Corporate Reorganisation Law Reform in China: Findings from a Province of Zhejiang

In 2006, China enacted its first rescue-oriented Enterprise Bankruptcy Law with the aim of establishing its corporate rescue culture. But the corporate reorganisation procedure that is at the heart of the new bankruptcy law has not been used frequently. It is appropriate to ask why the use of China’s new corporate rescue law has been so low? Meanwhile, in the existing corporate reorganisations under the 2006 Law, most debtors were excluded from the reorganisation process, so that the Chinese new debtor-in-possession model, which seems to be a desirable control format, was largely shelved; this article explores why debtors were overwhelmingly side-lined in these cases. By using the empirical fieldwork data collected from one Chinese province, Zhejiang, this article is addressing these two issues. Zhejiang’s experience with reorganisations is significant as it has had a larger number of reorganisations than most other Chinese provinces.