Supreme People's Court, Provisions on Several Issues Concerning the Application of the «PRC Enterprise Bankruptcy Law» (1)

最高人民法院关于适用《中华人民共和国企业破产法》若干问题的规定（一）

October 12, 2011 | BY

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First SPC interpretation on the Enterprise Bankruptcy Law.

Clp Reference: 2500/11.09.09 Promulgated: 2011-09-09 Effective: 2011-09-26

Promulgated: September 9 2011
Effective: September 26 2011

Main contents: The Interpretation clarifies the issues concerning the determination of reasons for bankruptcy to facilitate the implementation of the Enterprise Bankruptcy Law. According to Article 1, if a debtor is unable to discharge a debt that is due and payable, and its assets are insufficient to discharge all of its debts or it is clearly insolvent, the people's court shall find that it has satisfied a reason for bankruptcy. Where a relevant party asserts that the debtor does not satisfy the reasons for bankruptcy on the grounds that a party that bears joint and several liability for the debtor's debt is not insolvent, the people's court shall dismiss such claim.

The people's court shall find that the debtor is unable to discharge its debt that is due and payable if all of the following circumstances hold simultaneously:

(i) a claim-debt relationship has been established in accordance with the law;

(ii) the term for performance of the debt obligation has expired; and

(iii) the debtor has not fully discharged its debt (Article 2).

If a debtor's balance sheet, or audit report, asset appraisal report, etc. shows that all of its assets are insufficient to repay all of its liabilities, the people's court shall find that the debtor's assets are insufficient to discharge all of its debts, unless there is counter-evidence sufficient to show that the debtor's assets can repay all of its liabilities (Article 3).

Related legislation: PRC Enterprise Bankruptcy Law, Aug 27 2006, CLP 2006 No.8 p.39

clp reference:2500/11.09.09prc reference:法释〔2011〕22号promulgated:2011-09-09effective:2011-09-26

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