What is Corporate Bankruptcy?

The company went bankrupt (gng s pò chn), because the company was unable to settle its due debts and was unable to continue its operations, the court announced that it had ceased operations and had cleared its debts and debts. According to the Chinese Company Law, a company declared bankrupt in accordance with the law shall, in accordance with the relevant laws, organize the shareholders, relevant authorities and relevant professionals to set up a liquidation group to conduct bankruptcy liquidation of the company.

[gng s pò chn]

Enterprise Bankruptcy Law of the People's Republic of China

(August 27, 2006

Chapter I General Provisions

Chapter II Application and Acceptance

Section 1 Application

Section 2 Acceptance

Chapter III Managers

Chapter IV Debtor's Property

Chapter V Bankruptcy Expenses and Mutual Benefit Debt

Chapter VI Declaration of Claims

Chapter VII Creditors' Meeting

Section I General Provisions

Section 2 Creditors Committee

Chapter VIII Reorganization

Section 1 Reorganization Application and Reorganization Period

Section 2 Formulation and Approval of Reorganization Plan

Section 3 Implementation of Reorganization Plan

Chapter IX Reconciliation

Chapter X Bankruptcy Liquidation

Section 1 Bankruptcy Declaration

Section II Price Change and Distribution

Section III End of Bankruptcy Proceedings

Chapter XI Legal Liability

Chapter XII Supplementary Provisions

Chapter I General Provisions

The first is to regulate the bankruptcy procedures of enterprises, fairly clear creditor's rights and debts, protect the legitimate rights and interests of creditors and debtors, and safeguard the socialist market economic order. This law is formulated in accordance with the Constitution.

Article 2 Where an enterprise legal person cannot settle its due debts, and the assets are not enough to settle all its debts or it is obviously lacking the ability to settle its debts, the debts shall be liquidated in accordance with the provisions of this Law.

If an enterprise legal person has the circumstances prescribed in the preceding paragraph, or if it is likely to lose its solvency, it may be reorganized in accordance with the provisions of this Law.

Article 3 Bankruptcy cases are under the jurisdiction of the people's court where the debtor is domiciled.

Article 4 Where there are no provisions in the trial procedures for bankruptcy cases, the relevant provisions of the Civil Procedure Law shall apply.

Article 5 Bankruptcy proceedings commenced in accordance with this Law have effect on the debtor's property outside the territory of the People's Republic of China.

Where a judgment or ruling on a bankruptcy case with legal effect made by a foreign court involves the debtor's property in the territory of the People's Republic of China, and the people's court has applied for or requested recognition and enforcement, the people's court has concluded or acceded to an international treaty, Or if the review is based on the principle of reciprocity, and it is deemed that the basic principles of the laws of the People's Republic of China are not violated, the national sovereignty, security, and public interests are not damaged, and the legitimate rights and interests of creditors in the territory of the People's Republic of China are ruled for recognition and enforcement.

Article 6 In trying bankruptcy cases, the people's courts shall protect the lawful rights and interests of the employees of the enterprise and shall hold the legal liabilities of the management personnel of the bankrupt enterprise in accordance with the law.

Chapter II Application and Acceptance

Section 1 Application

Article 7 In the circumstances stipulated in Article 2 of this Law, the debtor may apply to the people's court for reorganization, reconciliation, or bankruptcy liquidation.

The debtor cannot settle the debt due, and the creditor may apply to the people's court for reorganization or bankruptcy liquidation of the debtor.

Where an enterprise legal person has been dissolved but has not been liquidated or has not completed its liquidation, and the assets are not sufficient to pay off its debts, the person responsible for liquidation shall apply to the people's court for bankruptcy liquidation.

Article 8

The so-called settlement refers to the agreement reached between the claimant and the respondent through negotiation, instead of resolving the debt dispute between the debtor and the creditor through the bankruptcy of the people's court.

Chapter IV of the "Bankruptcy Law of the People's Republic of China (Provisional)" specifically regulates the reconciliation and rectification of creditors and debtors. The specific contents are as follows:

I. Apply for rectification

Within three months after the people's court accepted the creditor's application for debtor bankruptcy, the superior department in charge of the bankruptcy enterprise being applied for may apply to the people's court for reorganization of the bankruptcy enterprise being applied for. The law stipulates that the reorganization period shall not exceed three years.

Presenting a draft settlement agreement

The superior department in charge of the bankruptcy enterprise submitted a draft settlement agreement before the first creditors' meeting hosted by the people's court. The main content of the draft settlement agreement should be the time limit for debt settlement, the amount and the amount of relief required.

Discussion of the settlement agreement

At a meeting convened by all creditors, the settlement agreement was discussed and voted in accordance with the provisions of Article 12 of the Enterprise Bankruptcy Law of the People's Republic of China (Trial). Once approved, the People's Court issued a rectification announcement and suspended it. Bankruptcy proceedings.

Formulate a rectification plan

After seeing the rectification announcement, the competent department of the enterprise shall assist the enterprise to formulate the rectification plan and discuss it with the enterprise staff meeting. The competent department of the original enterprise shall be responsible for presiding over the rectification work.

V. Supervision of enterprise rectification

An enterprise going to bankruptcy enters the rectification stage, and the rectification situation is supervised by the enterprise staff meeting and creditors. The superior department in charge of rectification shall regularly report the rectification situation to the staff meeting and creditors meeting. In the process of enterprise rectification, the workers' assembly and creditor's conference should supervise the whole process, and monitor whether the company earnestly implements the settlement agreement, and whether there are any illegal acts such as concealment, private distribution, free transfer of property, or sale of property at abnormally low prices, or abandoning creditor's rights. Illegal acts should be reported immediately to the people's court, rectification terminated, and bankruptcy proceedings resumed.

Results of the rectification of the ruling

After the enterprise is reconciled and rectified, it can resolve the debt dispute with the creditors according to the settlement agreement and settle the debts according to the agreement. The people's court shall announce the termination of the bankruptcy procedure and resume the normal business activities of the enterprise; otherwise, it shall announce the termination of the rectification and resume the bankruptcy procedure. ^[1]