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Original title: Zhejiang Formally Explores Personal Bankruptcy System and Establishes Five-Year Behavior Review Period
Establish a personal bankruptcy system and complete “half of the bankruptcy law.” After Shenzhen, Zhejiang formally explored the personal bankruptcy system.
On December 2, the Zhejiang High People’s Court issued the “Guidelines for Centralized Settlement of Personal Debts (Personal Bankruptcy) in Zhejiang Courts (Trial)” (hereinafter referred to as the “Labor Guidelines”) and actively explored the adoption of conditional debt relief and honest property declaration, reasonably determining the “necessities of life” to achieve the institutional purpose of exonerating property in the bankruptcy system, etc., and thoroughly exploring the institutional factors of bankruptcy staff in the centralized settlement of personal debts. The publication of the labor guidelines means that Zhejiang has formally explored the personal bankruptcy system.
In August this year, Shenzhen formally passed the “Personal Bankruptcy Regulations of the Shenzhen Special Economic Zone”, to be implemented on March 1, 2021.
The personal bankruptcy system is closely related to commercial banks. Some big bankers said that personal bankruptcy can affect some credit loans. For example, some banks tighten risk control conditions for people with high leverage or weak ratings, but it is still too early to tell. Some people in the industry believe that personal bankruptcy should protect the legitimate rights and interests of creditors, while allowing the “honest and unfortunate” debtor to ditch the “Lao Lai” hat. For example, personal bankruptcy and reorganization should form the responsibility to pay past debts and avoid dumping debts to the bank through bankruptcy.
Five-year behavior review period
According to the Zhejiang Province Labor Guidelines, currently only the debtor is obliged to apply for centralized personal debt settlement (personal bankruptcy). Shenzhen clarifies that both debtors and creditors can apply to the people’s court for personal bankruptcy. However, both require continuous participation in social security for three years.
The requirements for centralized settlement of personal debts in Zhejiang province (individual bankruptcy) are: natural persons who have a home registration in Zhejiang province, live in Zhejiang province and participate in social insurance in the province from Zhejiang or have paid personal income tax for three consecutive years cannot pay their overdue debts and do not have sufficient assets To pay all debts or obviously lack of ability to pay, you can apply for centralized settlement of personal debts in accordance with these guidelines. Individual industrial and commercial households can refer to these guidelines for centralized debt relief.
The conditions for filing for personal bankruptcy in Shenzhen are: as regards the debtor, a natural person living in Shenzhen and has participated in Shenzhen social insurance for three consecutive years, whose assets are insufficient to pay off all debts or have an obvious lack of solvency due to the production, operation and consumption of life. Carry out the bankruptcy settlement in accordance with the law. As for the creditor, when the debtor is unable to pay the debt, creditors who individually or collectively have more than 500,000 yuan of expired creditor rights can apply for bankruptcy liquidation of the debtor.
Personal bankruptcy generally has a behavioral inspection period, which is 5 years in Zhejiang and 3-5 years in Shenzhen.
According to the Zhejiang Province Work Guidelines, if all creditors agree to forgive the remaining debts and end the foreclosure, there is no behavioral review period. It is also possible to establish a behavior review period as a condition for accepting the discharge of the remaining debt. If a creditor does not agree to discharge the remaining debts of the debtor or establishes a behavior review period as a condition for accepting the discharge of the remaining debts, the behavior review period will be five years after the conclusion of the centralized settlement procedures. of personal debts.
Shenzhen stipulates that personal bankruptcy mainly adopts three procedures: liquidation, reorganization and liquidation. Among them, the liquidation is a typical bankruptcy, that is, the debtor distributes all the assets to the creditor to settle the debt through the related procedures. After an inspection period of three to five years, if the conduct restrictions are met and there is no bankruptcy fraud, the outstanding debt can be released in accordance with the law. Debt rebirth.
It is an international practice to restrict the relevant behaviors of debtors entering bankruptcy proceedings.
In terms of consumption restrictions, the Zhejiang Province Work Guidelines prohibit nine acts: flying business class, first class, soft sleeper on trains, second class cabins or higher on ships, EMU second class passenger trains high-speed G-head and first-class or superior seats from other EMUs; Consumption in hotels, hotels, discos, golf courses and other places above three stars; purchase of new, expanded or high-end furnishing houses or properties; leasing of high-end office buildings, hotels, apartments and other office locations; purchase of motor vehicles; travel and vacations; children studying private schools with high fees; paying high premiums to purchase financial insurance products; other consumer behaviors that are not necessary for life and work.
