Author: Xin Jizhao
The pilot of Shenzhen's personal bankruptcy system continued to advance. On July 18, the Shenzhen Municipal Bankruptcy Administration organized the drafting of the Interim Measures of the Shenzhen Municipal Bankruptcy Administration (Draft for Comments) (hereinafter referred to as the Measures (Draft)) to solicit opinions from all sectors of society.
The Shenzhen Municipal Bankruptcy Administration said in the drafting note that Shenzhen was the first city in China to explore the establishment of legal institutions. In accordance with the international practice and the practice that Shenzhen has set up a statutory body, a special legislation is required to stipulate the establishment, responsibilities, funding sources, selection methods and appointment and removal of main responsible persons, governance structure, supervision mechanism, relationship boundaries with relevant government departments and other matters of the Shenzhen Bankruptcy Administration.
In addition, the establishment of the Shenzhen Municipal Bankruptcy Administration has drawn on the experience of foreign and Hong Kong bankruptcy administrations. The Personal Bankruptcy Ordinance of Shenzhen Special Economic Zone only stipulates its basic functions. By formulating the Measures, the functions, decision-making, implementation, supervision and other operational mechanisms of the Municipal Bankruptcy Administration will be linked with international practices, so as to enhance its credibility and international recognition, and enhance its voice in future cross-border bankruptcy cooperation and related rule making activities.
The trial implementation of the natural person bankruptcy system is one of the issues of the comprehensive pilot reform of Shenzhen's construction of the first demonstration zone of socialism with Chinese characteristics authorized by the central government. On March 1, 2021, the first personal bankruptcy law in China, the Personal Bankruptcy Ordinance of Shenzhen Special Economic Zone, was officially implemented, and the first domestic bankruptcy management agency, "Shenzhen Bankruptcy Administration", was established.
Pilot "Shenzhen Model" of Personal Bankruptcy System
As one of the important market economy systems, bankruptcy system is the basic guarantee of economic operation and market credit. On March 1, 2021, the first personal bankruptcy law in China, the Personal Bankruptcy Ordinance of Shenzhen Special Economic Zone, was officially implemented. It stipulates that: A natural person who lives in the Shenzhen Special Economic Zone and has participated in social insurance for three consecutive years may apply to the people's court for bankruptcy, including bankruptcy liquidation, reorganization and reconciliation, if his or her ability to pay off debts is lost or his or her assets are insufficient to pay off all debts due to production, operation and living consumption.
On the same day as the implementation of the Personal Bankruptcy Regulations of Shenzhen Special Economic Zone, the first domestic bankruptcy administration agency, the Shenzhen Municipal Administration of Bankruptcy Affairs, was set up at the same time, thus separating the jurisdiction of individual bankruptcy cases from the jurisdiction of bankruptcy affairs.
Since then, Jiangsu, Zhejiang, Shandong and other places have successively started the pilot program of centralized liquidation of personal debts (similar to personal bankruptcy system), which has aroused widespread social repercussions and awakened the expectations of relevant people for the introduction of personal bankruptcy system.
In terms of the trial of individual bankruptcy cases, in July 2021, the Shenzhen Intermediate People's Court ruled that Liang Wenjin's reorganization plan should be approved in accordance with the provisions of Article 119 of the Regulations of Shenzhen Special Economic Zone on Individual Bankruptcy, and that Liang Wenjin's individual bankruptcy reorganization procedure should be terminated. This marks the effectiveness of the ruling of the first bankruptcy case in China.
In May 2022, the Shenzhen Bankruptcy Court issued the Opinions on Strengthening the Implementation of Individual Bankruptcy Applications and Review Work to standardize individual bankruptcy applications and establish a regular acceptance mechanism. In order to prevent the abuse of individual bankruptcy procedures and prevent bankruptcy fraud, this opinion specifically proposes that the applicant should have a better understanding of the Personal Bankruptcy Regulations of Shenzhen Special Economic Zone. In addition, more reorganization and less liquidation are emphasized for personal bankruptcy. The debtor is required to reasonably choose reorganization, reconciliation or bankruptcy liquidation procedures according to law to liquidate personal debts in combination with its own asset status and solvency.
