| The proceeding of Bankruptcy Reorganization can rescue the debtor,who is in Financial distress and has the probably rebirth,to obtain the ability of sustainable operation.Reorganization proceeding has always been the main trend of international bankruptcy law,and it is also the main content absorbed and used for reference by many countries to formulate the bankruptcy law.Most representatively,the Chapter 11 of US.Bankruptcy Law has become the foothold and normative basis the theory and practice of Bankruptcy Reorganization.In 2007,China’s revised enterprise bankruptcy law introduced the Bankruptcy reorganization proceeding.This introduction partially satisficed the requirement of China’s socialist market economy,and became the highlight of China’s enterprise bankruptcy law.However,since the introduction of the Bankruptcy Reorganization Proceeding for more than ten years,there has been an abnormal situation of Law "oversupply",that is,the case of Reorganization Proceeding maintain a low rate 15% in Bankruptcy cases,even in recent years,with the economic transformation,there is a outbreak of the number of bankrupt enterprises.The "numbness" of the Bankruptcy Reorganization Rule not only deviates from the original intention and gist of the design,does not match with the current supply of the mechanism of market seceding of China’s socialist market economy,but also is out of the indicators of the current world business environment evaluation system.One of the reasons is that the ruling of judicial cramdown fails to play a real role in regulating,guiding and demonstrating,with the resulting the weakness of the Bankruptcy Reorganization Proceeding rule.Based on the empirical analysis of the Bankruptcy Reorganization Proceeding cases in Fujian Province from 2014 to February 28,2021,this paper finds that the proportion of bankruptcy judges’ decisions on reorganization cramdown is as low as 8.3%,showing the judge’s negative attitude towards cramdown rules.This judicial phenomenon is far from the abuse of judicial cramdown rules criticized by scholars in recent years.This paper finds that the negativity of judicial cramdown rule is rooted in the unclear judicial review boundary and uncertain standard of judicial cramdown rule in Bankruptcy Reorganization Proceeding.Article 87 of the enterprise bankruptcy law of China is too vague and has poor operability.At the same time,the theory of bankruptcy law in our country is lack of argument,which leads to the judicial cramdown rule becoming the "Achilles heel" in the practice and theory of bankruptcy law.Therefore,this paper introduces the "team production theory" of Prof.Margaret,a the leading scholar in Bankruptcy Law,and establishes the theoretical basis of judicial cramdown rule of Bankruptcy Reorganization.At the same time,in order to avoid the possible exclusion of team production theory transplanted to China,this paper interprets team production theory in the context of Chinese commercial law,from this reconstructing the review framework of judicial cramdown rule of bankruptcy judge,and updates the leading direction of judicial cramdown rule,that is,realizing the transformation from court leading to respecting the dynamic application of stakeholder team agreement.Team production theory is one of institutional economics theory based on contract.It holds that the transaction relationship between different groups constitutes a company organization.Even if the enterprise is in financial crisis or business crisis,the organization is still effective.As a team,the board of directors or the trustee of the company is authorized to decide the development direction of the company with the ultimate authority,the rent and surplus generated by the company’s production are distributed among the team members.In the case that the enterprise may enter into bankruptcy reorganization proceeding,the board of directors,senior executives or the administrator or debtor Committee in the bankruptcy reorganization proceeding become the role of the trustee and has the fiduciary duty of the trustee.Based on the delegation of the team production agreement,the trustee exercises the authority of business decision.In this paper,the business decision authority is divided into two types,one is the rigid decision,that is,in line with the requirements of factual state or factual evidence,the trustee should make a decision,there is no room for choice,otherwise it will violate the fiduciary duty.The other is the discretion of commercial judgment,in which the trustee has the right to choose within the discretion range.The dichotomy reflected in the bankruptcy reorganization law also provides two different standards for the judge to review the bankruptcy reorganization.One is the rigid trust decision,which needs to judge the factual evidence on the basis of full investigation.Therefore,the judge must change the uncertainty into certainty on the basis of the factual evidence review;The other is the discretionary trust behavior of commercial judgment.The judge should focus on the fairness and justice of the behavior and the balance of various interests,rather than rigid trust,focusing on factual evidence.In the dichotomy analysis,this paper argues that the judicial cramdown rule of bankruptcy reorganization should establish its examination boundary and standard from two dimensions: one is from uncertain concept to definite concept in bankruptcy reorganization,the second is the judicial review of commercial judgment discretion.It is true that the two act of trust may damage the legal rights or just interests,which is also the starting point and destination of the judicial cramdown rule.Therefore,this paper proposes that the infringement of the legal right must have a legal basis,and the damage to the just interests