THE Shenzhen Intermediate People’s Court has received more than 400 personal bankruptcy applications, 10 of them already filed for investigation, since the personal bankruptcy law took effect March 1, court sources said Tuesday.

Of the 10 cases, five of them have been granted liquidation.

A verdict from the court showed a man, surnamed Li, was in 3.62 million yuan (US$566,100) debt from his failed projector business. Li set up e-commerce sales teams several times, in partnership with other companies, and invested more than 1 million yuan in research and development while also spending more than 100,000 yuan in advertising for each team. Yet, due to increase of costs and declining prices of projectors, Li’s company grew deeply in debt. Li applied to court for personal bankruptcy after his company closed. He had 3,000 yuan and a car under his name, in addition to 3.62 million yuan debt.

Court data showed most of the applicants are between 30 and 50 years old. They either started up companies or engaged in business operations in industries like Internet, retailing or manufacturing. Their debt amounts range from 100,000 yuan all the way to 3 million yuan. Li was one in debt for more than 3 million yuan.

Shenzhen enacted the personal bankruptcy law, the first of its kind in China, in March in hopes of providing a way out for honest, but unfortunate, individuals saddled with debt they cannot repay. The law is believed to play an important role in constructing a complete and modern bankruptcy system and market exit mechanism.

To better protect the legal rights of debtors, the law allows those in debt to have up to 200,000 yuan in total assets exemption that can be used for daily life, education and medical needs of the debtors and their dependents.

Meanwhile, eligible personal bankruptcy applicants, who will be exempted from all or part of their debts from declaring bankruptcy in court, will be subject to strict supervision in personal expenditure, income distribution and career qualifications.

During the three-year supervision period, the bankrupt debtors cannot fly first or business class on planes, travel by soft sleepers in regular long-distance trains nor use first-class high-speed train seats. They are also not allowed to check in to three-star or above hotels, nightclubs or golf clubs.

They are also restricted from purchasing properties or vehicles, renting offices at expensive office buildings, hotels or apartment buildings, or expanding or remodeling residences.

Additionally, their children are not allowed to study in expensive private schools.

Those who intend to take advantage of loopholes in order to somehow ditch their debt liabilities will face severe punishments, as per the law.

(Han Ximin)