In terms of occupational restrictions, Zhejiang has not issued relevant regulations, and Shenzhen prohibits debtors from acting as directors, supervisors, and senior managers of listed companies, public unlisted companies, and financial institutions.
How many people will file bankruptcy?
Attorney Zhu Yicong from the Yingke Law Firm said that compared to the “Shenzhen Personal Bankruptcy Regulations” enacted and to be implemented in Shenzhen, the Zhejiang Labor Guidelines have the same philosophy, that is, protect honest debtors and unlucky. It is a normal phenomenon for large numbers of people to file for bankruptcy after the enactment of employment guidelines. Because there are already people who meet certain conditions, it is also the proper sense of enacted regulations to guide your bankruptcy, but it will not trigger a wave of malicious evasion bankruptcies. A number of systems have been designed to prevent malicious debt avoidance to help honest but unfortunate debtors to be reborn while preventing and punishing bankruptcy fraud.
These include the obligation of the debtor to fully declare property and debts, not to leave the country without permission, and to report in a timely manner after name, contact information, and address are changed. If the debtor refuses to cooperate or assist the people’s court or administrator in the investigation, refuses to answer questions, or refuses to send relevant information; provides false or altered information, makes false or misleading statements; intentionally implements or assists in the implementation of concealment, transfer, By destroying, improperly disposing of assets, property rights, financial vouchers and other materials, or other conducts that unduly reduce the value of assets, the people’s court may impose reprimands, subpoenas , fines and detentions in accordance with the law; if a crime is constituted, criminal liability will be investigated in accordance with the law.
After the personal bankruptcy system is gradually implemented, how many people will file for bankruptcy?
Cao Qixuan, head of the Shenzhen Bankruptcy Court of the Shenzhen Intermediate People’s Court, said that there are currently about 6 million people living in Shenzhen and have participated in Shenzhen social security for three consecutive years. Check out the annual number of Hong Kong individual bankruptcy filings for about one thousandth of the population. This ratio is estimated to be approximately 5,000 to 6,000 personal bankruptcy cases each year. “At first, there may be fewer applicants, but after a few years it will slowly increase and stabilize.”
On December 3, the Zhejiang Higher People’s Court held a press conference to reveal that, as of the end of September, Zhejiang Province had accepted a total of 237 cases of centralized settlement of personal debts and concluded 147 cases of centralized settlement of personal debt. personal debts.
In addition, the total amount of debts involved in the case of personal debts in Zhejiang Province was 202.7 million yuan, of which the secured debt amounted to 25.732.51 million yuan and the ordinary debt amounted to 177 million yuan. A total of 33,503,490 yuan was paid, with an average settlement rate of 16.53%. 685 creditors, including 138 financial creditors, participated in the centralized settlement of personal debts in the province. A total of 712 foreclosure cases were involved in the centralized settlement of personal debts in the province, which involved an amount of 248.2 million yuan in foreclosure.
The personal bankruptcy system is also expected to have cross-regional effectiveness.
Insiders believe that the “extraterritoriality” of the personal bankruptcy system is the main issue in its implementation. “A person goes bankrupt in Shenzhen, how should his debts be determined in other places where the personal bankruptcy system is not implemented?” Cao Qixuan said that after the regulations were passed, the regulations on the centralized jurisdiction of derivative litigation and the Shenzhen courts issued rulings on personal bankruptcy cases. In terms of effectiveness outside the special zone, it is also necessary to win the support of higher courts.
On November 9, the Supreme People’s Court issued the “Opinions on the Support and Guarantee of the Construction in Shenzhen of a Pilot Demonstration Zone of Socialism with Chinese Characteristics” (the “Opinions”), in which it proposed to take the initiative to test a bankruptcy system for natural persons and establish a guarantee and coordination mechanism for judicial implementation for the bankruptcy system for natural persons. Fully implement the legal effects of judgments in cases of bankruptcy of natural persons both inside and outside the RAE. In addition, promote the reform to separate the judiciary of bankruptcy cases from the management of bankruptcy matters and support the establishment of a special bankruptcy management agency in Shenzhen. Explore establishing a bankruptcy reorganization center throughout Asia and the Pacific.
The Vice President of the Supreme People’s Court, Yang Wanming, stated that the “Opinions” clearly support the cross-regional effectiveness of bankruptcy of natural persons, which is a matter of general concern across the board, and calls for the full implementation of the legal effects of judgments in bankruptcy cases of natural persons both inside and outside the SAR, and encourages courts across the country to actively support this. Labor reform.
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