This year’s Legal Exchange came shortly after the presidents of both China and the United States noted the importance of the U.S.-China relationship and reiterated their desire to strengthen bilateral ties through sustained engagement and a shared commitment to managing differences constructively.  In September, President Obama and Chinese President Xi addressed the importance of bankruptcy mechanisms to resolving excess capacity in China and agreed that there should be exchanges regarding our bankruptcy laws.  The first such exchange took place last week, when Commerce General Counsel Kelly Welsh co-hosted the 21st U.S.-China Legal Exchange on December 13 at Renmin University of China Law School in Beijing and on December 15 at the KoGuan Law School at Jiao Tong University in Shanghai.  China’s Vice Minister of Commerce Zhang Xiangchen and State Council Legislative Affairs Office Deputy Director Gan Zangchun co-hosted the exchange. 

This year’s Legal Exchange partially fulfilled the September 2016 presidential commitment by recognizing the importance of addressing economic problems caused by excess capacity through impartial systems and mechanisms relating to mergers and acquisitions; restructuring; and bankruptcy reorganization, bankruptcy settlement, and bankruptcy liquidation. The events at Renmin University and Jiao Tong University brought together top legal experts of both countries to discuss the U.S. bankruptcy law system and attracted over 100 audience members in each location. Presentations by the U.S. side focused on the development and current state of U.S. bankruptcy law, judicial perspectives on bankruptcy, the role of the U.S. Trustee Program, complex corporate reorganizations, and practical issues in restructuring and liquidation including in the auto and airline industries. China’s experts provided insight on their efforts to establish special bankruptcy tribunals, improve their bankruptcy administrator systems and use modern information tools to improve transparency of bankruptcy cases. The conversations among experts and questions from the audience addressed the conditions needed for innovation, and challenges posed by “zombie” companies, struggling sectors, excess capacity, potential fraud in case administration, and policy concerns such as labor and employment. The frank and dynamic discussions throughout the programs underscored the tremendous interest on the issue of bankruptcy law reform in China today.

Participating for the U.S. delegation were: the Honorable Robert Drain, Judge at the U.S. Bankruptcy Court of the Southern District of New York; Ramona Elliott, General Counsel of the U.S. Trustee Program, U.S. Department of Justice; Professor Charles Tabb, University of Illinois College of Law; James Sprayregen, Partner, Kirkland & Ellis; Corinne Ball, Partner, Jones Day; and Josef Athanas, Partner, Latham & Watkins. China’s legal experts included academics from Renmin University Law School and Jiao Tong University KoGuan Law School, members of the judiciary, and private sector practitioners, who provided responses to U.S. presentations and engaged in dialogue with the U.S. experts.

About the Legal Exchange

Under the U.S.-China Joint Commission on Commerce and Trade (JCCT) Commercial Law Working Group, the U.S. Department of Commerce’s Office of General Counsel leads engagement with China’s Ministry of Commerce (MOFCOM) to promote understanding and cooperation on issues related to commercial rule of law. Since the mid-1980’s, the Commerce General Counsel and China’s Vice Minister of Commerce have co-led the U.S.-China Legal Exchange, a unique forum in which China and the United States bring their legal experts to the other country to present to public audiences on new and important developments in the commercial legal and regulatory landscape. This meeting has taken place almost every year and continues to be an important means to build bilateral understanding on legal topics relevant to business in each country.