What Is Voluntary Insolvency?

Voluntary bankruptcy is a bankruptcy case in which a debtor applies for bankruptcy. When a debtor loses its ability to pay off its debts, it has the right to apply for bankruptcy and repayment on its own initiative. Because the debtor applied for bankruptcy on its own initiative, to a certain extent, it showed its sincerity to repay the debt and may reduce the loss of creditors. Therefore, during the development of the bankruptcy law, certain preferential treatment was given to the bankruptcy voluntarily. Most modern countries adopt the principle of debt relief for bankrupts. Therefore, a debtor who is unable to pay off can apply for bankruptcy voluntarily, which can also solve the problem of heavy debts, avoid litigation, and settle the dilemma in order to regain the benefits. In order to prevent the debtor from concealing bankruptcy, which causes debt to continue to swell and damage the interests of creditors, many countries have clearly stipulated in the law that when a servant loses the ability to pay, he must take the initiative to apply for bankruptcy and punish those who violate this obligation. As stipulated in the French Bankruptcy Act of 1967, the debtor is obliged to file an application for bankruptcy when it ceases to pay. The Federal Bankruptcy Act of 1877 stipulates that companies should apply for bankruptcy when they are unable to pay their debts. Such provisions are particularly necessary when the debtor is a legal person who only guarantees the settlement of property. The Chinese Enterprise Bankruptcy Law (for trial implementation) provides that a debtor may apply for declaration of bankruptcy with the consent of its superior authority. When the debtor applies for bankruptcy, he shall submit a statement of the company's losses, relevant accounting statements, debt inventory, and debt inventory. ^[1]

Voluntary bankruptcy

Right!

Voluntary bankruptcy is a bankruptcy case in which a debtor applies for bankruptcy. When a debtor loses its ability to pay off its debts, it has the right to apply for bankruptcy and repayment on its own initiative. Because the debtor applied for bankruptcy on its own initiative, to a certain extent, it showed its sincerity to repay the debt and may reduce the loss of creditors. Therefore, during the development of the bankruptcy law, certain preferential treatment was given to the bankruptcy voluntarily. Most modern countries adopt the principle of debt relief for bankrupts. Therefore, a debtor who is unable to pay off can apply for bankruptcy voluntarily, which can also solve the problem of heavy debts, avoid litigation, and settle the dilemma in order to regain the benefits. In order to prevent the debtor from concealing bankruptcy, which causes debt to continue to swell and damage the interests of creditors, many countries have clearly stipulated in the law that when a servant loses the ability to pay, he must take the initiative to apply for bankruptcy and punish those who violate this obligation. As stipulated in the French Bankruptcy Act of 1967, the debtor is obliged to file an application for bankruptcy when it ceases to pay. The Federal Bankruptcy Act of 1877 stipulates that companies should apply for bankruptcy when they are unable to pay their debts. Such provisions are particularly necessary when the debtor is a legal person who only guarantees the settlement of property. The Chinese Enterprise Bankruptcy Law (for trial implementation) provides that a debtor may apply for declaration of bankruptcy with the consent of its superior authority. When the debtor applies for bankruptcy, he shall submit a statement of the company's losses, relevant accounting statements, debt inventory, and debt inventory. ^[1]

Voluntary bankruptcy should provide

In the era of ancient Greece and Rome, "bankruptcy" meant not only the bankruptcy of the debtor, but also the extinction of his political life, social life, and even natural life. Not only that, after the debtor was declared bankrupt, the remaining debt that it failed to pay still has the responsibility to continue to perform, and the creditor can apply for enforcement as soon as possible. This is a reflection of the guilty view of bankruptcy and the irresponsibility of bankruptcy. Although this situation changed in the late Roman period, in the "Dark Middle Ages", it was sinking again, covering the European continent until the 17th century. In this historical period, the bankruptcy law was completely tilted to the protection of the interests of creditors, and it was a legal tool for creditors to realize debt relief. For debtors, not only did they not receive any interest protection from the bankruptcy law, it was still to a considerable extent. The object of execution of the bankruptcy law is in a passive position of slaughter. In this way, the debtor will never have any motivation to apply for self-bankruptcy, and the so-called voluntary bankruptcy will never occur.

In the United Kingdom, by 1645, 100 debt inmates closed at the Fleet on the banks of the Fleet, representing 8,000 indebted persons, jointly petitioned and complained, and first complained to British authorities, stating The practice is unconstitutional, requiring release and exemption. In response to the situation, the British authorities passed a decree in November and December of the following year to release and release the debts of poor, honest debtors. By 1705 and 1711, the United Kingdom officially promulgated the Act of Anne, announcing the introduction of bankruptcy exemption under British bankruptcy law. The practice of bankruptcy exemption is of great historical significance. It not only mobilizes the debtor's enthusiasm to participate in the bankruptcy proceedings, but also raises it from the object status to the subject status, which makes voluntary bankruptcy possible.

