China regulator launches debt committees for troubled borrowers

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Shanghai | Published: September 9, 2016 11:41:05 AM

Creditors of troubled Chinese firms can set up debt committees to assist with debt restructuring, the country's banking regulator said on Friday, as more firms get into financial difficulties and are unable to repay their loans.

As the country's growth rate stutters, increasing numbers of borrowers are going bust and leaving China's banks with trillions of yuan in soured debt. (Reuters) (Reuters)As the country?s growth rate stutters, increasing numbers of borrowers are going bust and leaving China?s banks with trillions of yuan in soured debt. (Reuters) (Reuters)

Creditors of troubled Chinese firms can set up debt committees to assist with debt restructuring, the country’s banking regulator said on Friday, as more firms get into financial difficulties and are unable to repay their loans.

As the country’s growth rate stutters, increasing numbers of borrowers are going bust and leaving China’s banks with trillions of yuan in soured debt.

The aim of the committee, which can be set up on a voluntary basis, is to “guide firms with their debt restructuring, help troubled firms to resolve their troubles,” among other things, the China Banking Regulatory Commission said in a notice posted on its website.

A committee can be set up for any troubled firm which is seriously in debt by three or more of its creditors, the notice said.

The committee should safeguard the rights and interests of banks as well as organise orderly debt restructuring for firms.

Any financial institutions connected to the borrower, in principle, can join such committees, the notice said.

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