What Is Creditor Insurance?

Creditors are lenders and suppliers of financial institutions such as banks. They either gave company loans or provided the company with inventory and equipment. As creditors, they are most concerned about whether they can obtain the principal and interest of the loan and receive the payment in time. ^[1]

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Creditors are lenders and suppliers of financial institutions such as banks. They either gave company loans or provided the company with inventory and equipment. As creditors, they are most concerned about whether they can obtain the principal and interest of the loan and receive the payment in time. ^[1]

Creditors forgive debts, which means that creditors give up their claims, thereby eliminating

Creditors mainly refer to those who pay in advance , the right subjects who have the right to request others for specific actions, and refer to those institutions and individuals that provide repayable financing to enterprises, including those that provide loans to enterprises ) And institutions or individuals (commercial creditors) that provide short-term financing in the form of sales of goods or services. Loan creditors are most concerned about the security of creditor's rights, including the recovery of loan dues and the repayment of interest. Therefore, they need to understand the

(I) Conditions for issuing creditor's rights certificates

The first is that the issuance of creditor's rights certificates must be based on the applicant's willingness, and the applicant must not be forced or disguised to accept the creditor's rights certificate. As the evidence of creditor's rights does not have the nature that a judgment or ruling can be issued compulsorily or lied in accordance with legal procedures, local courts generally stipulate that the evidence of creditor's rights must be obtained with the consent of the parties or an application from the parties. No one shall forcibly require creditors to accept evidence of claims for any reason.

The second is that the person to be executed must have no known whereabouts and there is indeed no property available for the execution of the debt certificate. Since the creditor's right certificate actually plays a role in terminating the execution procedure, if the creditor's right certificate is issued, it means the end of the execution case. Thereafter, the applicant will not resume execution unless new clues and evidence are provided by the applicant. therefore. Credit notes must be issued with care, and they can only be issued after all means of enforcement have been exhausted.

The third is that the decision of the creditor's right must be made by the collegiate bench, and the executive must not make it by itself. As mentioned above, the issuance of creditor's rights certificates must be carried out strictly and must not be issued at will.

The fourth is an execution case that is a monetary payment; other types of cases do not constitute a debt relationship, so creditor's rights certificates cannot be issued.

Fifth, creditor's rights certificates can only be issued within the time limit or during the execution of a statutory application.

(2) Implementation of application for creditor's certificate

Where the obligee applies for enforcement according to the evidence of creditor's rights, he shall submit evidence about the property of the person to be executed or provide clues on the property of the person to be executed, and the court shall promptly send personnel to investigate and verify. Those who meet the conditions for mandatory enforcement shall be registered and executed directly by the executing agency, no further filing is required, and application execution fees are waived. After examination, if the implementation conditions are not met, the right holder may be notified not to execute.

(3) Collection and cancellation of creditor's rights certificates

When the debtor has paid off all the debts, the creditor stated in writing to cancel the debts of the debtor, the deposit of the subject matter of the debts, the offsetting and mixing of the debts, the death of the debtor, and no inheritor or heir to abandon the inheritance, the legal person or other organization terminated, and no rights or obligations If the bankruptcy and debt repayment procedures of an enterprise or an enterprise legal person are terminated, or in other circumstances as prescribed by laws and judicial interpretations, the court may collect and revoke the issued evidence of creditor's rights. If the holder of the creditor's rights certificate refuses to pay off, the court may announce the cancellation.

Stakeholders participate in the game of the allocation of financial rights of the company according to their respective negotiation capabilities and the degree of worry about the breakdown of the negotiations, and pursue the actual share of the company's financial control (residual claim). Among the company's stakeholders, as internal stakeholders, the managers and the board of directors as internal stakeholders have a high degree of interest, occupy a strong position in the game, and can become the main body of the company's financial management; Among them, public investors, suppliers, consumers, and communities generally have a "free-rider" ideology. They are in a weak position in the game and cannot participate in the company's financial management as the governing body of responsibility. In theory, they can participate in the game in the name of organizations and groups with common interests, but this means that the emergence of new agency problems can only make the problem more complicated. Therefore, at this stage, because the disadvantaged group cannot establish a game mechanism, it is not realistic for stakeholders to fully participate in the company's financial management. However, creditors who are external stakeholders can participate in the company's financial management based on their own conditions. Financial institutions such as banks are the main creditors of Chinese enterprises, and they have the ability and motivation to participate in the company's financial management.

Creditor meeting: refers to an interim resolution and supervisory body composed of creditors and expressing the will of all creditors.

Creditors creditors meeting

The creditors' meeting is an institution that expresses the will of all creditors and represents the overall interests of creditors under the guidance and supervision of the court. In the bankruptcy process, there are interests among many creditors, but there are also differences. The creditors' meeting is an interim organization that coordinates the interests of various creditors and protects the common interests of all creditors. At the same time, it is also an organizational form in which all creditors exercise the right to make decisions and supervise related bankruptcy matters.

According to Article 13 of the Corporate Bankruptcy Law and Article 200 of the Civil Procedure Law, all creditors are members of the creditors' meeting. The creditors mentioned here refer to those who have declared their claims to the court within the statutory period, including creditors with property guarantees, creditors without property guarantees, and guarantors after the debts have been settled by the debtors. Members of the creditors' meeting enjoy voting rights, except that creditors with property guarantees have not waived their right of priority. The debtor's guarantor, after paying off the debt on behalf of the debtor, can act as a creditor and enjoy the right to vote. The chairman of the creditors' meeting shall be appointed by the people's court among the creditors with voting rights. When necessary, the people's court may designate multiple chairmen of the creditors 'meeting and establish a committee of chairmen of the creditors' meeting. Creditors may entrust agents to attend creditor meetings and may authorize agents to exercise their voting rights, but they shall submit a power of attorney to the people's court or the chairman of the creditors' meeting. The superior authority of the debtor may send staff to attend the creditors' meeting. The legal representative of the debtor must be present at the creditors' meeting to answer the creditor's inquiries; if he refuses to be present, the people's court may detain the person in accordance with Article 100 of the Civil Procedure Law.

