Shenzhen, China – In a landmark decision, a couple from Shenzhen has become the first to be declared bankrupt in the city under the new Personal Bankruptcy Regulations of the Shenzhen Special Economic Zone. The court’s ruling has set a precedent for the application of personal bankruptcy in China, offering hope for individuals facing insurmountable debt.
According to the Shenzhen Intermediate People’s Court, the couple, identified as Guo and Li, have been declared bankrupt due to their inability to repay a total debt of over 9.28 million yuan. The court’s decision follows a thorough review of their financial situation, which revealed that the couple had been struggling with debt since the 2012 fire that destroyed their towel wholesale and retail store in Luohu District.
The fire, which resulted in the loss of approximately 1.5 million yuan worth of inventory, led the couple to seek arbitration and litigation against their property leaseholder and property management company. Despite their efforts, they were unsuccessful in obtaining compensation, which ultimately led to the closure of their store.
In an effort to recover, the couple reopened their business but faced ongoing financial difficulties. They were forced to borrow money from family, friends, and various platforms to sustain their business and repay their debts. However, due to their inability to pay the rent, the store had to close and was officially注销ed in October 2023.
The court’s decision to declare the couple bankrupt is based on the Personal Bankruptcy Regulations of the Shenzhen Special Economic Zone, which came into effect on June 1, 2021. The regulations allow individuals to apply for bankruptcy under certain conditions, such as the inability to repay their debts and a lack of assets to cover their liabilities.
Under the new regulations, the couple will be under a three-year supervision period during which they must comply with certain obligations, including reporting their financial situation to the bankruptcy administrator and maintaining a certain level of living expenses for themselves and their dependents.
After the three-year supervision period, the couple may apply to the court to have their remaining debts forgiven. The court will review their application and decide whether to grant the petition based on the couple’s compliance with the bankruptcy regulations and their ability to repay any remaining debt.
The case of Guo and Li has sparked a debate on the benefits and potential drawbacks of personal bankruptcy in China. Proponents argue that the new regulations will provide a safety net for individuals facing financial difficulties, allowing them to restart their lives and rebuild their creditworthiness. Critics, however, are concerned that the regulations may be exploited by individuals seeking to evade their debt obligations.
Shenzhen Intermediate People’s Court Presiding Judge Cao Qixuan emphasized the need for a balanced approach to personal bankruptcy cases. The handling of personal bankruptcy cases must consider the interests of all parties involved, including creditors, debtors, and society as a whole, he said.
The case of Guo and Li serves as a testament to the evolving legal landscape in China, as the country continues to explore new ways to address the challenges faced by individuals and businesses in an increasingly complex economic environment.
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