Enterprise
Bankruptcy Law of the People's Republic of China
NPC.gov.cn
Order
of the President of the People’s Republic of China No.54
The
Enterprise Bankruptcy Law of the People’s Republic of China, adopted at the
23rd Meeting of the Standing Committee of the Tenth National People’s Congress
of the People’s Republic of China on August 27, 2006, is hereby promulgated and
shall go into effect as of June 1, 2007.
Hu
Jintao
President
of the People’s Republic of China
August
27, 2006
Enterprise
Bankruptcy Law of the People’s Republic of China
(Adopted at the 23rd
Meeting of the Standing Committee of the Tenth National People’s Congress on
August 27, 2006)
Contents
Chapter
I General Provisions
Chapter
II Application and Acceptance
Section 1 Application
Section 2 Acceptance
Chapter
III Administrator
Chapter
IV A Debtor’s Property
Chapter V
Expenses for Bankruptcy Proceedings and Debts Incurred for the Common Good of
Creditors
Chapter
VI Declaration of Claims
Chapter
VII Creditors’ Meeting
Section 1 General
Provisions
Section 2 The Creditors’ Committee
Chapter
VIII Reorganization
Section 1 Application
for and Period of Reorganization
Section 2 Formulation
of and Approval for a Reorganization Plan
Section 3
Implementation of a Reorganization Plan
Chapter
IX Compromise
Chapter
X Bankruptcy Liquidation
Section 1 Bankruptcy
Declaration
Section 2Realization
and Distribution
Section 3 Termination
of the Procedure for Bankruptcy
Chapter
XI Legal Liability
Chapter
XII Supplementary Provisions
Chapter
I
General
Provisions
Article 1 This
Law is enacted with a view to regulating the procedure for enterprise
bankruptcy, fairly settling claims and debts, safeguarding the lawful rights
and interests of creditors and debtors, and maintaining the order of the
socialist market economy.
Article 2 Where
an enterprise legal person cannot pay off his debts due and his assets are not
enough for paying off all the debts, or he apparently lacks the ability to pay
off his debts, the debts shall be liquidated according to the provisions of this
Law.
Where
an enterprise legal person is under the circumstances as specified in the
preceding paragraph or he has apparently forfeited the ability to pay off his
debts, he may undergo reorganization according to the provisions of this Law.
Article 3
A bankruptcy case shall be under the jurisdiction of the people’s court at the
place where the debtor resides.
Article 4 Where
there are no provisions in this Law to govern the procedure for hearing a
bankruptcy case, the relevant provisions of the Civil Procedure Law shall be
applicable.
Article 5
Once the procedure for bankruptcy are initiated
according to this Law, it shall come into effect in respect of the debtor’s
property outside of the territory of the People’s Republic of China.
Where
a legally effective judgment or ruling made on a bankruptcy case by a court of
another country involves a debtor’s property within the territory of the
People’s Republic of China and the said court applies with or requests the
people’s court to recognize and enforce it, the people’s court shall, according
to the relevant international treaties that China has concluded or acceded to
or on the basis of the principle of reciprocity, conduct examination thereof
and, when believing that the said judgment or ruling does not violate the basic
principles of the laws of the People’s Republic of China, does not jeopardize
the sovereignty and security of the State or public interests, does not
undermine the legitimate rights and interests of the creditors within the
territory of the People’s Republic of China, decide to recognize and enforce
the judgement or ruling.
Article 6 When
trying a bankruptcy case, the people’s court shall, in accordance with law,
guarantee the legitimate rights and interests of the employees of the enterprise
and investigate the business managers of the bankruptcy enterprise for their
legal liabilities.
Chapter
II
Application
and Acceptance
Section
1 Application
Article 7 Where
a debtor is under the circumstances as specified in Article 2 of this Law, he
may make an application to the people’s court for reorganization, compromise or
bankruptcy liquidation.
Where
the debtor cannot pay off his debts due, the creditor may make an application
to the people’s court for the debtor’s reorganization or bankruptcy
liquidation.
Where
an enterprise legal person has been dissolved but has not started or completed
liquidation and he does not have enough assets to pay off his debts, the person
responsible for liquidation according to law shall make an application to the
people’s court for bankruptcy liquidation.
Article 8 For
applying to a people’s court for bankruptcy, an Application for Bankruptcy and
the related evidence shall be submitted to it.
The
following matters shall clearly be stated in the Application for Bankruptcy:
(1)
a basic introduction to the applicant and the
defending party of the application;
(2)
purposes of application;
(3)
facts and grounds of the application; and
(4)
other matters that the people’s court deems necessary
to state.
Where
a debtor makes an application, he shall submit to the people’s court statements
on his financial position, a complete list of his debts, a complete list of his
claims, the related financial statements, a plan for
employee arrangements and payment of his employees’ wages and social insurance
premiums.
Article 9 Before
the people’s court accepts an application for bankruptcy, the applicant may
request for withdrawal of the application.
Section
2 Acceptance
Article 10 Where
a creditor makes an application for bankruptcy, the people’s court shall,
within five days from the date it receives the application, notify the debtor
concerned. Where the debtor has objections to the application, he shall put
forward his objections to the people’s court within seven days from the date he
receives notification from the people’s court. The people’s court shall decide
whether or not to accept the case within 10 days at the expiration of the
period for raising objections.
Except
for the circumstances as specified in the preceding paragraph, the people’s
court shall decide whether or not to accept an application for bankruptcy
within 15 days from the date it receives the application.
Under
special circumstances where the time limit for deciding whether to accept a
case, as specified in the preceding two paragraphs, needs to be extended, it
may be extended for another 15 days upon approval by the people’s court at the
next higher level.
Article 11
Where the people’s court decides to accept an application for bankruptcy, it
shall serve such decision on the applicant within five days from the date it
makes the decision.
Where
the application is made by a creditor, the people’s court shall serve its
decision on the debtor within five days from the date it makes the decision.
The debtor shall, within 15 days from the date the decision is served, submit
to the people’s court statements on his financial position, a complete list of
his debts, a complete list of his claims, the related financial statements and
payment of his employees’ wages and social insurance premiums.
Article 12 Where
the people’s court decides not to accept an application for bankruptcy, it
shall serve the decision on the applicant within five days from the date it
makes the decision and explain the reasons why. Where the applicant is
dissatisfied with the decision, he may, within 10 days from the date the
decision is served, file an appeal with the people’s court at the next higher
level.
Where
during the period from acceptance of an application for bankruptcy to declaration
of bankruptcy, the people’s court finds through examination that the debtor is
not under the circumstances as specified in Article 2 of this Law, it may
decide to reject the application. Where the applicant is dissatisfied with the
decision, he may, within 10 days from the date the decision is served, file an
appeal with the people’s court at the next higher level.
Article 13
When the people’s court decides to accept an application for bankruptcy, it
shall designate an administrator at the same time.
