Shenzhen Government Online
1st personal bankruptcy reconciliation case handled
From: Shenzhen Daily
Updated: 2021-10-19 09:10

The Shenzhen Intermediate People’s Court recently concluded a personal bankruptcy case in favor of the applicant, surnamed Zhang, to reconcile with his creditor.


This was the first personal bankruptcy case handled by a Shenzhen court since the personal bankruptcy law was enacted in March, the first of its kind in China, in an effort to provide a way out for “honest but unfortunate” individuals saddled with debt they cannot pay off.


The debtor Zhang, a retiree, remained in debt for the guarantee liability for his company’s unpaid business loans despite the court enforcing repayments by auctioning his assets several times. Zhang is now living on a senior’s pension and allowances from the civil affairs department, with his debt payments deducted from these funds. On June 7, Zhang applied for personal bankruptcy application and court investigation showed he still owed Ping An Bank 970,379.73 yuan (US$150,820). After rounds of negotiations, the creditor agreed to exempt Zhang’s remaining debt after he paid 52,000 yuan.


Zhang was a typical “honest but unfortunate” individual who benefited from the personal bankruptcy law. Zhang’s debts had him auction his house, declare his property to court and use his pension to pay them off. He had only 2,000 yuan for his monthly expenses.


Since the personal bankruptcy law enactment in March, the Shenzhen Intermediate People’s Court has received 755 personal bankruptcy applications including 47 cases for reconciliations. A total of 17 cases have entered personal bankruptcy liquidation proceedings, including seven for reconciliation proceedings, according to the court.


According to the law, eligible personal bankruptcy applicants, who are exempted from all or part of their debts from declaring bankruptcy by court, will be subject to strict supervision in personal expenditure, income distribution and career qualifications.


During the three-year supervision period, the bankrupt debtors cannot fly first or business class on planes, nor travel by soft sleepers in regular long-distance trains or first-class seats in high-speed trains. They are also not allowed to check in to three-star or above hotels, nightclubs or golf clubs.


They are restricted from purchasing properties or vehicles, renting offices at expensive office buildings, hotels or apartment buildings, or expanding or remodeling residences. Their children are not allowed to study in expensive private schools.