Government measures in key jurisdictions 3rd edition final - Flipbook - Page 36
China
Insolvency
•
During the COVID-19 outbreak, courts have allowed enterprises in bankruptcy proceedings to take
measures such as resumption of production and operation or disposal of assets related to
epidemic prevention and control, which has contributed to fighting the epidemic as well as
increasing the creditors' debt repayment ratio.
•
For additional information on measures taken related to enterprises in bankruptcy proceedings
during the COVID-19 epidemic in Chinese, please click here.
•
On April 15, the Supreme People’s Court issued the opinions on promoting lawful and efficient
adjudication of bankruptcy cases, which provides various measures to improve the efficiency and
reduce the cost of bankruptcy proceedings.
•
On May 15, the Supreme People’s Court issued the second guiding opinions in adjudicating civil
cases involving the Covid-19 epidemic. The Supreme People’s Court asks the courts at different levels
to facilitate consultation between the debtor and creditor if a creditor petitions for bankruptcy of an
enterprise that fails to meet its debt repayment obligation due to the Covid-19 epidemic. The courts
are asked to avoid initiating bankruptcy proceedings for enterprises that fail to meet debt
repayment obligation solely because of the impact of Covid-19 epidemic by evaluating the cash flow
and asset liability ratio of these enterprises during this special period of time only.
Contractual
Issues
•
Performance of contractual obligations could be delayed due to the Covid-19 Epidemic. Here is
an analysis about if a developer can claim exemption from liability for the breach of contract
arising from a delay in delivering houses on schedule.
What measures
have been taken
to reinforce
contracts?
•
In practice, many developers see epidemics, major public health events, universal epidemic
diseases, governmental policies and decrees relating to construction as force majeure events, or at
least situations where developers are specifically entitled to postpone the time of delivery as agreed upon
in their sales contracts.Thus, based on the principle of autonomy of will, sellers and purchasers can enjoy
and undertake the rights and obligations to postpone the time of delivery as agreed upon in their
contracts if it is valid.
•
If there is no valid agreement, developers can apply for a force majeure or use the principle of
change of circumstances. However, the legal consequences and outcome of such a declaration will
be determined on a case-by-case basis.
•
Special Series regarding the Legal Impact of the Covid-19 Epidemic on the Real Estate
Industry. Topic One: the impact of the Covid-19 epidemic on the sale of commodity housing.
•
On May 15, the Supreme People’s Court issued the second guiding opinions in adjudicating civil
cases involving the Covid-19 epidemic. The Supreme People’s Court states that the courts should
not grant the petition of either party to terminate a sales contract if the Covid-19 epidemic is
making performance more costly or performance will be later than the time specified in the
contract as long as the purpose of the contract is not frustrated. On the other hand, the courts
may allow adjustment of price or time of performance based on the actual circumstances of
each case and the principle of equity.
Has the
government made
any changes
to insolvency
legislation?
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Government measures in key jurisdictions