Article 14
The people’s court shall, within 25 days from the date it decides to accept an
application for bankruptcy, it shall notify the
creditors already known and announce its decision.
The
following matters shall clearly be stated in the notification and announcement:
(1)
titles or names of the applicant and the defending
party of the application;
(2)
the time when the people’s court accepts the
application for bankruptcy;
(3)
period, place and points for attention with respect to
declaration of claims;
(4)
title or name of the administrator and the office
address;
(5)
demand made by the administrator upon the debtors or
property holders of the debtor for paying off the debts or delivering the
property;
(6)
the time and place for the first creditors’ meeting to
be held; and
(7)
other matters that the people’s court deems it
necessary to notify of and announce.
Article 15 During
the period from the date when the decision made by the people’s court to accept
an application for bankruptcy is served on the debtor to the date when the
procedure for bankruptcy is concluded, the persons related to the debtor shall
fulfill the following obligations:
(1)
properly preserving the property, seals, account
books, documents, etc. which are in their possession and under their
management;
(2)
proceeding with the work according to the requirements
of the people’s court and the administrator, and truthfully answering their
inquiries;
(3)
attending the creditors’ meetings as non-voting
participants and truthfully answering the creditors’ inquiries;
(4)
remaining at their domiciles, unless otherwise
permitted by the people’s court; and
(5)
not taking up any post as director, supervisor or
senior manager in any other enterprise.
The
persons related to the debtor mentioned in the preceding paragraph include the
legal representative of an enterprise, which may, upon decision by the people’s
court, also include the financial managers and business managers of the
enterprise.
Article 16 After
the people’s court accepts an application for bankruptcy, payment of debts made
by the debtor to individual creditors shall be invalid.
Article 17 After
the people’s court accepts an application for bankruptcy,
the debtors or property holders of the debtor shall pay off the debts or deliver
the property to the administrator.
Where
the debtors or property holders of the debtor intentionally pay off the debts
or deliver the property to the debtor in violation of the provisions of the
preceding paragraph, thus causing losses to creditors, they shall not be freed
from the obligation of paying off the debts or delivering the property.
Article 18 After
the people’s court accepts an application for bankruptcy, the administrator
shall have the right to decide to rescind or continue to perform a contract
that is concluded before the acceptance yet remains to be fulfilled by both the
debtor and the other party and shall notify the other party of his decision.
Where the administrator fails to notify the other party within two months from
the date when the bankruptcy application is accepted or to give any reply to
the exhortation made by the other party with 30 days from the date the
exhortation is made, the contract shall be deemed to be rescinded.
Where
the administrator decides that performance of the contract be continued, the
other party shall comply; however, the other party shall have the right to
request the administrator to provide guaranty. Where the administrator refuses
to do so, the contract shall be deemed to be rescinded.
Article 19 After
the people’s court accepts an application for bankruptcy, the measures for
preserving the property of the debtor shall be lifted and the procedure for
execution shall be suspended.
Article 20 After
the people’s court accepts an application for bankruptcy, any civil action or
arbitration involving the debtor that has been started but has not yet been
concluded shall be suspended; however, the action or arbitration can proceed
after an administrator takes over the debtor’s property.
Article 21
After the people’s court accepts an application for bankruptcy, a civil action
against the debtor can only be filed with the said people’s court.
Chapter
III
Administrator
Article 22 The
administrator shall be designated by the people’s court.
Where
the creditors’ meeting believes that the administrator cannot perform his
duties according to law or impartially or is incompetent to fulfill his duties,
the meeting may apply with the people’s court for replacement.
The
measures for designating administrators and determining their remunerations
shall be formulated by the Supreme People’s Court.
Article 23 An
administrator shall perform his duties according to the provisions of this Law,
report on his work to the people’s court and be subject to supervision by the creditors’
meeting and the creditors’ committee.
The
administrator shall attend the creditors’ meetings as a non-voting participant,
reporting on the performance of his duties and answering inquires.
Article 24 A
liquidation team composed of persons of the departments or authorities
concerned or a law firm, a certified public accountant firm, a bankruptcy
liquidation firm or any other public intermediary agency that is established
according to law may serve as an administrator.
The
people’s court may, in light of the actual conditions of a debtor and after
consulting with the public intermediary agency concerned, designate the person
who has the necessary professional knowledge and has obtained the
qualifications for the practice to serve as an administrator.
A
person shall not serve as an administrator, if:
(1)
he has been subjected to criminal punishment for
intentional offense;
(2)
his qualification certificate for the relevant
practice has been revoked;
(3)
he has an interest in the case; or
(4)
the people’s court deems it improper to have him serve
as an administrator.
Where
the administrator is served by an individual person, he shall purchase the
responsibility insurance for the practice.
Article 25 An
administrator shall perform the following duties:
(1)
taking over the property, seals, account books,
documents and other data of the debtor;
(2)
investigating into the financial position of the
debtor and preparing a report on such position;
(3)
deciding on matters of internal management of the debtor;
(4)
deciding on the day-to-day expenses and other
necessary expenditures of the debtor;
(5)
deciding, before the first creditors’ meeting is held,
to continue or suspend the debtor’s business;
(6)
managing and disposing of the debtor’s property;
(7)
participating in legal actions, arbitrations or any
other legal procedure on behalf of the debtor;
(8)
proposing to hold creditors’ meetings; and
(9)
performing other duties that the people’s court deems
that he should.
Where
other provisions governing the duties of an administrator are stipulated in
this Law, those provisions shall be applicable.
Article 26
If an administrator decides to continue or suspend the business operation of a
debtor or if he intends to take any of the actions as specified by the provisions
of Article 69 of this Law before the first creditors’ meeting is held, the
matter shall be subject to approval by the people’s court.
Article 27
An administrator shall be hardworking in doing his
duties, and shall perform his duties faithfully.
Article 28
An administrator may, upon approval by the people’s court, employ the necessary
workers.
The
remuneration of an administrator shall be determined by the people’s court. In
case the creditors’ meeting has objections to such remuneration, it shall have
the right to raise them to the people’s court.
Article 29 An
administrator shall not resign his post without justifiable reasons.
Resignation of an administrator shall be subject to approval by the people’s
court.
Chapter
IV
A
Debtor’s Property
Article 30 A
debtor’s property includes all of the property that
belongs to a debtor when the application for bankruptcy is accepted, as well as
the property as obtained by the debtor during the period from the time when the
application for bankruptcy is accepted to the time when the procedures for
bankruptcy are concluded.
Article 31
An administrator shall have the right to request the court to nullify any of
the following actions taken within one year before the people’s court accepts
the application for bankruptcy in respect of the debtor’s property:
(1)
transferring the property gratis;
(2)
trading at an obviously unreasonable price;
(3)
providing property guaranty to unsecured debts;
(4)
paying off debts not due; or
(5)
abandoning claims.