According to Article 14 of China's Enterprise Bankruptcy Law and Articles 40, 41, and 46 of the Supreme Court's Provisions on Several Issues Concerning the Trial of Enterprise Bankruptcy Cases, the first creditor's meeting should accept bankruptcy cases in the people's court The announcement will be held after the expiration of three months and will be convened and presided over by the people's court. Subsequent creditors 'meetings shall be convened when deemed necessary by the people's court or the chairman of the creditors' meeting, or they may be convened when requested by the liquidation group or creditors who account for more than one-fourth of the total unsecured creditor's rights. If a creditor's meeting is held after the first creditor's meeting, the chairman of the creditor's meeting shall report to the people's court 3 days before the notice of the meeting, and the convener of the meeting shall notify the creditor 15 days before the meeting . Except that the debtor's property is not sufficient to pay the bankruptcy expenses and the bankruptcy proceedings are terminated early, the creditor's meeting shall not be cancelled on the grounds that the settlement rate of the general claim is zero.

Terms of reference of creditors' meetings

According to Article 15 of the Corporate Bankruptcy Law, the creditors' meeting has the following three functions:

First, review the relevant evidence of creditor's rights and confirm whether there is a property guarantee for the creditor's right and its amount;

Second, discuss the adoption of the draft settlement agreement;

Third, discuss the disposal and distribution of bankruptcy property.

Contents of creditors' meeting

According to Article 42 of the Supreme Court's "Regulations on Several Issues Concerning the Trial of Bankruptcy Cases of Enterprises", creditor meetings generally include the following:

1. Announce the authority of the creditors' meeting and other related matters;

2. Announce the results of creditor qualification review;

3. Designate and announce the chairman of the creditors' meeting;

4. Arrange the legal representative or person in charge of the debtor to accept the creditor's inquiry;

5. The liquidation team will report the debtor's production and operation, property and debt situation, make a liquidation report and propose a property disposal plan and distribution plan;

6. Discuss and review the certification materials of creditor's rights, the property guarantee situation and amount of creditor's rights, discuss and adopt a settlement agreement, review the liquidation report of the liquidation team, and discuss the adoption and disposal of bankruptcy property.

7. According to the discussion, vote in accordance with Article 16 of the Enterprise Bankruptcy Law. The contents of the discussions at the creditors' meeting shall be recorded clearly.

Creditor resolution

The exercise of powers by creditors' meetings is usually achieved by resolutions. Since the resolution of the creditor's meeting affects both the immediate interests of the creditor and the immediate interests of the debtor, it must have certain conditions for its formation.

According to Article 16, paragraph 1, of the Enterprise Bankruptcy Law, a creditor's meeting resolution is passed by a majority (excluding the number) of creditors with voting rights present at the meeting, and the amount of creditors they represent must account for the total amount of unsecured secured claims More than half of the total (including the number), but the resolution passed the draft settlement agreement must account for more than two-thirds of the total unsecured security claims (including the number).

Article 247 of the Supreme Court's "Opinions on the Application of Civil Procedure Law" also made similar provisions. It can be seen that the conditions for the adoption of the draft settlement agreement are stricter than those required for general resolutions. This is because the settlement agreement will have a significant impact on the interests of all creditors and must reflect the wishes of the vast majority of creditors. According to the judicial interpretation of the Supreme People's Court, the creditor's rights represented by creditors exercising voting rights are calculated based on the creditor's rights determined by the creditors' meeting. Any dispute over this shall be determined by the people's court after examination, and calculated according to the amount of creditor's rights determined by the ruling. If the property distribution plan proposed by the liquidation group is not approved after two discussions by the creditors' meeting, the people's court shall rule. In this ruling, if the creditors who account for more than half of the total unsecured creditor's rights have objections, they can appeal to the people's court at the next higher level within 10 days from the date of the ruling by the people's court. The people's court at the next higher level shall form a collegial panel to conduct the trial and make a decision within 30 days.

Article 16 (2) of China's Enterprise Bankruptcy Law states: "The resolution of the creditors' meeting is binding on all creditors." The resolution of the creditor's meeting is a civil legal act performed by the creditor's meeting on behalf of all creditors. Adopted in accordance with legal procedures, all creditors must comply, and even creditors who did not attend the meeting to vote and creditors who did not agree to the resolution despite attending the meeting are no exception.

In order to ensure the correctness of the resolution of the creditors' meeting, Article 43 of the Supreme People's Court's "Regulations on Several Issues Concerning the Trial of Bankruptcy of Enterprises" stipulates how to rectify when the resolution violates the law, that is, "creditors believe that the resolution of the creditor's meeting violates the law or violates it Those with legitimate rights and interests may submit the decision to the people's court within 7 days after the resolution of the creditors' meeting, and the people's court will rule according to law. "After receiving the application from the creditors, the court shall review the convening of the meeting, the procedures for voting, the content of the resolution, etc. . If it is considered that the resolution is indeed illegal, it shall be ruled to be cancelled and the creditors' meeting shall be made to make a new resolution; if it is not considered to be illegal, the application shall be rejected and the original resolution shall be maintained. The resolution of the creditors' meeting shall not be suspended until it is cancelled by the people's court.