Shenzhen’s judicial system is handling 1,635 applications for personal bankruptcy according to a pioneering law that took effect on March 1, 2021. The legislation applies to individuals who have made continuous local social insurance contributions for a minimum of three years. It addresses personal insolvency resulting from business losses or excessive spending, offering solutions such as insolvency liquidation, reorganization and conciliation. The latter two methods aim to strike a balance between debtors and creditors, 85 percent of whom are financial institutions. Experts are advocating for the swift nationwide adoption of this trailblazing law, emphasizing the need for coordination with civil and criminal laws to deter absconding and fraudulent activities. By June 2022, Shenzhen had set up a body to provide guidance on legal processes. While China enshrined corporate bankruptcy laws in 2006, it was not until Shenzhen’s trailblazing initiative that the ability to declare personal bankruptcy received attention.
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