Article 32
Within six months before the people’s court accepts the application for
bankruptcy, if a debtor is under the circumstances as specified in the first
paragraph of Article 2 of this Law but chooses to make repayment to individual
creditors, the administrator shall have the right to request the people’s court
to nullify it, except where such individual repayment is beneficial to the
debtor’s property.
Article 33
The following actions taken in respect of the debtor’s property are invalid:
(1)
concealing or transferring the property in order to
avoid repayment of debts; and
(2)
fabricating debts or acknowledging unreal debts.
Article 34
Where the property is obtained from the debtor by means of such actions as
specified in Article 31, 32 or 33 of this Law, the administrator shall have the
right to recover it.
Article 35 Where
after the people’s court accepts an application for bankruptcy, any of the
debtor’s capital contributors that fails to fulfill
his obligation of capital contribution in full, the administrator shall require
the capital contributor to contribute the capital he has subscribed to,
irrespective of the time limit set on capital contribution.
Article 36 The
administrator shall recover the irregular incomes obtained from the enterprise
and the property of the enterprise illegally taken into his possession by a
director, supervisor or senior manger of the debtor
through taking advantage of his position.
Article 37 After
the people’s court accepts an application for bankruptcy, the administrator may
take back the pledge or lien through paying off the debts or providing a
guaranty acceptable to the creditor.
With
respect to payment of debts or provision of guaranty as a substitute, as
mentioned in the preceding paragraph, if the value of the pledge or lien is
lower than the amount of the claim for which the guaranty is provided, the
value of the pledge or lien shall be limited to its market value at the time
when the pledge or lien was made.
Article 38 After
the people’s court accepts an application for bankruptcy, the property, which
has been taken by a debtor into his possession but which does not belong to the
debtor, may be taken back by the obligee of the
property through the administrator, unless otherwise provided for by this Law.
Article 39
At the time when the people’s court accepts an application for bankruptcy, if
the seller has sent the goods to the debtor as the buyer and the latter has
neither received the goods nor paid the money in full, the seller may get back
the goods in transit. However, the administrator may pay the money in full and
request the seller to deliver the goods.
Article 40
Where a creditor is in debt to the debtor before the application for bankruptcy
is accepted, the former may lodge a claim with the administrator for offsetting
the debts. However, the debts shall not be offset under any of the following
circumstances:
(1)
being in debt to the debtor, he obtains another
person’s claims against the debtor after the application for bankruptcy is
accepted;
(2)
getting into debt to the debtor when he already knows the fact that the debtor
is incapable of paying off his debts due or has applied for bankruptcy; unless
it is otherwise provided for by law or he gets into debt because of the
developments that take place one year before the application for bankruptcy is
made; or
(3)
being a debtor to the debtor, he obtains the claims from the debtor when he
already knows the fact that the debtor is incapable of paying off his debts due
or has applied for bankruptcy; unless it is otherwise provided for by law or he
obtains the claims because of the developments that take place one year before
the application for bankruptcy is made.
Chapter
V
Expenses
for Bankruptcy Proceedings and Debts Incurred for the Common Good of Creditors
Article 41 The
following expenses that are entailed after the people’s court accepts an
application for bankruptcy are expenses for bankruptcy proceedings:
(1)
litigation cost involved in a bankruptcy case;
(2)
expenses for management, realization and distribution
of the debtor’s property; and
(3)
expenses involved in the administrator’s performance
of his duties and paid for his remuneration and expenses for the employees
recruited.
Article 42 The
following debts incurred after the people’s court accepts an application for
bankruptcy are debts incurred for the common good of creditors:
(1)
debts incurred because the administrator or debtor
requests the other party to fulfill a contract which both parties have failed
to fulfill;
(2)
debts to the debtor through spontaneous agency on the
debtor’s property;
(3)
debts incurred as a result of the debtor’s unjust
enrichment;
(4)
remunerations for work and social insurance premiums
payable for sustaining the debtor’s business operations, and other debts
arising therefrom;
(5)
debts incurred by the administrator or an employee who
causes losses to another person in the course of performing his duties; and
(6)
debts incurred by the debtor’s property for causing
losses to another person.
Article 43
The expenses for bankruptcy proceedings and the debts incurred for the common
good of creditors shall be paid off with the debtor’s property at any time.
Where
the debtor’s property is not enough for paying off all the expenses for
bankruptcy proceedings and the debts incurred for the common good of creditors,
the former shall be paid off first.
Where
the debtor’s property is not enough for paying off all the expenses for
bankruptcy proceedings or the debts incurred for the common good of creditors,
such payment shall be made on a pro rata basis.
Where
the debtor’s property is not enough for paying off the expenses for bankruptcy
proceedings, the administrator shall request the people’s court to conclude the
procedure for bankruptcy. The people’s court shall, with 15 days from the date
it receives the request, decide to conclude the procedure for bankruptcy and
announce the decision. Chapter VI
Declaration
of Claims
Article 44 As
of the time when the people’s court accepts an application for bankruptcy, the
creditor that enjoys the claims against the debtor may exercise his right in
respect of his claims according to the procedures as prescribed by this Law.
Article 45 After
accepting an application for bankruptcy, the people’s court shall specify the
time limit for a creditor to declare claims. Such time limit, calculated from
the date when the people’s court announces its acceptance of the application
for bankruptcy, shall be not less than 30 days at least but not more than three
months at the most.
Article 46 All
claims undue shall be deemed to be due at the time when the application for
bankruptcy is accepted.
Beginning
from the time when the application for bankruptcy is accepted, calculation of
the interest on claims shall be stopped.
Article 47 A
creditor may declare his claims which are attached with certain conditions or
time limit and the claims for which an action or arbitration is pending.
Article 48
A creditor shall, within the time limit specified by
the people’s court for declaration of his claims, declare his claims to the
administrator.
It
is not necessary for the debtor to declare the wages, subsidies for medical
treatment, injuires and disability and the pensions
for the disabled and the families of the deceased which he owes, the basic
old-age insurance premiums and medical insurance premiums which he owes and
fails to enter in the employees’ personal accounts, and the compensations which
should be paid to the employees as prescribed by relevant laws and
administrative regulations, for all of which the administrator shall compile a
list after investigation and have it published. Where an employee has
objections to what is recorded in the list, he may request the administrator to
make corrections; and if the administrator refuses to do so, the employee may file
an action with the people’s court.
Article 49
When a creditor declares his claims, he shall make a written statement on the
amount of his claims and on whether there is any property guaranty, and present
the relevant evidence. If the claims declared are joint-and-several claims, he
shall give an explanation thereof.
Article 50
Joint-and-several creditors may choose one from among them to declare their
claims on their behalf or declare their claims jointly.
Article 51 Where
the debtor’s guarantor or any joint-and-several debtor has paid off the debts
on behalf of the debtor, he may declare his claims on the basis of his right of
recourse to the debtor.
Where
the debtor’s guarantor or any joint-and-several debtor has not paid off the
debts on behalf of the debtor, he may declare his claims on the basis of his
future right of recourse to the debtor, unless the creditors have declared all
their claims to the administrator.
