Bankruptcy System Research Articles

How bankruptcy system innovation affects firm investment behavior: A quasi-natural experiment based on the establishment of bankruptcy courts in China

This study investigates the effects of bankruptcy system innovation on firm investment behavior. Taking the establishment of bankruptcy courts in China as a quasi-natural experiment and using the difference-in-differences method, we show a significant positive relationship between the bankruptcy system and firm investment in financial assets. Improving creditor protection, increasing firms' financing constraints and costs, and increasing the bankruptcy reorganization rate are the main mechanisms through which the establishment of bankruptcy courts promotes firm investment in financial assets. Moreover, the effects of bankruptcy court establishment on firm investment in financial assets are more significant for non-state-owned firms, firms with CEOs who do not have a financial background, and firms in regions with better institutional environments. Finally, we find that the increased investment in financial assets by firms after the establishment of the bankruptcy court balances the efficiency of investment in financial assets at the same time. The findings of this study can provide a reference for optimizing the allocation of market resources and improving the financial rules of the legal system.

Regulatory Procedures for Corporate Bankruptcy: A Comparative Analysis between the Kingdom of Saudi Arabia and the United States of America

The following paper provides a qualitative comparative analysis of the regulatory processes involved in corporate bankruptcy in the Kingdom of Saudi Arabia (KSA) and the United States of America (USA). The work analyses the legislation, main subjects, procedures, and results of corporate insolvency in both countries. As such, this study seeks to analyze the differences and comparisons of these regulations to address the question of the efficiency of each regime and the gaps for changes. The features of recent changes in Saudi Arabian legislation in the sphere of bankruptcy and the influence of these changes on the business environment are discussed, as well as the obligatory American Chapter 11 procedures. The comparative approach provides policy-implementing, legal-advice, and business-useful outlooks to the policymakers, lawyers, and enterprises operating in both countries for subsequent reasons. Based on the research findings and the shift in the Bankruptcy system in Saudi Arabia, this paper also acknowledges insider influence, particularly the influence of the U.S. model as the world’s benchmark on corporate restructuring best practices.

Promoting small businesses’ access to credit and innovation through a reform of the bankruptcy system: evidence from Slovenia

ABSTRACT This study examines the impact of a bankruptcy system reform process implemented in Slovenia on access to credit conditions and investments in innovation by small businesses. The reform process increased the recovery rate and reduced the time to resolve insolvency procedures, thus improving the efficiency of the bankruptcy system. Leveraging a dataset of 1,245 Slovenian micro-, small-, and medium-sized enterprises, our results document an increase in innovation investments by small businesses after the reform process due to more accommodating access to credit conditions.

Study on the Legal Problems of the Exemption System of Personal Bankruptcy

The core of personal bankruptcy is the exemption system, which gives honest and unfortunate debtors a chance to start over and guarantees their basic rights of survival and development, is an important system for maintaining sound socio-economic functioning and for resolving difficult issues of court enforcement, not only in helping natural debtors in debt deadlocks in individual cases, but also in helping markets to recover as quickly as possible, thereby improving the overall well-being of society. However, throughout the world, whether it is a country that has established the personal bankruptcy system for a long time, or a country that is in the initial stage of exploring the personal bankruptcy system, personal bankruptcy exemption, a well-meaning legal system, has inevitably caused some negative effects and hindered the operation of the system as a whole. In order to guarantee the good operation of the personal bankruptcy exemption system in our country, we should establish such systems as the incentive system of the bankruptcy person with good faith and the property registration system to support the operation of the procedure, improve the link between personal bankruptcy exemption and civil law, Civil Procedure Law, company law, etc., in order to guarantee the validity and feasibility of personal bankruptcy exemption system, the procedures of debtor's application, administrator's opinion, Creditor's objection, relief and rescission are detailed.

China's Path to the Construction of Personal Bankruptcy System

Personal bankruptcy system is a system that has been absent in China for a long time, the scale of over-consumption groups in China is expanding at this stage, the number of over-indebted people is increasing, and there are a large number of cases that are difficult to be executed or have no property to be broken in the court, which makes the construction of personal bankruptcy system more urgent. In this paper, the author discusses the value background, access rules and legal effects of the personal bankruptcy system, with the intention of constructing a personal bankruptcy system under the path of China.

