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BIZCHINA / Center

Investors positive about bankruptcy law

By Fei Ya (China Daily)
Updated: 2007-06-28 11:07

Nearly three-quarters of corporate executives expect to increase
investment on the Chinese mainland over the next three years after the
introduction of a comprehensive bankruptcy law, according to a survey
jointly issued by Deloitte China and CPA Australia China Division.

The survey of 480 executives from the mainland, Hong Kong, Singapore and
Malaysia found that investors are mainly positive about China's new
Enterprise Bankruptcy Law, which was enacted on June 1.

The attitude towards the new law is underpinned by a workable and
transparent bankruptcy regime, which will help investors identify
investment risks and exit options if investments perform poorly.

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The new law unifies the bankruptcy regime for Chinese enterprises on the
mainland - including foreign- and domestic-owned, and State- and
privately-owned - and is more comprehensive than the former bankruptcy
law, which was implemented 20 years ago.

The former law said China had bankruptcy jurisdiction over only
State-owned enterprises, but there was nothing in place to protect the
more than 4.9 million privately owned companies.

"These reforms address the need for a more efficient and effective
redistribution of corporate assets, whether State-owned or privately
owned," said Derek Lai, national leader of reorganization services at
Deloitte China.

The new law embraces international standard practice and introduces new
concepts, such as debt restructuring.

Two-thirds of respondents said a formal debt restructuring system would
protect interests of a bankrupt company while half of the respondents
believe it would protect the interests of creditors, according to the
survey.

(For more biz stories, please visit Industry Updates)

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