Article 52 Where
it is ruled that the procedure as prescribed in this Law should be applicable
to more than one joint-and-several debtor, their creditors shall have the right
to declare all of their claims in each of the bankruptcy cases.
Article 53
Where an administrator or debtor revokes a contract according to the provisions
of this Law, the other party may declare his claims on the basis of his right
to compensation for the damages caused by the revocation.
Article 54
Where it is ruled that a debtor who is the entrusting party of an entrustment
contract should be governed by the procedure as prescribed in this Law and the
entrusted party, without knowledge of the fact, continues to deal with the
entrusted business, the entrusted party may declare his claims on the basis of
the right of claim derived therefrom.
Article 55 Where
it is ruled that a debtor being the producer of a negotiable instrument should
be governed by the procedures as prescribed in this Law, the payer of the
negotiable instrument continues his payment or acceptance, the payer may
declare his claims on the basis of the right of claim derived therefrom.
Article 56 Where
a creditor fails to declare his claims within the time limit for declaration of
claims as specified by the people’s court, he may declare such claims
afterwards before distribution of the bankruptcy property in the final
installment. However, if the property has been distributed earlier, no more
distribution shall be made to him. The expenses for examining and confirming
the claims declared afterwards shall be borne by the party that makes such declaration.
Where
a creditor fails to declare his claims according to the provisions of this Law,
he shall not exercise his right according to the procedure as prescribed in
this Law.
Article 57 After
receiving the materials for declaration of claims, the administrator shall have
them registered, examine the claims declared and fill out a form of claims.
The
form of claims and the materials for declaration of claims shall be preserved
by the administrator for reference by the interested parties.
Article 58
The form of claims as filled out according to the provisions of Article 57 of
this Law shall be submitted to the first creditors’ meeting for checking.
Where
the debtor and creditor have no objections to what is recorded in the form of
claims, the people’s court shall make a ruling on its confirmation.
Where
the debtor or creditor has objections to what is recorded in the form of
claims, he may file an action with the people’s court that has accepted the
application for bankruptcy.
Chapter
VII
Creditors’
Meeting
Section
1 General Provisions
Article 59
A creditor declaring his claims according to law is a member of the creditors’
meeting and has the right to attend the meetings of the creditors and enjoy the
right to vote.
A
creditor whose claims are not confirmed is not entitled to exercise the right
to vote unless the people’s court can temporarily decide on the amount of his
claims for the sake of his exercise of such right.
Where
a creditor secured by the specific property of the debtor and that has not
given up his priority right to be repaid shall not enjoy the right to vote on
matters as specified in Subparagraphs (7) and (10) under the first paragraph of
Article 61 of this Law.
A
creditor may entrust his agent with the task of attending the creditors’
meeting and exercising the right to vote. To attend the creditors’ meeting, the
agent shall submit a letter of power of attorney to the people’s court or to
the chairman of the creditors’ meeting.
A
creditors’ meeting shall be attended by representatives of the employees and of
the trade union of the debtor, who may express their views on relevant issues.
Article 60 There
shall be a chairman of the creditors’ meeting, who shall be designated by the
people’s court from among the creditors with the right to vote.
The
chairman of the creditors’ meeting shall preside over such meetings.
Article 61
The creditors’ meeting shall exercise the following functions and powers:
(1)
checking the claims;
(2)
applying with the people’s court for replacing the administrator
and examining the expenses and remuneration of the administrator;
(3)
supervising the work of the administrator;
(4)
selecting and replacing members of the creditors’
committee;
(5)
deciding on whether to have the debtor continue or
discontinue his business operations;
(6)
adopting plans for reorganization;
(7)
adopting agreements for compromise;
(8)
adopting plans for management of the debtor’s
property;
(9)
adopting plans for realizing the bankruptcy property
into money;
(10)
adopting plans for distribution of the bankruptcy
property; and
(11)
other functions and powers that the people’s court
deems that the creditors’ meeting should exercise.
The
creditors’ meeting shall keep minutes of the resolutions made on the matters
discussed.
Article 62
The first creditors’ meeting shall be convened by the people’s court within 15
days before the expiration date of the time limit for declaration of claims.
Subsequent
creditors’ meetings may be held when the people’s court deems it necessary, or
when the administrator, the creditors’ committee, or a creditor holding one
quarter or more of the total amount of claims proposes to the chairman of the
creditors’ meeting that such a meeting be held.
Article 63
For convening a creditors’ meeting, the administrator shall notify the known
creditors 15 days in advance.
Article 64
A resolution made by the creditors’ meeting shall be adopted by more than half
of the creditors that attend the meeting, have the right to vote, and represent
half or more of the total amount of the unsecured claims, unless otherwise
provided for by this Law.
Where
a creditor believes that a resolution adopted at a creditors’ meeting is at
variance with the provisions of law or undermines his interests, he may, within
15 days from the date when the resolution is made at the creditors’ meeting,
plead with the people’s court to decide to revoke the resolution and order the
creditors’ meeting to have a resolution remade according to law.
A
resolution adopted at the creditors’ meeting shall be binding on all creditors.
Article 65 Where
any of the matters specified in Subparagraphs (8) and (9) under the first
paragraph of Article 61 of this Law is not adopted through voting at the
creditors’ meeting, it shall be subject to decision by the people’s court.
Where
the matter as specified in Subparagraph (10) under the first paragraph of
Article 61 of this Law is still not adopted by a second voting at the
creditors’ meeting, it shall be subject to decision by the people’s court.
The
decisions as specified in the preceding two paragraphs may be announced by the
people’s court at the creditors’ meeting or notified to the creditors.
Article 66 Where
a creditor is dissatisfied with the decision made by the people’s court
according to the first paragraph in Article 65 of this Law, or where the
creditors representing half or more of the total unsecured claims are
dissatisfied with the decision made by the people’s court according to the
second paragraph in Article 65 of this Law, he or they may, within 15 days from
the date when the decision is announced or when the notification thereof is
received, apply with the said people’s court for review. Execution of the
decision shall not be discontinued during the period of review.
Section
2 The Creditors’ Committee
Article 67
The creditors’ meeting may decide to establish a creditors’ committee. The
creditors’ committee shall be composed of the creditors’ representatives who
are selected by the creditors’ meeting and a representative from among the
employees of the debtor or from the trade union of the debtor. The members of
the creditors’ committee shall not exceed nine persons in number.
The
members of the creditors’ committee shall be subject to confirmation by
decision of the people’s court in writing.
Article 68 The
creditors’ committee shall perform the following functions and powers:
(1)
supervising the management and disposition of the
debtor’s property;
(2)
supervising the distribution of the bankruptcy
property;
(3)
proposing the convening of a creditors’ meeting; and
(4)
other functions and powers as entrusted by the
creditors’ meeting.
When
performing its functions and powers, the creditors’ committee shall have the
right to require the administrator and the relevant employee of the debtor to
give an explanation of the matters that fall within the scope of his functions
and powers or provide relevant documents.