독립성을 상실한 구분건물 담보물의 채권자 보호 방안 연구

Our Constitution stipulates that all property rights that have economic value are guaranteed under public and private law. Nevertheless, the current Civil Execution Act has institutional shortcomings in safeguarding the interests of creditors, and the auction procedures for Sectioned Buildings, for which confirming independent boundaries is challenging, tend to infringe on or damage creditors' rights. The Civil Execution Act states that for Sectioned Buildings for which verifying independent boundaries is difficult, the auction application shall be dismissed or the auction commencement decision shall be canceled, both at the application stage and after the auction commencement decision has been issued. Furthermore, it provides the option to revoke the sale approval decision even after a bid has been placed and the sale approval decision for the buyer has been finalized. There have been numerous cases in which the auction application was terminated or, despite the auction proceeding and a bid being made, the winning bidder could not acquire ownership. Due to the recent establishment of Articles 1-2 of the Condominium Act, which aim to prevent unstable situations in the ownership of Sectioned Buildings and protect people's property rights, the number of cases in which auctions have been recognized or permitted has noticeably increased. However, it is evident that auctions are not permitted in several cases. Therefore, to safeguard the property rights of creditors in cases involving Sectioned Buildings, where it is challenging to confirm independent boundaries, a forced bankruptcy system is suggested under the framework of the Debtor Rehabilitation and Bankruptcy Act. This system allows creditors to apply for a debtor's bankruptcy as a means to enforce their property rights.

An empirical study of micro‐ and small‐enterprise bankruptcy protection under the COVID‐19 pandemic: New evidence from China

AbstractMicro‐ and small‐enterprises (MSEs) serve as a strong foundation for sustainable and stable economic and social development in countries worldwide. However, they are highly susceptible to bankruptcy crises, a phenomenon that has been significantly amplified by the COVID‐19 pandemic. The article presents an empirical investigation of the application of the bankruptcy system to MSEs, using data on MSE bankruptcies published by the Sichuan courts in China in 2020 during the COVID‐19 pandemic as evidence. The article reveals that MSEs face a triple dilemma when applying bankruptcy procedures. Firstly, the legal system for bankruptcy is unsound. Secondly, the institutional mechanism for bankruptcy is imperfect. And thirdly, the social environment surrounding bankruptcy is not conducive. The article presents a novel approach to address bankruptcy issues by suggesting the implementation of streamlined bankruptcy procedures, a reorganization system for small and micro‐enterprises and a personal bankruptcy system. Additionally, it proposes enhancing the institutional framework for the selection, evaluation and oversight of bankruptcy judges and administrators, as well as the establishment of third‐party institutions. Furthermore, it advocates for a modernized understanding of bankruptcy, the provision of pre‐bankruptcy services and the creation of a bankruptcy protection system. The article presents a unique sample of international comparative studies on MSEs and proposes a new approach to examining bankruptcy protection for MSEs in China.

Effectiveness of Indonesia’s Simple Proof Test in Comparison to the US Code

Objective: This paper aims to analyze (1) simply proving the elements for bankruptcy under Article 2(1) jo. 8(4) Law No. 37 of 2004 (“Bankruptcy Law”), and (2) its effectiveness in comparison to bankruptcy in the US. This paper assesses also distinctive judgement between the bankruptcy system of Indonesia and the US even when relying on the same forms of evidence. Legal experts and advocates recognize Indonesia’s Simple Proof Test for bankruptcy as ineffective and ‘too simple’ where Courts turn a blind eye to rule out matters requiring a thorough legal and factual assessment, hence the current Bankruptcy Bill basing future revisions on United States (“US”) practices. However, the simple proof test remains. Methods: This research is a normative legal research with applying the statutory and comparatives approach to analyze the research questions concerned with descriptive qualitative. Conclusions: The result of this research found that applying the same standards in an entirely different regime would not reap the benefits intended. Therefore, a thorough assessment should replace the simple proof test entirely.

乡村振兴视域下农村集体经济组织有限破产制度探讨

乡村振兴视域下农村集体经济组织有限破产制度探讨

The Historical Process and Contemporary Insights of China's Bankruptcy System

The Historical Process and Contemporary Insights of China's Bankruptcy System

The financial statements and their impact on natural persons subject to the regime of companies covered by the patrimonial restructuring of the bankruptcy system law

The financial statements and their impact on natural persons subject to the regime of companies covered by the patrimonial restructuring of the bankruptcy system law

