On 15 July 2019, UNCITRAL formally approved a new model law (linked here) for enterprise group insolvencies on how to administer group insolvencies across multiple jurisdictions. A lesson learnt from the 2008 global financial crisis when we saw the collapse of Lehman Brothers was the absence of legislation that dealt with group insolvencies. This has been identified as a major gap in UNCITRAL’s model law on cross-border insolvency (MLCBI). Read more…
The bankruptcy regime was a major milestone for China. For the first time in its history, China now has a unified and comprehensive
bankruptcy system covering all types of enterprises, including foreign investment vehicles and state-owned enterprises.
Similar to many jurisdictions, the bankruptcy regime uses key concepts such as:
- Voluntary and involuntary bankruptcy;
- An independent administrator;
- Involvement of creditors in the administration of the bankruptcy;
- Restructuring and settlement;
- Extraterritoriality, allowing property outside China and certain foreign proceedings to fall within the regime;
- Voidable transactions; and
- Ratable distribution.
A significant feature of the legislation relates to the protection of workers’ rights. The regime ranks employees ahead of other unsecured
creditors but behind secured creditors, who retain their priority over secured assets.