Where
the administrator or the relevant employee of the debtor, in violation of the
provisions of this Law, refuses to accept supervision, the creditors’ committee
shall have the right to plead with the people’s court to make a decision on the
matters subject to its supervision, and the latter shall make the decision
within five days.
Article 69
Before doing any of the following, the administrator shall report to the
creditors’ committee in a timely manner:
(1)
transferring of the rights and interests of such immovables as land and houses;
(2)
transferring of such property rights as the right to
prospecting mineral deposits, the right to mining and the intellectual property
right;
(3)
transferring of all the inventory or business
operation;
(4)
borrowing of money;
(5)
creating of security on property;
(6)
transferring of claims and securities;
(7)
executing the contract left unfulfilled by the debtor
and the other party;
(8)
waivering of rights;
(9)
withdrawing of a pledge; and
(10)
other acts for disposing of the property that has a
vital bearing on the creditor’s interests.
Where
there is no such creditors’ committee, the administrator shall, before
executing what is specified in the preceding paragraph, report to the people’s
court in a timely manner.
Chapter
VIII
Reorganization
Section
1 Application for and Period of Reorganization
Article 70
A debtor or creditor may, according to the provisions
of this Law, directly apply with the people’s court for having the debtor
reorganized.
Where
a creditor applies for putting his debtor into bankruptcy liquidation, the
debtor or his capital contributors whose capital contribution makes up one-tenth
or more of the debtor’s registered capital may, after the people’s court
accepts the application for bankruptcy and before it declares the debtor
bankrupt, apply with the people’s court for reorganization.
Article 71 Where
upon examination, the people’s court deems that an application for
reorganization conforms to the provisions of this Law, it shall rule that the
debtor should undergo reorganization and shall make the matter known to the
public.
Article 72 The
period of reorganization shall last from the date when the people’s court rules
that the debtor should undergo reorganization to the date when the procedure
for reorganization is terminated.
Article 73
During the period of reorganization, the debtor may, through his application
and upon approval granted by the people’s court, manage his property and
business operations on his own under the supervision of an administrator.
Under
conditions as specified in the preceding paragraph, the administrator that has
taken over the property and business operations from the debtor in accordance
with the provisions of this Law shall hand over the property and business
operations to the debtor, and the functions and powers to be exercised by the
administrator as specified by this Law shall be exercised by the debtor.
Article 74 The
administrator that takes charge of the property and business operations may
appoint a business manager of the debtor to take care of the business
operations.
Article 75 During
the period of reorganization, the exercise of the security right over the
specific property of a debtor shall be suspended. However, in the case of
possible damage or marked depreciation of value of the security, which may
impair the secured creditor’s right, the secured creditor may apply with the
people’s court for resuming the exercise of his security right.
During
the period of reorganization, the debtor or administrator that borrows money
for carrying on business may create a security on the loan.
Article 76 In
the case of another person’s property that is legally taken into possession by
a debtor, if the obligee requests to take the
property back during the period of reorganization, the terms previously agreed
upon shall be met.
Article 77 During
the period of reorganization, no capital contributor of a debtor may request
for distribution of profits derived from his investment.
During
the period of reorganization, no director, supervisor or senior manager of a
debtor may transfer to a third party the equity of the debtor he holds, unless
with the consent of the people’s court.
Article 78 Under
one of the following circumstances during the period of reorganization, the
people’s court shall, upon request by an administrator or an interested party,
rule that the reorganization procedure should be terminated and shall declare
the debtor bankrupt:
(1)
where the business operations and financial position
of the debtor continue to deteriorate and there is no hope of retrieval;
(2)
where the debtor indulges in fraud or maliciously
decreases his property, or commits any other act which is obviously
disadvantageous to his creditors; or
(3)
where the debtor commits such an act as to make it
impossible for the administrator to perform his duties.
Section
2 Formulation of and Approval for a Reorganization Plan
Article 79 A
debtor or administrator shall, within six months from
the date when the people’s court rules that the debtor should undergo
reorganization, submit a draft plan for reorganization to the people’s court
and the creditors’ meeting at the same time.
Upon
request made by a debtor or administrator before the expiration of the period
as specified in the preceding paragraph and on justifiable grounds, the
people’s court may rule that the period should be extended for three months.
Where
a debtor or administrator fails to submit a draft plan for reorganization on
schedule, the people’s court shall rule that the procedure for reorganization
should be terminated and declare the debtor bankrupt.
Article 80
Where it is the debtor who manages his own property and business operations, a
draft plan for reorganization shall be formulated by the debtor.
Where
it is the administrator who is in charge of management of the property and
business operations, the draft plan for reorganization shall be formulated by
the administrator.
Article 81 A
draft plan for reorganization shall contain the
following:
(1)
the debtor’s plan for business operations;
(2)
classification of the creditors’ claims;
(3)
the plan for the adjustment of the claims;
(4)
the plan for payment of the claims;
(5)
the period of time for implementing the reorganization
plan;
(6)
the period of time for supervising the implementation
of the reorganization plan; and
(7)
other plans conducive to the debtor’s reorganization.
Article 82 For
the creditors holding the following categories of the claims to attend the
creditors’ meeting at which the draft plan for reorganization is to be
discussed, they shall be grouped according to the following categories of the
claims when a vote is taken on the draft plan for reorganization:
(1)
the secured claims on the debtor’s specific property;
(2)
the wages, subsidies for medical treatment, injuries and disability and the
pensions for the disabled and the families of the deceased which the debtor
owes, the basic old-age insurance premiums and the basic medical insurance
premiums which he owes and fails to enter in the employees’ personal accounts,
and the compensations which should be paid to the employees as prescribed by
relevant laws and administrative regulations;
(3)
the taxes the debtor fails to pay; and
(4)
the common claims.
For
a vote on the draft plan for reorganization, the people’s court may, when
necessary, decide to form a group of small-claim creditors under the category
of the common claims.
Article 83 It
shall not be stipulated in a reorganization plan that the social insurance
premiums which a debtor fails to pay, other than the ones which are specified
under Subparagraph (2) in the first paragraph of Article 82 of this Law should
be reduced or exempted. The creditor involved in the said ones shall not take
part in the voting of the draft plan for reorganization.
Article 84 The
people’s court shall, within 30 days from the date when it receives a draft
plan for reorganization, convene a creditors’ meeting for a vote on the draft.
When
more than half of the creditors in voting group for the same category of claims
who are present at the creditors’ meeting agree to a draft plan for
reorganization and they represent two-thirds or more of the total amount of the
said category of claims, the draft shall be deemed to be adopted by the group.
The
debtor or administrator shall give an explanation of the draft plan for
reorganization at the creditors’ meeting and answer inquiries.
Article 85 Representatives
of the capital contributors of a debtor may, as non-voting participants, attend
the creditors’ meeting to discuss a draft plan for reorganization.
