What question did this study set out to answer?

This paper aims to analyze the enforcement of China's personal bankruptcy regulations and their implications for debtor relief.

May 14, 2026

Rethinking law in books versus law in action in China's first experiment of a personal insolvency regime: Towards a more debtor‐oriented procedural design

Key Points

This paper aims to analyze the enforcement of China's personal bankruptcy regulations and their implications for debtor relief.
Empirical analysis of data from March 2023 to February 2025 on the enforcement of the SPBR.
Comparison of insolvency procedures including bankruptcy liquidation and reorganisation.
Examination of the creditor landscape and its impact on debtor outcomes.
The majority of non-business cases remain excluded from the SPBR regime.
Court confirmation of reorganisation plans increasingly mandates full debt repayment.
Creditor-oriented procedures hinder effective debtor relief for personal insolvencies.

Abstract

Abstract Although a local experiment, the promulgation of the Regulations of Shenzhen Special Economic Zone on Personal Bankruptcy (SPBR) in 2020 was hailed as a significant milestone in China's insolvency lawmaking which has thus far addressed only corporate insolvencies. Building on Kilborn's empirical study of the SPBR's enforcement during its initial 2 years, this paper analyses data from the subsequent 2 years (1 March 2023 to 28 February 2025). While lending support to Kilborn's conclusions, the findings in this paper, in some respects, point to an even bleaker outlook for insolvent individuals seeking a fresh start. Most non‐business‐related cases have continued to be excluded from the regime, while liquidation‐and‐discharge relief remains rare for business‐related debtors. More significantly, full repayment of outstanding debts has increasingly become a standard requirement for court confirmation of reorganisation plans. To explain this troubling enforcement record, this paper examines two key insolvency procedures offered by the SPBR, namely, bankruptcy liquidation and reorganisation, and shows how their creditor‐oriented procedural design, modelled on the Chinese Enterprise Bankruptcy Law , is ill‐suited for addressing personal insolvencies. Reinforced by the structural features of the creditor landscape in personal insolvencies in China, this design effectively places the prospects of debtor relief in the hands of creditors, particularly state‐owned or controlled financial institutions, notwithstanding the court's cramdown powers. The paper further suggests ways to moderate this creditor‐oriented procedural design by drawing upon international regulatory experiences, particularly those from the United States, Japan and Australia, while remaining attentive to China's local conditions. It argues that shifting towards a more debtor‐oriented approach is crucial, especially given the SPBR's significant influence on the introduction of similar regimes in other Chinese regions as well as at the national level.

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