China's Supreme People's Court (SPC) issued two regulations on Monday on the selection of bankruptcy trustees in China.

The first regulation stipulates that trustees must be appointed when a court hears a bankrupt case.

Trustees in bankruptcy are agencies or individuals appointed to take charge of the liquidation or reorganization of bankrupt companies.

The regulation stipulates that trustees must be selected from a list of qualified agencies drawn up by the Higher People's Courts.

It requires the Higher People's Courts to draw up local lists of qualified agencies selected from the legal and accounting firms and agencies in charge of liquidation.

To ensure fairness, the regulation states that the selection and work of trustees can be scrutinized at creditors' meetings and by creditors' committees, which are also entitled to apply to the courts to change the trustees appointed if they are unsatisfied with them.

The other regulation says trustees will be paid according to the total value of distributable property of the bankrupt companies, rather than working hours.

An official of SPC said the former method was more appropriate for China at present.

"The method is commonly operated in most countries and it is also helpful to encourage trustees to recover more property of the bankrupt companies and protect the rights of creditors," he said.

The regulations, as judicial interpretations of the corporate bankruptcy law, will come into effect on June 1, together with the law.

China's top legislature on August 27 adopted the bankruptcy law, which is intended to protect both creditors of bankrupt companies and the companies' employees.

The law stipulates that from June 1, all insolvent companies will pay credit guarantees to creditors first, and use other assets to pay laid-off workers.

Source: Xinhua