Where
a draft plan for reorganization involves the adjustment of the rights and
interests of capital contributors, a group of capital contributors shall be
formed to vote on the matter.
Article 86
When all the voting groups agree to adopt a draft plan
for reorganization, the draft shall be deemed to be adopted.
The
debtor or administrator shall, within 10 days from the date when the plan for
reorganization is adopted, apply with the people’s court for approval of the
plan. Where upon examination, the people’s court deems that the application
complies with the provisions of this Law, it shall, within 30 days from the
date when it receives the application, decide to grant approval, terminate the
procedure for reorganization and announce it.
Article 87
Where a draft plan for reorganization is not adopted by some of the voting
groups, the debtor or administrator may consult with those groups. The said
groups may take another vote after consultation. The result of consultation
shall not damage the interests of the other voting groups.
Where
a voting group that does not adopt a draft plan for reorganization refuses to take
another vote on it or the draft plan is not adopted even by a second vote but
it meets the following conditions, the debtor or administrator may apply with
the people’s court for approval of the draft plan:
(1)
according to the draft plan for reorganization, the claims as specified in
Subparagraph (1) under the first paragraph of Article 82 of this Law will be
paid in full as far as the specific property is concerned, the losses caused by
postponed payment will be compensated for in a fair manner, and the secured
interests will not be substantially impaired, or the voting groups concerned
have adopted the draft plan for reorganization;
(2)
according to the draft plan for reorganization, the claims as specified in
Subparagraphs (2) and (3) under the first paragraph of Article 82 of this Law
will be paid in full, or the voting groups concerned have adopted the draft
plan for reorganization;
(3)
according to the draft plan for reorganization, the proportion for repayment of
the common claims will not be lower than that as allotted under the procedures
for bankruptcy liquidation at the time when the draft plan is submitted for
approval, or the voting groups concerned have adopted the draft plan;
(4)
in the draft plan for reorganization, the rights and interests of capital
contributors are adjusted in a fair and impartial manner, or the group of
capital contributors has adopted the draft plan;
(5)
in the draft plan for reorganization, members of the same voting group are
treated fairly, and the order arranged therein for payment of the claims does
not contravene the provisions of Article 113 of this Law; and
(6)
the debtor’s plan for business operations is feasible.
Where
upon examination, the people’s court deems that the draft plan for
reorganization complies with the provisions of the preceding paragraph, it
shall, within 30 days from the date when it receives the application, decide to
grant approval, terminate the procedure for reorganization and announce it.
Article 88
Where a draft plan for reorganization is not adopted and is not approved
according to the provisions of Article 87 of this Law, or a draft plan, though
adopted, is not approved, the people’s court shall rule that the procedure for
reorganization should be terminated and shall declare the debtor bankrupt.
Section
3 Implementation of a Reorganization Plan
Article 89
A reorganization plan shall be implemented under the
debtor’s charge.
After
the people’s court decides to approve a reorganization plan, the administrator
that has taken over the management of the property and business operations
shall hand over the property and business operations to the debtor.
Article 90 Beginning
from the date when the people’s court decides to approve a reorganization plan,
the administrator shall supervise the implementation of the plan within the
period for supervision as specified in the plan.
Within
the period when being supervised, the debtor shall report to the administrator
on the implementation of his reorganization plan and his financial position.
Article 91
At the expiration of the period when being supervised, the administrator shall
submit a report on supervision to the people’s court. From the date when the
report on supervision is submitted, the administrator’s duty of supervision is
terminated.
Any
interested party to the reorganization plan shall have the right to consult the
report on supervision submitted by the administrator to the people’s court.
Upon
application by the administrator, the people’s court may decide to extend the
period for supervision over the implementation of a reorganization plan.
Article 92 The
reorganization plan approved by decision of the people’s court shall have a
binding force on the debtor and all the creditors.
Where
a creditor fails to declare his claims according to the provisions of this Law,
he shall not exercise his right when the reorganization plan is being
implemented; however, when the implementation of the plan is concluded, the
creditor may exercise his right in compliance with the conditions for payment
of claims of the same category as specified in the reorganization plan.
The
right enjoyed by a creditor against the debtor’s guarantor and all the
joint-and-several debtors shall not be affected by the reorganization plan.
Article 93 Where
a debtor cannot or fails to implement a reorganization plan, the people’s court
shall, upon request of the administrator or interested party, decide to
terminate the implementation of the plan and declare the debtor bankrupt.
Where
the people’s court decides to terminate the implementation of a reorganization
plan, the commitment taken by the creditors on adjustment of the claims in the
plan shall be invalidated. However, the repayment received by the creditors due
to implementation of the plan shall remain effective, and the part of the
claims for which no repayment has been paid shall be regarded as bankruptcy
claims.
The
creditors as specified in the preceding paragraph may continue to join the
distribution, only when the other creditors in the same sequential order
receive the same proportion of repayment.
Under
the circumstances as specified in the first paragraph of this Article, the
guaranty provided for implementation of the reorganization plan shall continue
to be effective.
Article 94 With
respect to the debts that are reduced or exempted according to a reorganization
plan, the debtor shall cease to be liable for repayment upon complete
implementation of the reorganization plan.
Chapter
IX
Compromise
Article 95 A
debtor may, according to the provisions of this Law, directly apply with the
people’s court for compromise; and he may do so after the people’s court
accepts the application for bankruptcy and before it declares the debtor
bankrupt.
To
apply for compromise, the debtor shall present the draft of a compromise
agreement.
Article 96 Where
upon examination, the people’s court deems that the application for compromise
conforms to the provisions of this Law, it shall rule on a compromise, announce
it and hold a creditors’ meeting at which to discuss the draft of a compromise
agreement.
The
creditor secured by the specific property of the debtor may exercise his right
from the date when the people’s court rules in favor of compromise.
Article 97 A
resolution on a compromise agreement shall be adopted at the creditors’ meeting
with the consent of more than half of the creditors who are present at the
meeting and who have the right to vote, represent two-thirds or more of the
total amount of unsecured claims.
Article 98 Where
a compromise agreement is adopted at the creditors’ meeting, it shall be
subject to decision by the people’s court to confirm it and terminate the
procedure for compromise, and the people’s court shall announce the matter. The
administrator shall hand over the property and business operations to the
debtor and submit to the people’s court a report on the performance of his
duties.
Article 99 Where
the draft of a compromise agreement is not adopted at the creditors’ meeting,
or the draft, though adopted at the meeting, is not confirmed by the people’s
court, the people’s court shall decide to terminate the procedure for
compromise and declare the debtor bankrupt.
Article 100 A
compromise agreement that is confirmed by the people’s
court shall have a binding force on the debtor and all the creditors involved
in the compromise.
A
creditor involved in the compromise refers to a party that, at the time when
the people’s court accepts the application for bankruptcy, holds unsecured
claims against the debtor.
