Wealth distribution in Chinese bankruptcy reorganization law and practice

Abstract Wealth distribution provisions in bankruptcy reorganization law, which regulate the distribution of the debtor's overall value among all the interested parties with an aim of ensuring a fair and equitable distribution, constitute an important part of the bankruptcy reorganization law. This article first examines the wealth distribution provisions contained in Chinese bankruptcy reorganization law from a Sino‐US perspective and then explores the wealth distribution in Chinese bankruptcy reorganization practice through an empirical study of 18 bankruptcy reorganization cases of listed corporations in China. After an analysis of Chinese legal provisions on wealth distribution and their application in practice, this article draws the conclusion that wealth distribution in Chinese bankruptcy reorganization practice is far from being fair and equitable, which may cause abused use of the reorganization proceeding and distort the operation of the bargaining mechanism. Reform suggestions for Chinese bankruptcy reorganization law are proposed at the end. Copyright © 2011 John Wiley & Sons, Ltd.