However, possibility is not equal to reality. Because the debtor's voluntary bankruptcy is the result of a combination of many factors, and it is not just an exemption. Moreover, in the early days of the development of exemptionism, it was subject to various conditions and there were many exceptions. History has developed into the 19th century. The concept of debtors using bankruptcy to achieve self-relief, self-protection, and self-liberation was finally confirmed in the British bankruptcy law. Since then, not only have creditors, but also debtors have a place in the engine of bankruptcy proceedings. The concept of "bankruptcy" is thus divided into two: voluntary bankruptcy and involuntary bankruptcy. The United States also initially affirmed the concept of "voluntary bankruptcy" in its 1841 Bankruptcy Law, but the law was repealed two years later. It was not until 1898 that US bankruptcy law formally recognized the two basic types of bankruptcy as "voluntary bankruptcy" and "involuntary bankruptcy." The concept of bankruptcy in civil law countries such as Germany and Japan also went through the same process. It is entirely conceivable that in modern civilized countries, it is very difficult or even impossible to find a bankruptcy law that still adheres to the application of bankruptcy by creditors.

It is worth further explaining that after the establishment of the method of voluntary bankruptcy, its proportion in the bankruptcy law has become larger and larger, and the bankruptcy law has increasingly adjusted it to focus on the protection of the interests of the debtor, so the debtor uses The enthusiasm for bankruptcy proceedings to achieve self-relief is increasing. The provisions of the free property system, the establishment of exemptionism, especially the successive appearance of the bankruptcy reconciliation system and the bankruptcy rectification system, have gradually strengthened the debtor's incentive mechanism for using bankruptcy methods, and improved the debtor's superior position in the bankruptcy process. . The bankruptcy law eventually became the debtor's relief law. This phenomenon is particularly prominent in Anglo-French countries. There, the center of legislative regulation, from abstract guiding ideology, legal principles, concrete systems and procedures, and even the ethical tone contained in the wording, has eloquently demonstrated that it has completely shifted to the debtor's side. This is especially true in judicial practice. American scholars point out: "Bankruptcy law is now almost completely a means of debtor's remedy. The overwhelming majority of bankruptcy cases are initiated by debtors seeking judicial remedies." The theory is also the same, focusing on "voluntary "Bankruptcy" and light "involuntary bankruptcy" are common. Opening up their multi-million-word thick monographs on bankruptcy law, it is often seen that in their "Foreword" or "Introduction", they pointed out directly: "Given that involuntary bankruptcy is extremely rare, what we are about to discuss is limited to Voluntary bankruptcy. "At this point, we can fully believe that bankruptcy law has developed into modern society. Voluntary bankruptcy has an overwhelming advantage over involuntary bankruptcy. The concepts, values, and functions carried in the concept of" bankruptcy "have been from ancient times In modern times, the nature has changed.

China's corporate bankruptcy law, whether it is a trial law or a "corporate bankruptcy and debt repayment procedure" in civil litigation, has established two forms of bankruptcy: voluntary and involuntary (mandatory). Moreover, in its legislative purpose, the interests of creditors and debtors are treated the same, and both have been stated to be equally protected. However, judicial practice shows that whether it is voluntary or involuntary bankruptcy, the court acceptance rate is low, and a sound engine mechanism for bankruptcy procedures has not yet been established. In particular, in the very few bankruptcy cases, the factors of administrative intervention are often saturated. Under the role of administrative power, not only are the parties' "voluntary" or "involuntary" in the bankruptcy process unrepresentable, but even the bankruptcy process itself has transformed from its original meaning into the shell of administrative means. The long-established "shutdown and transfer", which is expected to be overcome through bankruptcy law, is once again revived in a new form, the distorted bankruptcy process. An in-depth analysis has many reasons, which touch every aspect of real life. But most importantly, I am afraid there are several things: (1) the boundary of property rights between national government agencies and enterprises is not clear, and the legal person property right system has not really been implemented; (2) the bankruptcy law itself has many shortcomings, especially It is very vague as to where to protect the standard; (3) the habitual forces of traditional culture and the inertial movement of the planning system are still working; etc. Only by overcoming all obstacles in the operation of the corporate bankruptcy law can the boundaries between the voluntary and involuntary concepts of "bankruptcy" be revealed, and the bankruptcy mechanism be on track.