should have a legitimate reason,so as to clarify all kinds of complicated intertwined interests and conflicts in the bankruptcy reorganization.Through a general to specific understanding path,the paper draws up the following research structure:The first chapter problem discovery: the bankruptcy reorganization case of Fujian Province is a sample analysis.The first chapter of Fujian Province by 2014 to 2021 years pooled analysis of the province’s day bankruptcy reorganization case.The content of the analysis involves the reorganization model and the trust team used in 60 cases,the trust obligations of the managers reflected in the cases,the number of votes and voting methods of the draft reorganization plan,the case analysis of mandatory approval,and the setting of voting groups,analyze the common characteristics of goodwill items such as the reasons for rejecting the reorganization application,the recruitment of reorganization investors,the basis of the simulated liquidation analysis,the judgment of the reorganization value,the judgment of the feasibility of the reorganization,the consideration factors for the judge to approve the draft of the reorganization plan,etc.,Through the analysis of precedents,the article believes that the compulsory approval of judicial reorganization has not yet been established on a logically self-consistent structure,and that there is a major contradiction in the understanding of the same matter between judges and judges,There are also huge contradictions between managers and judges.The second chapter the origin of theory: team production theory and interpretation of Chinese context.The first chapter expounds the evolution history of the "traditionalism" theory,the "creditor bargaining" theory and the "Team production" theory in the company’s crisis.The article proposes that "traditionalism" theory can only explain the bankruptcy motivation of optimizing stock resources,but cannot explain the legal basis for legitimate damage to the bankrupt rights of certain stakeholders in the process of bankruptcy reorganization.The "creditor bargaining" theory regards bankruptcy as a materialized relationship,that is,various stakeholders act around the orderly distribution of the bankrupt asset pool.It ignores the bankruptcy and reorganization of the enterprise as a combination of elements,which not only reflects the relationship between people and things,but also reflects the relationship between people.In contrast,the positive responses to the above two deficiencies are accomplished by the theory of "Team production".In the context of Chinese business law,the application of the theory of "team production" has not been rejected.For example,the requirement of employee supervisors in the two-tier board of directors(the board of supervisors is considered to be a board of supervisor’s functions)in the company law is to examine the interests of employees as important members of the production team.In bankruptcy reorganization,this theory properly explains the reasons for the coordination of community interests in the selection of bankruptcy reorganization plans,as well as the distribution of reorganization premiums caused by the externalization of bankruptcy costs.These problems are beyond the "creditor bargaining" theory cannot explained.The Third chapter rigid Trust: focusing on the concept of "uncertainty".The team production theory is based on the premise of sustainable business operation.Only when the team production theory basis contract fails or is impossible at all,bankruptcy liquidation is the way to correct the team production theory contract.Therefore,the team production theory upholds the principle of bankruptcy reorganization as the general and bankruptcy liquidation as the exception.The basis for judging that the fundamental goal cannot be achieved is that the profit from bankruptcy reorganization(i.e.,the reorganization value)is lower than the bankruptcy liquidation value,that is,the bankrupt enterprise does not have reorganization value.Judging that a bankrupt company does not have reorganization value is a question of the trust teams determination of the concept of uncertainty.These are rigid direction,determine if bankruptcy restructuring enterprises do not have value,then the trust teams must recommend bankruptcy proceedings go liquidation proceedings,the bankruptcy judge if corporate restructuring have value,then the trust teams must recommend bankruptcy proceedings take reorganization proceedings,The trust teams has no free space for business judgment.The determination of "not having reorganization value" as the "uncertain" concept requires trust teams to make judgments based on macro-cognition,which gives the bankruptcy reorganization trust teams relatively extensive investigative powers.Trust teams need to conduct serious investigations on macro issues such as industry prospects,special geographical advantages,optional tax law special treatment "premium”,effective investment and financing environment,social impact,and community relations to determine macro evidence for value judgment.The determination of "not having reorganization value" is also affected by the attributes of bankrupt assets,which is a microscopic factor.The trust teams needs to investigate the following micro-factors of asset attributes: price evaluation options for asset-specific attributes,corporate qualifications and approvals,human resources,and willingness to reorganize.The problem of determining the concept of uncertainty lies in the right of investigation.Compared with the liquidation value,the judgment of reorganization value is a dynamic equilibrium process.Therefore,in the process of confirming the "uncertain" concept of reorganization value,it is necessary to observe(1)the principle of equilibrium and