Drawing a clear line between corporate and personal debt has long vexed Chinese entrepreneurs. To raise capital, many provide personal guarantees for corporate loans; when their companies fall into financial distress, those same guarantees often leave them burdened with substantial personal liabilities. Pilot personal bankruptcy regimes in cities such as Shenzhen have begun to test possible remedies, but their reach remains narrow. The current Enterprise Bankruptcy Law still focuses on rescuing companies rather than protecting the individuals behind them.
In September 2025, the National People’s Congress released the Enterprise Bankruptcy Law (revised draft), which introduces a mechanism for personal debt relief. Under…