Although this is only a local regulation, it shows the important legal value of complementing the system weakness of market subject withdrawal and further improving the construction of an honest society. It is a good news for "honest but unfortunate" entrepreneurial losers who are expected to be relieved of endless debt troubles, and a "nightmare" for "old fogies" who ignore market rules.
According to the report of the Workers' Daily on June 9, the Standing Committee of Shenzhen Municipal People's Congress solicited public opinions on the Personal Bankruptcy Regulations of Shenzhen Special Economic Zone (Draft for Comments) on June 2. The core of the regulation is to establish an individual bankruptcy system. Natural persons whose assets are insufficient to pay off all debts or who are obviously lack of solvency due to production, operation and living consumption can apply for bankruptcy if they meet certain conditions. This means that in the face of business failure, "honest but unfortunate" entrepreneurs will have the right to go bankrupt.
The Regulation (Draft for Comments) is the first draft law regulating personal bankruptcy in China, which marks the beginning of the construction of personal bankruptcy system. Although this is only a local regulation, it shows the important legal value of complementing the system weakness of market subject withdrawal and further improving the construction of an honest society. It is a good news for "honest but unfortunate" entrepreneurial losers who are expected to be relieved of endless debt troubles, and a "nightmare" for "old fogies" who ignore market rules.
There are legal provisions in many market economy countries to clear up debts, exit the market and achieve "self rescue" through personal bankruptcy procedures. Previously, most of the market subjects in China were legal persons, while the market subjects of natural persons accounted for relatively little and mostly operated on a shoestring basis, even though the impact of business failure on families and society was not very prominent. With the rise of the wave of "mass entrepreneurship and innovation", on the one hand, individual businesses, e-commerce, WeChat businesses and other natural person market entities are increasing, business scale is expanding, and market risks are becoming increasingly prominent; On the other hand, the natural person shareholders in entrepreneurial enterprises and private enterprises cannot be exempted from their guarantee obligations to enterprises, which leads to some "zombie enterprises" being unable to return. If the legal regulation that natural persons bear unlimited responsibility cannot be broken, and the natural person subject who has failed in business can withdraw from the market in an orderly manner, it is not only conducive to reducing the debt burden of individuals and families, it is not conducive to other market subjects carefully selecting trading partners, and it is also not conducive to building a social credit system from a broader level. In response, in recent years, at the two sessions of the National People's Congress, some deputies have repeatedly put forward proposals to establish an individual bankruptcy system.
In fact, before the establishment of the personal bankruptcy legal system, relevant parties have been actively promoting policy planning and practical exploration. In June 2019, 13 departments including the National Development and Reform Commission jointly issued the Reform Plan for Accelerating the Improvement of the Market Subject Exit System, which requires that the National Development and Reform Commission, the Ministry of Justice and other departments be responsible for promoting the establishment of the natural person bankruptcy system step by step. At the level of judicial practice, the courts in Wenzhou, Taizhou and other places in Zhejiang Province have started relevant attempts. The Wenzhou Intermediate Court started from the trial procedure, and the Taizhou Intermediate Court started from the execution procedure, trying to make a judicial breakthrough in the personal bankruptcy system by establishing a centralized liquidation procedure for personal debts. The formulation of the Regulations of Shenzhen Special Economic Zone on Individual Bankruptcy (Draft for Comments) can be described as a first attempt at legislation.
In the system of personal bankruptcy system, there is a "positive and negative" relationship between withdrawing from the market according to law for the natural person subject suffering from debt and preventing and stopping malicious evasion of debt. Dealing with the "positive and negative" relationship - not only to "untie" personal debt, but also to prevent malicious evasion of debt - is the key to ensure that the personal bankruptcy system plays an ideal role.
To establish the legal system of personal bankruptcy, on the one hand, we should make effective use of the existing legal achievements in China. For example, China has issued and implemented the Enterprise Bankruptcy Law, and has established a set of standardized procedures in the legal person bankruptcy system, which can provide reference for the personal bankruptcy system. The promulgation and upcoming implementation of the Civil Code further clarified the legal boundary for personal assets. In recent years, relevant parties have continued to promote the construction of personal information sharing platform to facilitate relevant parties to conveniently query personal property information and help prevent some people from hiding and transferring property.
On the other hand, it is necessary to block the public's fear of maliciously evading debts out of the personal bankruptcy proceedings through strict system design, so as not to leave any room for speculation. A phenomenon that cannot be ignored is that although the relevant legal system is becoming more and more rigorous, and the social integrity construction is becoming more and more solid, there are always some people who take risks and try to kill themselves. The public is worried that the legal provisions in the personal bankruptcy system to reduce or cancel personal debts may become a channel for some lawbreakers to try to evade debts maliciously. This is undoubtedly a severe test for legislators.
It is an inevitable requirement for the development of China's market economy to establish a personal bankruptcy system, form a credit based restraint and punishment mechanism for the market subject to withdraw from the responsible person, and then guide the market subject to abide by the law and operate honestly, so as to form an environment where the trustworthy person can move freely and the dishonest person can't move forward. China's legislation has always had a model of local first and national second, and regulations first and laws later. The formulation of the Personal Bankruptcy Regulations of Shenzhen Special Economic Zone (Draft for Comments) fits this legislative model. It is expected that the formulation of this regulation can widely gather consensus and provide a model for legislation at the national level.
