China to set up more bankruptcy courts

The Supreme People's Court (SPC) has ordered the establishment of more special divisions to handle liquidation and bankruptcy cases in intermediate courts.

These divisions will specialize in researching and hearing companies' bankruptcy and compulsory liquidation cases, guiding inferior courts on handling similar cases, and the management and training of bankruptcy administrators, said an SPC plan released Thursday.

At the end of 2015, China's Central Economic Work Conference emphasized the importance of supply-side reform and the clearance of "zombie companies" as a way to cut overcapacity.

"Zombie companies" are businesses that are not economically viable, usually in industries with severe overcapacity, kept alive by support from government and banks.

According to Thursday's plan, the number of staff allocated to these divisions will be determined by the requirements of local cases, and the selection of judges will be based on those with relevant court experience.

Such courts should be established discreetly, scientifically and "in accordance with local economic development and the demand of cases involving zombie companies and bankruptcy," the SPC said.

The four municipalities of Beijing, Shanghai, Tianjin and Chongqing as well as 11 provinces will be the first to set up such divisions at intermediate courts in their cities. Other provincial-level regions will follow suit by the end of the year, said the SPC. Endi