In early September, the Standing Committee of the National People's Congress began deliberations on amending the country's corporate bankruptcy law. One proposal would create a liquidation provision for owners who are jointly and severally liable for the total debts of bankrupt companies. The government wants input from the business community, aiming for swift enactment. Though a personal bankruptcy system has been introduced in select regions like the city of Shenzhen, this would be the first nationwide system.
When Chinese financial institutions lend money to startups and other small businesses, they usually hold individual owners jointly and severally liable. China's corporate bankruptcy law, enacted in 2007, applies only to corporations. Entrepreneurs whose businesses failed have been left responsible for huge debts they could not pay off, making it difficult for them to start new businesses.