지방자치단체 예산의 방만운영과 낭비 예방을 위한 입법적 해결방안

Among the writings on local government operation published since the 1970s until recently in the UK, which can be said to be the suzerain of local autonomy the representative characteristic is the focus of research on the logic that threatens the traditional status of local autonomy which has been understood as a sound symbol of democracy in the past. Korea has been experiencing incomplete local autonomy with insufficient decentralization for over 30 years but it is not much different in that local autonomy is rapidly being absorbed into turbid central politics as in the UK and Western Europe. In addition to the influence of central politics lacking national trust local election officials bandwagon of popularism drives unit local governments to serious budget waste. The problems arising from the continuous budget waste and lax financial management of local governments can be limited to a unit area in a microscopic view but expand as a side effect of the nation's overall financial management in a macroscopic view. In particular, such a side effect is that it promotes distrust between social classes, while eventually causing serious obstacles in the operation of local autonomy, which is the basis of democracy. The patterns of budget waste in the budget management process of local governments typically show behaviors such as hasty decisions, exhibitionism, patronage and sharing. The main background of this problem is the selfish judgment of the political party that does not properly accept the voters' demands. In other words, rather than managing their finances soundly, they focused only on spending their budgets by pandering to popularity. It has also encouraged a waste of budget due to the private use of public powers. Therefore, we urge the introduction of a local government bankruptcy system and a taxpayer lawsuit system as a way to solve the problem. At the same time, the improvement and strengthening of the ordinance legislative power which has been continuously requested from the local government field and that is an urgent issue. Along with improvement of the current self-audit function of local governments. In the future I would like to suggest that it is necessary to establish a 'Local Board of Audit and Inspection' gradually divide the country into regions.

Research on the Implementation Dilemma and Solution Path of Personal bankruptcy Exemption System from the Perspective of Interest Balance *

Under modern bankruptcy law, individual debtors enter bankruptcy proceedings mainly to obtain debt relief. Therefore, the exemption system is not only a part of the Personal bankruptcy system but also plays a core role in the Personal bankruptcy system. However, the debtor's debt relief is based on the consideration of harming part of the creditors' interests in repayment, which poses an ethical challenge to the Personal bankruptcy relief system. Therefore, how to balance the interest relationship between creditors and debtors in the personal bankruptcy exemption system and promote the orderly development of the social market economy, this paper will discuss the model selection, scope of application, inspection period and other aspects.

Assessment of formal proceedings and out-of-court reorganisation: results from a survey among turnaround professionals in Austria

This study analyses the decision criteria for a specific form of reorganisation in a creditor-friendly bankruptcy system such as that of Austria. From a neoinstitutional perspective, we present different forms of bankruptcy law and the specifics of reorganisation in Austria. Next, we show several distinctive criteria and influencing factors for formal reorganisation and workouts. We group these factors into constitutions and institutional settings, process and handling, and implementation of the reorganisation. Using a sample of 411 survey responses from turnaround professionals, our empirical study analyses the decision criteria for a specific form of reorganisation. We apply a multivariate approach comprising two-sided paired samples Wilcoxon tests to assess the derived hypotheses and a hierarchical cluster analysis. Our results indicate significant differences in the valuation of the two forms: the turnaround professionals rate public perception much higher for out-of-court reorganisation, whereas legal certainty is rated significantly better for formal proceedings. Regarding process and handling, transparency and the handling of blocking positions are arguments for formal reorganisation, whereas flexibility is valuated better for workouts. In terms of implementation, respondents see advantages for out-of-court reorganisation, as it facilitates the implementation of both financial and operational measures. Taxation, the handling of blocking positions, and the improvement of public perception were identified as key development aspects for the legal framework conditions of the various reorganisation forms.

Bankruptcy recovery rate and small businesses’ innovation

ABSTRACT Small businesses often face a high risk of bankruptcy and harsh financing conditions, which can hamper them from engaging in innovation. This paper investigates whether a bankruptcy system that guarantees a good recovery rate for creditors in case of firms’ liquidation stimulates small businesses’ innovation investments through lower interest rates and therefore easier access to credit. With the help of a borrower-lender model, we derive insights about the interactions between bankruptcy recovery rate, borrowing interest rates and firms’ investments in innovation. The model gives theoretical underpinnings for a subsequent empirical analysis. By using a cross-country sample of micro (1–9 employees)-, small (10–49 employees)-, and medium (50–249 employees)-sized enterprises (MSMEs), our study provides three main results. It shows that an increase in the bankruptcy recovery rate a) is positively associated to MSMEs’ investments in innovation (investment effect); b) reduces the share of MSMEs that are credit constrained because the cost of borrowing is too high (constraint effect); c) reduces the interest rates dispersion for highly profitable MSMEs (dispersion effect). Overall, our findings suggest that improving creditors recovery rate can help promote the innovative behaviour of small businesses through easier financing conditions.

Bankruptcy Law's Knowns and Unknowns

In 1978, Congress created a new federal bankruptcy law that has since become a key part of the American capital markets. I examine how large companies and their investors contract to make bankruptcy more or less likely, how distressed firms negotiate with creditors outside of bankruptcy, and how companies plan for a Chapter 11 filing and navigate the bankruptcy system. I also survey the strategic moves, ranging from litigation to financing, that activist investors deploy to improve their bargaining power and earn higher returns. The American bankruptcy system is evolving constantly, and prevailing accounts of bankruptcy law quickly become stale, creating a constant need for new empirical research to establish a foundation for policy making.