Where
a creditor involved in the compromise fails to declare his claims according to
the provisions of this Law, he shall not exercise his right during the period
when the compromise agreement is being honored. However, after the complete
implementation of the compromise agreement, he may exercise his right according
to the conditions for repayment as stipulated by the compromise agreement.
Article 101
The right enjoyed by the creditor in favor of the compromise against the
debtor’s guarantor and joint-and-several debtors shall not be affected by the
compromise agreement.
Article 102 A
debtor shall pay off his debts according to the
conditions stipulated by the compromise agreement.
Article 103
With respect to a compromise agreement that is established through fraud or
other illegal acts on the part of a debtor, the people’s court shall decide to
invalidate it and declare the debtor bankrupt.
Under
the circumstances as specified in the preceding paragraph, the payment that a
creditor involved in the compromise receives due to the honoring of the
agreement shall not be returned, provided that it is in the same proportion as
that received by the other creditors.
Article 104
Where a debtor cannot or fails to honor a compromise agreement, the people’s
court shall, upon request by the creditor involved in the compromise, decide to
terminate the honoring of the compromise agreement and declare the debtor
bankrupt.
Where
the people’s court decides to terminate the honoring of a compromise agreement,
the commitment on adjustment of the claims made by the creditor involved in the
compromise shall be invalidated. However, the repayment received by the said
creditor due to the honoring of the compromise agreement shall remain effective
and the part of the claims involved in the compromise that has not been paid
shall be the bankruptcy claims.
The
creditor as specified in the preceding paragraph may continue to join the
distribution, only when the payment received by the other creditors reaches the
same proportion.
Under
the circumstances as specified in the first paragraph of this Article, the
guaranty provided for the honoring of a compromise agreement shall remain
effective.
Article 105 When
after the people’s court accepts an application for bankruptcy, the debtor and
all the creditors themselves conclude an agreement on settlement of the claims
and debts, they may request the court to decide to confirm the agreement and
terminate the procedure for bankruptcy.
Article 106
With respect to the debts that are to be reduced or exempted according to a
compromise agreement, the debtor shall cease to be liable for repayment from
the time when the compromise agreement is completely honored.
Chapter
X
Bankruptcy
Liquidation
Section
1 Bankruptcy Declaration
Article 107 Where
the people’s court declares a debtor bankrupt according to the provisions of
this Law, it shall, within five days from the date when the decision thereon is
made, serve it on the debtor and the administrator and shall, within 10 days
from the said date, notify the known creditors and announce the matter.
After
a debtor is declared bankrupt, he is known as the bankrupt, his property is
known as the bankruptcy property, and the claims established against the debtor
at the time when the people’s court accepts an application for bankruptcy is
known as bankruptcy claims.
Article 108 Under
one of the following circumstances prior to declaration of bankruptcy, the
people’s court shall decide to terminate the procedure for bankruptcy and
announce it:
(1)
where a third party provides a full amount of guaranty
to, or repays all the debts due for, the debtor; or
(2)
where the debtor has repaid all the debts due.
Article 109 A
creditor secured by the specific property of the bankrupt shall enjoy the
priority in being repaid with the specific property.
Article 110
Where when a creditor enjoying the priority as specified in the provisions of
Article 109 of this Law exercises the priority to repayment but is not repaid
in full, the un-repaid part shall be taken as common claims. The claims of a
creditor that abandons the priority right to repayment shall be taken as common
claims.
Section
2 Realization and Distribution
Article 111
An administrator shall draw up a realization plan for bankruptcy property in
time and submit it to the creditors’ meeting for discussion.
The
administrator shall, according to the realization plan for bankruptcy property
that has been adopted at the creditors’ meeting or that has been decided on by
the people’s court according to the provisions of the first paragraph of
Article 65 of this Law, realize the bankruptcy property in a timely manner.
Article 112 Bankruptcy
property shall be realized through auction, unless otherwise decided on by the
creditors’ meeting.
A
bankrupt enterprise may be realized as a whole or partially. When an enterprise
is being realized, the intangible assets and other property may be realized
separately.
With
respect to the property which shall not be auctioned or the transfer of which
is restricted according to relevant State regulations, it shall be disposed of
in a manner as prescribed by the State.
Article 113
The bankruptcy property shall, after the expenses for bankruptcy proceedings
are defrayed and the debts incurred for the common good of creditors are repaid
first, be liquidated according to the following order:
(1)
the wages, subsidies for medical treatment, injuries and disability and the
pensions for the disabled and the families of the deceased which the bankrupt
owes, the basic old-age insurance premiums and the basic medical insurance
premiums which he owes and fails to enter in the employees’ personal accounts,
and the compensations which should be paid to the employees as prescribed by
relevant laws and administrative regulations;
(2)
the social insurance premiums which the bankrupt fails to pay, other than the
ones which are specified in the preceding subparagraph, and the taxes which the
bankrupt fails to pay; and
(3)
the common bankruptcy claims.
Where
the bankruptcy property is not sufficient to satisfy the demands for repayment
that are arranged in the same group, it shall be distributed on a pro rata
basis.
The
salaries of the directors, supervisors and senior managers of a bankrupt
enterprise shall be calculated on the basis of the average wages of the
employees of the enterprise.
Article 114
The bankruptcy property shall be distributed in cash, unless it is otherwise
decided on by the creditors’ meeting.
Article 115
An administrator shall formulate a plan for distribution of the bankruptcy
property in time, and submit it to the creditors’ meeting for discussion.
The
following items shall clearly be started in a plan for distribution of the
bankruptcy property:
(1)
the titles or names and domiciles of the creditors
that will share in the distribution of the bankruptcy property;
(2)
the amount of the claims that will share in the
distribution of the bankruptcy property;
(3)
the amount of the bankruptcy property available for
distribution;
(4)
the order and proportion for, and the amount of the
bankruptcy property subject to, distribution; and
(5)
the method for distributing the bankruptcy property.
After
the plan for distribution of the bankruptcy property is adopted at the
creditors’ meeting, it shall be submitted by the administrator to the people’s
court for confirmation.
Article 116 After
a plan for distribution of bankruptcy property is confirmed by decision of the
people’s court, it shall be executed by the
administrator.
Where
the administrator has to distribute the bankruptcy property in installments
according to the distribution plan, he shall announce the amount of the
property and the claims involved in each installment. When the administrator
distributes the property in the final installment, he shall make this clear in
the announcement and clearly state the matters as specified in the second
paragraph of Article 117 of this Law.
Article 117
With respect to a claim to which conditions on its validity or dismissal are attached, the administrator shall preserve the corresponding
share of distribution in advance.
With
respect to the share of distribution as preserved in advance by the
administrator according to the provisions in the preceding paragraph, if, on
the day of announcement of distribution in the final installment, conditions on
the validity of a claim have not become effective or the conditions on the
dismissal of a claim have been fulfilled, it shall be distributed to the other
creditors; if on the day mentioned above, the conditions on the validity of a
claim have become effective or the conditions on the dismissal of a claim have
not been fulfilled, it shall be handed back to the creditors.
