The Research Of Municipal Bankruptcy Of U.S. And Its Enlightenment To China

Since the cities in fiscal distress such as Detroit, Stockton and Jefferson County may seek to adjust debts under Chapter 9 of the Bankruptcy Code, municipal bankruptcy of United States has raised the concern in China. Municipal bankruptcy of United States is mainly defined in Chapter 9 of the Bankruptcy Code, that is Adjustment of Debts of A Municipality. Chapter 9 applied for eligible municipalities in fiscal distress, herein defines as a political subdivision, public agency, or instrumentality of a State, no States include. Municipal bankruptcy provides a mechanism similar to the enterprise reorganization instead of bankruptcy liquidation. Municipal bankruptcy is an effective afterwards relief, proving a legal debt adjustment mechanism for municipalities, thus offering a rebirth opportunity from the debt crisis. With the impact of economic recession, the filing cities number is increase and the scale of debts constantly refresh.Now China faces the serious local government debt problem and all are seeking solutions. Among them most scholars concern on the currently effective solutions or establish advance prevention mechanism, while, the paper tries to learn from the municipal bankruptcy of U.S. and establishs a legal debt adjustment mechanism as afterwards relief suitable for Chinese situation. The municipal facing debt problem is becoming increasingly common, may caused by many reasons such as the controllable factor of mismanagement, the uncontrollable factors of natural disaster or macro economic environment changes. On the other hand, the advance prevention mechanisms do not always work well, which is proved that the advance prevention mechanism in U.S. is better than us, but municipal can not get rid of fiscal distress. Therefore, an effective afterwards relief mechanism is essential. Besides the bankruptcy prevention function and discharge system in bankruptcy mechanism can provide theory and practice basis for the municipal debts adjustment mechanism.The paper includes preface and four chapters. The first chapter gives a overview on municipal bankruptcy of U.S., including the historical review of municipal bankruptcy legislation and legislative intent. The second chapter mainly introduces basic theories of municipal bankruptcy of U.S., including eligible entity, application conditions, adjustment plans, and key players like the role of debtor, creditors, the State, and the court. The third chapter tries to show municipal bankruptcy practice by the Orange County case. The fourth chapter discusses the serious situation of local government debt problem and the lack of afterwards relief mechanisms, and gives suggestions about how to establish our adjustment mechanism of municipal debts.The paper introduces the municipal bankruptcy of U.S. and shows its practice by the Orange County case to find the institutional function of municipal bankruptcy. Combined with the new Insolvency Bill of Chinese Taiwan and Chinese national conditions, the paper proposes that we should establish the adjustment mechanism of municipal debts and give some suggestions.