Targeted Bankruptcy Reforms: The Cases of USA, China and Some Selected Euro Area Countries: UK, Germany, France, and Spain

This study explores ways USA, China, UK, Germany, France and Spain have employed different but focused bankruptcy and insolvency approaches to deal with their economic problems. The purpose of this paper, therefore, is to study how these three different countries have come up with ways to help their economies through differentiated bankruptcy management unique to their situations. China needed to improve its international image to spur inflow of FDI. While you US sought to enhance corporate profitability and growth of big businesses at the expense of average citizens. To study each country’s reform laws, bankruptcy data and legal practices of different countries were obtained from those countries’ websites and various published documents. The data were examined and compared, noting differences in legal structures among the countries studied. It was found that, whereas the aim of bankruptcy laws was to remedy the countries’ economic problems and allow bankrupts a fresh start, the approaches taken differed markedly from one country to another. But it appears all these countries pursued bankruptcy reforms following surges in bankruptcy filings. In many cases, it was difficult to access bankruptcy data mainly because such data were published on Internet and no other reliable documents were available. Using each country’s legislative actions, the author examined and compared reformed laws of both countries. One major difference is that the Chinese reformed bankruptcy law addresses only enterprises (private or public) and completely leaves out individuals. But the US law has provisions for individuals as well as organizations, though it clearly favors businesses.