Prc China Law Bankruptcy

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					   Developing the Asian Markets
         PRC Experience


David Kidd
Allen & Overy
11 November 2003




                      ALLEN & OVERY
                            FAIR III – Session V
      PRC NPLs - the story so far

 AMCs (Cinda, Huarong, Great Wall, China
  Orient) established in 1999
 1.4 trillion yuan (US$170 billion) transferred
  by ICBC, BOC, CCB and ABC
 To date 21.5% sold by AMCs
 “NPLs cloud Big Four banks” - 6.11.03

                               ALLEN & OVERY
                                         FAIR III – Session V
             Resolution issues

 Legal framework
 State ownership
 Real estate
 Restructuring culture



                          ALLEN & OVERY
                                 FAIR III – Session V
            Legal framework

 1986 Trial Bankruptcy Law
 1991 Civil Procedure Law
 2002 Supreme Court interpretation
 New law in 2004?
 GITIC landmark (cf GDE)
 Judiciary
                             ALLEN & OVERY
                                      FAIR III – Session V
             State ownership

 PRC a socialist centrally planned economy
 Approval processes are slow
 Move towards private ownership and
  improved corporate governance
 Role of SOEs in employee welfare


                             ALLEN & OVERY
                                      FAIR III – Session V
                 Real Estate

 All land owned by state (urban) or
  collectives (rural)
 Allocated/Granted/Leased
 Security over tangibles
 Enforcement slow
 Employee rights
                              ALLEN & OVERY
                                       FAIR III – Session V
        Restructuring experience

 GDE/FJE/ITICs/Zhu Kwan
 Government support after GITIC
 Inertia, indecision and limited local
  experience (but no dominant family interests)
 Must combine international experience with
  local knowledge through strong servicing
  vehicles
                              ALLEN & OVERY
                                       FAIR III – Session V

				
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