Shenzhen Intermediate People’s Court said yesterday it received 260 personal bankruptcy filings in March, the first month since China’s first personal bankruptcy law took effect in the city March 1.
Of the total, 251 cases were filed by debtors and the rest by creditors.
Eight cases filed by debtors have been accepted and are being investigated, the court said at a press conference yesterday.
Seven individuals from these cases are now employed and all of them are willing to pay off creditors by debt restructuring and settlement, according to the court.
“Most of the debtors are between 30 and 50 [years of age]. They either started up companies or engaged in business operations in industries of the Internet, retail and manufacturing,” Long Guangwei, vice president of the court, said.
Their debt amounts range from hundreds of thousands of yuan to 2 million yuan (US$306,000). Only one of them was in debt of more than 3 million yuan. The scale is rather small compared to corporate debts, Long said.
Shenzhen enacted the personal bankruptcy law, the first of its kind in China, in March in an effort to provide a way out for honest but unfortunate individuals saddled with debt they cannot repay. The law is believed to play an important role in constructing a complete and modern bankruptcy system and market exit mechanism.
To better protect the legal rights of debtors, the law allows those in debt to have up to 200,000 yuan in total assets exemption that can be used for daily life, education and medical needs of debtors and their dependents.
Meanwhile, eligible personal bankruptcy applicants, who are exempted from all or part of their debts if declared bankrupt 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 high-speed train seats. They are not allowed to check in to three-star or above hotels, nightclubs or golf clubs.
They are also restricted from purchasing properties or vehicles, renting offices at expensive office buildings, hotels or apartment buildings, or expanding or remodeling residences.
Additionally, their children are not allowed to study in expensive private schools.
Those who intend to take advantage of the loopholes to dodge their debt liabilities will face severe punishments, as per the law.