중국 파산법상 개별변제 부인권의 성립요건

The individual repayment avoidance right is a key system that reflects the principle of fairness of the Bankruptcy Act, and plays an important role in maintaining the safety of transactions, defending good faith, and ensuring market order. In real life, debtors often reimburse certain creditors, such as relatives, friends, and stakeholders, first during the bankruptcy threshold period, and infringe on the interests of other creditors. The function of the individual repayment avoidance right is to promote fair repayment between creditors. Therefore, it occupies an important position in the bankruptcy law of all countries. As the criterion for judging individual repayment avoidance right, the constitutive elements of legal provisions are the core of avoidance right system. In the Bankruptcy Law of China, the main provisions of individual repayment avoidance right are stipulate in Article 32 of the Enterprise Bankruptcy Law of the People's Republic of China, Article 41 of the Regulations of Shenzhen Special Economic Zone on Personal Bankruptcy and some relevant judicial interpretations. However, china’s legal provisions on the constituent elements of individual repayment avoidance right are relatively simple and problematic. There are many problems such as, the omission of the “insider clause” in the behavior element, inconsistency of the period element, irrationality of the exception element, the proof dilemma of the element of the cause of bankruptcy, and the absence of the provisions on the subjective state element. It is inevitably affecting the normal functioning of the system. Therefore, based on China's bankruptcy system of legislative and judicial reality, the thesis introduces the legislation status of the constitutive elements of the individual repayment avoidance right, and analyzes the loopholes and deficiencies in the legal regulations. Then, aiming at the above problems, the thesis puts forward the improvement plan. It includes adding relevant clauses of “insider” in the behavior element, improving the starting point of the period element, retaining and revising the burden of proof of elements of the cause of bankruptcy, introducing subjective state elements, Optimizing the exception clause and so on. At present, China is in the critical period of revising the Enterprise Bankruptcy Law and implementing the Shenzhen Personal Bankruptcy Regulations. It is urgent and necessary to systematically study the constitutive element so find individual repayment avoidance right. It is hoped that the research in this thesis can promote the further development of the individual repayment avoidance right system in China.

Research on the Procedure Construction of China’s Personal Bankruptcy System

Nowadays, the establishment of a nationwide personal bankruptcy system as soon as possible has been a unified view in academic circles. However, the specific setup of this system and the connection and interaction of various supporting systems are still hot issues of academic controversy. From the initial exploration to the continuous prosperity of the local pilot works, the rich pilot experience provides a practical basis for theoretical research. At the same time, new reform trends and changes have emerged in the international frontier legislation. Therefore, this research attempts to give suggestions for the procedural design of the establishment of a national personal bankruptcy legal system in China. Drawing on new experiences and new models domestic and abroad, the selection of personal bankruptcy procedures should adhere to liquidation as the criterion, and attach importance to the role of reorganization, as well as maintain the stability of social and economic order and promote the development and improvement of the legal system.

Application of Bankruptcy System of Rural Collective Economic Organizations

The Civil Code has established the special legal person civil subject status of rural collective economic organizations. Under the dual drive of reform and legislation, rural collective economic organizations are evolving towards market subjects, and the withdrawal mechanism of rural collective economic organizations should be constructed. The application of the bankruptcy system is an inevitable choice under the background of reaffirming the economic functions of rural collective economic organizations, and also meets the practical needs of rural collective economic organizations as special legal persons to withdraw from the market in an orderly manner. When applying the bankruptcy system, the conditions and subject of bankruptcy application of rural collective economic organizations should be clarified; Determine the responsible property, including but not limited to the usufructuary right used by members to exchange capital contributions for shares, and grant members the right to repurchase capital contributions; We will establish a simple bankruptcy procedure, a bankruptcy prevention system, a bankruptcy reorganization system and other supporting systems.

Research on the Exemption System of Personal Bankruptcy Residual Debt in China from the Perspective of Socialist Culture of Rule of Law

With the development of commodity economy, loan consumption is becoming more and more common. Under this consumption mode, debtors are very likely to fall into the vicious circle of insolvency, which is a great obstacle to the development of individuals and society. The emergence of personal bankruptcy system has helped debtors get rid of debt difficulties and promoted a new cycle of social economy. The establishment of personal bankruptcy system is a correct way to conform to the historical trend. In the face of the vacancy of China's long-term personal bankruptcy system, this topic explores the basic way to construct the personal bankruptcy debtor's debt avoidance system in China by analyzing the obstacles to the establishment of personal bankruptcy in China, and analyzing the existing personal bankruptcy systems in the continental law system and the Anglo American law system. And based on the key historical node of the promulgation and implementation of the Personal Bankruptcy Regulations of Shenzhen Special Economic Zone, we pay attention to the real situation of the implementation of the regulations to discuss the construction of the debt avoidance system of personal bankruptcy debtors in China.