Abstract:

The World Bank’s new Business Ready (BR) framework mandates that corporate management assumes the obligation to preserve business value, avoid bankruptcy where possible, and, if bankruptcy becomes unavoidable, to file for bankruptcy in a timely manner before the commencement of formal insolvency proceedings. The absence of corresponding provisions in both the Company Law and the Enterprise Bankruptcy Law constitutes a potential point deduction in the BR assessment and reveals a legislative gap that urgently requires addressing within the legal framework. When a company faces financial distress and enters the zone of insolvency, management’s fiduciary duties should no longer be confined to the company and its shareholders

but should extend to include creditors. This shift represents not only a breakthrough in the scope of traditional fiduciary obligations but also an essential adaptation to market development aimed at protecting creditor

interests. The framework for management’s obligations prior to bankruptcy proceedings should be constructed by addressing the relevant parties, timing, required measures, and legal liabilities. Such a system aligns with the trends of Company Law reform by reinforcing accountability under the board-centric governance model, meets

the objectives of Bankruptcy Law by facilitating the rescue of viable enterprises and enabling market-oriented liquidation, and further promotes the development of the pre-reorganization regime. Collectively, these reforms are of profound significance for improving China’s bankruptcy legal system and enhancing the overall quality of the business environment.

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