The refinement of the restructuring system remains a central priority in the ongoing revision of the Enterprise Bankruptcy Law. The revised draft is designed to further improve restructuring mechanisms, aiming to better leverage their role in rescuing distressed enterprises.

The 24th session of the Standing Committee of the 14th National People's Congress is scheduled to convene in Beijing from August 25 to 28. During a press briefing held by the Legislative Affairs Commission on the 21st, it was announced that the revised draft of the Enterprise Bankruptcy Law will be submitted for its second review at this session.

In September 2025, the 17th session of the Standing Committee conducted the initial review of the draft. The unveiled draft, comprising 16 chapters and 216 articles, represents a substantial overhaul compared to the current law's 12 chapters and 136 articles, with over 160 articles substantively added or modified. This initial draft introduced four new chapters, including special provisions for micro and small enterprise bankruptcy proceedings and consolidated bankruptcy, established a bankruptcy work coordination mechanism, optimized restructuring-related systems, and clarified that natural person shareholders bearing joint liability for corporate debts may have their debts settled—all of which drew significant public attention.

What key modifications will the second review draft introduce? Huang Haihua, spokesperson for the Legislative Affairs Commission, outlined six primary areas of change. First, it clarifies that during the review of a bankruptcy application, the people's court may decide to temporarily suspend enforcement procedures against the debtor's property. Second, it refines the provisions concerning the scope of bankruptcy administrators. Third, it aims to fully leverage the restructuring system's function of rescuing distressed enterprises by specifying the methods and procedures for pre-restructuring negotiations and their connection with the formal restructuring process, while also improving the voting and approval systems for restructuring plans. Fourth, it adjusts and optimizes the provisions on the order of debt repayment from the bankruptcy estate. Fifth, it enhances the cross-border insolvency framework, including refining the jurisdictional rules for Chinese courts in cross-border bankruptcy cases. Sixth, it details and refines the systems related to debt settlement for jointly liable individual debtors, safeguarding the legitimate rights and interests of both creditors and debtors.

Notably, regarding the restructuring system, the second review draft will specify the methods and procedures for pre-restructuring negotiations and their linkage with the formal restructuring procedure. The previous draft had already arranged for institutional arrangements for negotiations conducted by relevant parties with the aim of restructuring prior to filing an application. Fan Zhiyong, director of the Bankruptcy Law Research Center at the Law School of Beijing Jiaotong University, previously noted that while the relevant provisions do not explicitly use the term "pre-packaged restructuring," they effectively introduce a mechanism akin to the pre-packaged restructuring practices implemented in local experiments across China in recent years, serving as a distress relief measure before formal bankruptcy. However, he also pointed out that certain rules remain somewhat "abstract," as the draft does not clarify whether courts or local governments can intervene during the pre-restructuring stage, in what capacity they would intervene, and what their functional positioning should be if they do. Given that most current pre-packaged restructuring practices are court-led, with some driven by local governments, the lack of explicit stipulations in the new law may not fully resolve these ongoing disputes.