Article 118 The
shares of the bankruptcy property for distribution that have not been collected
by creditors shall be preserved by the administrator. Where a creditor fails to
collect his share at the expiration of two months from the date of announcement
of distribution in the final installment, he shall be deemed to abandon the
right to the share, and the administrator or the people’s court shall
distribute the preserved share to the other creditors.
Article 119 With
respect to a claim that involved in a legal action or pending arbitral decision
at the time when the bankruptcy property are distributed, the administrator
shall preserve the share involved in distribution in advance. Where a share of distribution remains uncollected at the expiration
of two years from the date when the procedure for bankruptcy is terminated, the
people’s court shall distribute the preserved share to the other creditors.
Section
3 Termination of the Procedure for Bankruptcy
Article 120 Where
a bankrupt has no property available for distribution, the administrator shall
request the people’s court to decide to terminate the procedure for bankruptcy.
After
completion of distribution in the final installment, the administrator shall
submit a report on the distribution of the bankruptcy property to the people’s
court in a timely manner and request the people’s court to decide to terminate
the procedure for bankruptcy.
The
people’s court shall, within 15 days from the date when it receives the request
of the administrator for terminating the procedure for bankruptcy, make a
decision on whether to terminate the procedure. If it decides to terminate the
procedure, it shall announce such decision.
Article 121 The
administrator shall, within 10 days from the date when the procedure for
bankruptcy is terminated and, on the strength of the decision made by the
people’s court on terminating the procedure for bankruptcy, go through the
formalities for cancellation of registration with the authority that originally
has the bankrupt registered.
Article 122
An administrator shall cease performing his duties on the day following his
completion of the formalities for cancellation of registration, unless a legal
action or arbitral decision is still pending.
Article 123 Within
two years from the date when the procedures for bankruptcy are terminated
according to the provisions of the fourth paragraph in Article 43 or of Article
120 of this Law, a creditor may request the people’s court to make an
additional distribution according to the plan for distribution of the
bankruptcy property under one of the following circumstances:
(1)
such property as should be recovered according to the provisions of Articles
31, 32, 33 or 36 of this Law are discovered; and
(2)
it is discovered that the bankrupt still has other
property available for distribution.
Under
the circumstances as specified in the preceding paragraph, where the amount of
the property is not sufficient for paying the expenses for distribution, no
additional distribution shall be made and the said property shall be turned
over by the people’s court to the State Treasury.
Article 124
The guarantor and the joint-and-several debtors of the bankrupt shall, after
termination of the procedure for bankruptcy and according to law, continue to
bear the liabilities of payment of the claims that have not been paid according
to the procedure for bankrupt liquidation.
Chapter
XI
Legal
Liability
Article 125
Where a director, supervisor or senior manager, going against his obligations,
fails to be honest and hardworking, which leads to bankruptcy of the enterprise
where he works, he shall bear civil liability according to law.
The
person as specified in the preceding paragraph shall not serve as a director,
supervisor or senior manager of any enterprise within three years from the date
when the procedure for bankruptcy is terminated.
Article 126 Where,
summoned by the people’s court, a person who is related to a debtor and is
obligated to attend the creditors’ meeting as a non-voting participant refuses
to attend the meeting without justifiable reasons, the people’s court may force
him to appear in court and impose on him a fine according to law. Where a person
related to a debtor, in violation of the provisions of this Law, refuses to
make representations or answer questions, or makes false representations or
responds with false answers, the people’s court may impose on him a fine
according to law.
Article 127 Where
a debtor, in violation of the provisions of this Law, refuses to submit to the
people’s court such data as statements on his financial position, a complete
list of his debts, a complete list of his claims, relevant financial statements
or payment of his employees’ wages or social insurance premiums, or submits
untruthful data to it, the people’s court may, according to law, impose a fine
on the person who is directly responsible.
Where
a debtor, in violation of the provisions of this Law, refuses to hand over to
the administrator his property, seals or such materials as account books and
documents, or fabricates or destroys the evidentiary material concerning his
property, thereby making his financial position unclear, the people’s court
may, according to law, impose a fine on the person who is directly responsible.
Article 128 Where
a debtor commits an act as specified in Article 31, 32 or 33, thereby
undermining the interests of his creditors, the legal representative of the
debtor and the person who is directly responsible shall bear the liability for
compensation according to law.
Article 129 Where
a person related to a debtor, in violation of the provisions of this Law,
leaves the place where he resides, the people’s court may give him an admonition
or take him into custody, and may concurrently impose a fine on him according
to law.
Article 130 Where
an administrator fails to perform his duties diligently and faithfully, as is
required by the provisions of this Law, the people’s court may impose on him a
fine according to law; and where losses are caused to a creditor, a debtor or a
third party, the administrator shall bear the liability for compensation
according to law.
Article 131 Where
a violation of the provisions of this Law constitutes a crime, the violator
shall be investigated for criminal liability according to law.
Chapter
XII
Supplementary
Provisions
Article 132
Where after this Law is put into effect, the wages, the subsidies for medical
treatment, injuries and disability and the pensions for the disabled and the
families of the deceased that the bankrupt owes to his employees, the basic
old-age insurance premiums and the basic medical premiums that the bankrupt
owes and fails to enter in the personal accounts of the employees and the
compensations that should be paid to the employees as prescribed by relevant
laws and administrative regulations--all prior to the date when this Law is
promulgated and for which repayment is made according to the provisions of
Article 113 of this Law but which are not fully paid, the specific property as
prescribed in Article 109 of this Law shall be used to repay the rest before
being used to repay the creditor secured by the specific property.
Article 133 Special
matters involved in the bankruptcy to be effected among certain State-owned
enterprises within the period and scope as are prescribed by the State Council
before this Law is put into effect shall be handled according to the relevant
regulations of the State Council.
Article 134 Where
a commercial bank, securities company, insurance
company or any other financial institution is under the circumstances as
specified in Article 2 of this Law, the financial regulatory authority under
the State Council may lodge an application with the people’s court for
reorganization or bankruptcy liquidation of the financial institution. Where
the financial regulatory authority under the State Council adopts, according to
law, such measures as take-over and trusteeship with respect to a financial
institution that operates at grave risks, it may apply with the people’s court
for suspending the proceedings for civil action or execution, wherein the said
financial institution is the defendant or the party against whom a judgment or
order is being executed.
Where
a financial institution goes into bankruptcy, the State Council may, according
to the provisions of this Law and other laws, formulate the measures for
effecting bankruptcy.
Article 135 The
liquidation of the organizations other than the enterprise legal persons as
prescribed by other laws, which falls within the category of bankruptcy
liquidation, shall be governed, mutatis mutandis, by the procedure as
prescribed by this Law.
Article 136 This
Law shall go into effect as of June 1, 2007. The Law of the People’s Republic
of China on Enterprise Bankruptcy (for Trial Implementation) shall be annulled
simultaneously.