Installment favored in ruling over bankruptcy
China's first ruling on personal bankruptcy cases took effect on Monday, about four months after the country's first local regulation on personal bankruptcy went into effect in March.
The case falls under the category of reorganization cases. The applicant, Liang Wenjin, a 35-year-old Shenzhen resident, was saddled with debts of about 750,000 yuan (US$115,725) after a failed business venture.
Liang submitted a personal bankruptcy reorganization plan in March to Shenzhen Intermediate People's Court, which approved his application on Monday.
The court put a stop to accruing interest on the day it accepted Liang's personal bankruptcy application. Since the applicant found a job after his failed startup business and earned about 20,000 yuan a month, the court agreed that Liang would be subject to a restructuring process, and can renegotiate an installment repayment plan with his creditors, rather than directly going into bankruptcy liquidation.
According to the verdict, with interest and late fees waived, Liang has to repay all the principal to his creditors in three years.
During the period, apart from 7,700 yuan a month for the basic living expenses of his family of four, Liang has promised that his remaining income would be used to pay off the debt.
If Liang fails to follow through with the plan, creditors have the right to file for his liquidation in court, the ruling said.
In August 2020, Shenzhen's regulations on personal bankruptcy were approved by local legislators.