Improve the management of bankruptcy affairs
In terms of the management of personal bankruptcy affairs, at the beginning of this year, in order to standardize the registration, disclosure and related activities of personal bankruptcy information, and improve the transparency and credibility of handling personal bankruptcy cases, the Shenzhen Municipal Bankruptcy Administration issued the Interim Measures of Shenzhen for Registration and Disclosure of Personal Bankruptcy Information, which was officially implemented from January 10.
In May this year, the Shenzhen Municipal Administration of Bankruptcy Affairs issued a notice on conducting pre bankruptcy counseling for individuals. From June 1, 2022, the applicant can make an appointment to participate in pre application counseling before formally submitting an individual bankruptcy application to the Municipal Intermediate People's Court.
On July 18, in order to standardize the management and operation of the Shenzhen Bankruptcy Administration, the Shenzhen Bankruptcy Administration organized the drafting of the Interim Measures of the Shenzhen Bankruptcy Administration (Draft for Comments).
According to the above draft, Shenzhen Municipal Bankruptcy Administration has three responsibilities, including personal bankruptcy, enterprise bankruptcy and public administrator.
In terms of personal bankruptcy, the Shenzhen Municipal Administration of Bankruptcy bears the following administrative responsibilities for personal bankruptcy affairs: determining the qualification of an individual bankruptcy administrator and establishing a list of administrators; Propose managers; Manage and supervise the manager to perform his duties; Providing bankruptcy affairs consulting and assistance services; Assist in investigating bankruptcy fraud and related violations; Implement bankruptcy information registration and information disclosure system; Establish and improve the coordination mechanism for relevant government departments to handle bankruptcy affairs.
In terms of enterprise bankruptcy and other aspects, if the Shenzhen Municipal Administration of Bankruptcy undertakes other functions other than those specified in the preceding paragraph, such as administrative functions for enterprise bankruptcy affairs, the Municipal Administration of Bankruptcy shall report to the Municipal People's Government for approval.
In terms of public administrators, the Shenzhen Municipal Bankruptcy Administration can explore the establishment of a public administrator system, establish a professional team of public administrators, improve the quality and efficiency of bankruptcy cases and reduce the cost of handling.
The Shenzhen Municipal Administration of Bankruptcy Affairs said in the drafting note that it was born from the bankruptcy reform and was charged with the mission of implementing the bankruptcy reform. For this reason, the Measures (Draft) specifies that the Shenzhen Municipal Bankruptcy Administration Office shall operate as a statutory institution for the public institutions established by the Shenzhen Municipal Bureau of Justice.
The Measures (Draft), on the basis of stipulating that the Shenzhen Municipal Administration of Insolvency shall perform the administrative functions related to individual bankruptcy affairs as stipulated in the Regulations, first, clarify that if the Municipal Administration of Insolvency undertakes other functions such as the administrative functions of enterprise bankruptcy affairs, it shall be reported by the Municipal Administration of Insolvency to the municipal government for approval; The second is to encourage the Municipal Bankruptcy Administration to explore the system of public administrators and clarify the scope of cases or matters in which public administrators perform their duties as administrators.
In terms of financial and personnel management, the Measures (Draft) clearly stipulates that the Shenzhen Municipal Administration of Insolvency can raise funds by combining financial verification and marketization revenue with reference to the operation mode of overseas and Hong Kong bankruptcy administrations, and the practice of the Shenzhen International Arbitration Court in taking arbitration fees, mediation fees, negotiation promotion fees, etc. as business service income, Gradually realize self financing and self support.
In addition, we have established regulations to safeguard the non-profit nature of the Shenzhen Bankruptcy Administration, First, it is clear that the Shenzhen Municipal Administration of Bankruptcy should follow the non-profit principle to provide paid bankruptcy services; Second, the fees collected according to law should be used for the development of bankruptcy administration, the optimization of staff remuneration incentive mechanism and other purposes approved by the municipal government. The Measures (Draft) stipulates that the Shenzhen Municipal Insolvency Administration shall explore the establishment of a socialized employment mechanism with international competitiveness, draw up plans for institutional setting, post setting, personnel employment, salary standards, etc. according to the policies of relevant statutory bodies, and organize the implementation after approval in accordance with the prescribed procedures.
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