{"id":21223,"date":"2016-06-24T05:45:24","date_gmt":"2016-06-24T10:45:24","guid":{"rendered":"http:\/\/olduvai.ca\/?p=21223"},"modified":"2016-06-24T05:45:24","modified_gmt":"2016-06-24T10:45:24","slug":"chinese-bankruptcies-surge-more-than-50-in-q1-worse-to-come","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=21223","title":{"rendered":"Chinese Bankruptcies Surge More Than 50% In Q1; Worse To Come"},"content":{"rendered":"

Chinese Bankruptcies Surge More Than 50% In Q1; Worse To Come<\/a><\/h3>\n
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Two months ago,\u00a0when looking at the soaring number\u00a0<\/a>of bond issuance cancellations and postponements as calculated by BofA, we commented that it was only a matter of time before the long overdue tide of corporate defaults, held by for so many years by the Chinese government which would do anything to delay the inevitable, was about to be unleashed.<\/p>\n

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This prediction has indeed been validated and as the\u00a0FT reports overnight<\/a>, Chinese bankruptcies have surged this year “as the government uses the legal system to deal with \u201czombie\u201d companies and reduce industrial overcapacity as part of a broader effort to restructure the economy.”\u00a0In just the first quarter of 2016, Chinese courts have accepted 1,028 bankruptcy cases, up a whopping 52.5% from a year earlier, according to the Supreme People\u2019s Court<\/strong>. Just under 20,000 cases were accepted in total between 2008 and 2015.<\/p>\n

This is surprising because while China\u2019s legislature had approved a modern bankruptcy law in 2007 it had barely been used for years, with debt disputes often handled through backroom negotiations involving local governments.\u00a0 \u201cBankruptcy isn\u2019t just about creditor-borrower relations. It also touches on social issues like unemployment,\u201d said Wang Xinxin, director of the bankruptcy research centre at Renmin University law school in Beijing. \u201cFor a long time many local courts weren\u2019t willing to accept them, or local governments didn\u2019t let them accept.\u201d<\/p>\n

However, following the dramatic collapse of global commodity prices, which as we showed last October meant that more than half of local companies could not afford to even make one coupon payment with cash from operations, Beijing had no choice but to throw in the towel. And as the FT adds, “bankruptcy courts have been recruited into China\u2019s drive for \u201csupply-side reform\u201d, which centres on reduction of overcapacity in sectors such as steel, coal and cement.”<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Chinese Bankruptcies Surge More Than 50% In Q1; Worse To Come Two months ago,\u00a0when looking at the soaring number\u00a0of bond issuance cancellations and postponements as calculated by BofA, we commented that it was only a matter of time before the long overdue tide of corporate defaults, held by for so many years by the Chinese […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[3038,3903,1361,130,7188,200,14086,4318],"class_list":["post-21223","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-america","tag-bankruptcies","tag-bankruptcy","tag-china","tag-chinese-government","tag-default","tag-financial-tinmes","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21223","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21223"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21223\/revisions"}],"predecessor-version":[{"id":21224,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21223\/revisions\/21224"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21223"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21223"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21223"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}