toward Cross-Border

Bankruptcy Proceedings: One Progressive

Step Ahead

Guangjian Tu*and Xiaolin Li**

University of Macau, Taipa, Macau, China

Abstract

The birth of the law on enterprise bankruptcy of the People’s Republic of China in

2006 was highly acclaimed. It was generally regarded as a modernized compre-

hensive legislative work at home and abroad. The “territorialism”approach

adopted therein respecting foreign bankruptcy proceedings, however, has received

floods of criticism ever since. It has left a great legal vacuum for the protection of

foreign bankrupt debtor’s assets in China. Foreign investors, however, may see

dawn and have their confidence restored after the recent decision of the Supreme

People’s Court in the well-known case of Thumb Environmental Technology Group v

Sino-Environment Technology Group, which was made on 11 June 2014. From this case

on, with some limitations, the legitimate powers of foreign bankruptcy administra-

tors might normally be ensured once foreign bankruptcy proceedings are initiated

in the place of registration or place of principal business of the foreign debtor,

whereby foreign administrators will be able to take effective measures to investi-

gate, protect and dispose of the bankrupt’s assets located within the Chinese

territory.

I. Introduction

After a long yearning by Chinese and foreigners, the birth of the law on enterprise

bankruptcy of the People’s Republic of China (PRC or China) (hereinafter, EBL)

was highly acclaimed.

1

It was generally regarded as a modernized comprehensive

*E-mail: tuguangjian@yahoo.co.uk;

**E-mail: isabelaxli@gmail.com

1. This law was adopted on 27 August 2006 and en-

tered into force on 1 June 2007. The full text of EBL

can be found at <www.lawinfochina.com>accessed

3 August 2014. All Chinese legal instruments men-

tioned in this essay can be found on this website unless

otherwise indicated; this website will not be cited again

in the following text.

Copyright © 2015 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 24: 57–66 (2015)

Published online 10 February 2015 in Wiley Online Library

(wileyonlinelibrary.com). DOI: 10.1002/iir.1231