Jury is out on ChinaÆs new bankruptcy law

China's new insolvency laws may open up a new landscape for investors such as distressed-asset hedge funds.

This is the first week in which ChinaÆs new restructuring and bankruptcy laws have been in play. Observers are waiting to see if there will be a tsunami of court applications from creditors frustrated by the obduracy of Chinese borrowers, tackling the companies that linger on in zombie state, unable and unwilling to meet their obligations. For investors, not least distressed-asset and event-driven hedge funds, the changing landscape brings new opportunities.

In the past, bankruptcy laws were frowned upon by...

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