comprehensiveness and(2)The principle of integrity and development.The trust teams needs to follow the due process of investigation and disclosure,and identify the factual evidence of objection provided by the team members.The Fourth chapter discretion: feasibility and distribution scale of reorganization plan.If it is judged that the bankrupt enterprise has reorganization value,the trust teams shall make a draft of the reorganization plan based on the judgment of the reorganization value in the previous stage.There may be multiple schemes for the formulation of the reorganization draft,which belong to the trust teams business discretion.However,under the premise of the coexistence of multiple plans,the trust teams should first decide to choose a plan that can satisfy the company’s continuous operation,that is,the implementation of the bankruptcy reorganization plan is feasible.The feasibility of the reorganization means at least two things:(1)the reorganization plan is feasible,that is,the creditors will get the benefits or options promised in the plan,and(2)once the reorganization plan takes effect,the company will at least try its best surviving business.Therefore,the judgment of feasibility is a constrained discretionary behavior that requires future predictions based on known matters.The purpose is to seek good results guided by general business rules,not to pursue bad results,such as the introduction of incremental funds.Bankruptcy and reorganization of the enterprise once again fell into financial difficulties and triggered a second bankruptcy procedure.Since it is a restricted activity,this discretion needs to follow the principles of fairness,justice and balance.In bankruptcy reorganization,this principle of fairness,justice,and balance is embodied as the observance of absolute priority.However,the principle of absolute priority is based on the assumption of settlement of corporate accounts and price determination.Only under the path of sales reorganization can the assumptions of account settlement and price determination be fully satisfied.If the draft reorganization plan adopts other paths,such as the path of capital structure adjustment,the absolute priority order cannot be fully satisfied.In order to solve the dilemma of fairness,justice and balance in judicial practice,it is necessary to introduce relative priority rules in other reorganization paths.Relative priority allows stakeholders to agree on the order of performance in a contractual manner,that is,adopting the method of contract relativity to flexibly apply absolute priority rules.From this point of view,relative priority is not a kind of rebellion against absolute priority,but a kind of flexible compliance.The Fifth Chapter Rights and interests: infringement and legitimate damage.Even if the draft reorganization plan strictly follows the principles of fairness,justice and balance required by absolute priority or relative priority,it still has the opportunity to harm the legitimate rights and interests of all stakeholders.There is a major difference between the damage of legitimate rights and the damage of rights.Only in the case of legal empowerment,can the right be restricted or damaged,otherwise it is defined as the illegal damage of the right;the damage of the legitimate rights and interests is distinguished into the legitimate damage and the improper damage,and the legitimate damage does not require legal empowerment.The premise is that it can be exercised only by proving that the damage to the legitimate rights and interests is not illegal.The establishment of the micro-debt group in the bankruptcy reorganization process and the principle of absolute priority in the relativity of the contract are all damages to the legitimate rights and interests of stakeholders.These damages,the trust teams can be supported just prove that they are not illegal.At the same time,for legitimate damages to the legitimate rights and interests of stakeholders,the trust teams also needs to prove that such damages are exercised within the scope of the standard.The scope of these standards is required to meet the general assumption of reorganization,that is,the reorganization makes the value of the enterprise exceed the liquidation value.In the end,the final distribution of benefits by all stakeholders surpasses the distribution benefits that can be determined by the liquidation.This judgment criterion is the dissident and lowest expectation test in bankruptcy reorganization.The sixth chapter judicial review: roles and principles.Since judges cannot conduct in-depth investigations to obtain factual evidence,and judges do not have sufficient experience to support business judgments,judges can only appear as observers,not participants,in bankruptcy reorganization.As observers,judges need to conduct judicial review on rigid trust behaviors and commercial discretionary behaviors in the reorganization.When it comes to rigid trust behavior,the judge should focus on determining in the uncertain concept,which means that,whether the trust teams have fully implemented the investigative power and made full disclosure,so as to effectively identify the supporting factual evidence provided by the dissident.In the judicial review of uncertain concept determination,the more difficult aspect is the invoking of adjacent legal concepts.When making judicial review,judges should follow the principle of legal analogy from near too far.Before compulsory approval of the reorganization plan,the judge should also determine whether the reorganization procedure has caused illegal damage to the rights of stakeholders and improperly damaged the legitimate rights and interests of stakeholders.Regarding illegal damages to rights,the focus of the judge’s review is whether the damages of rights are clearly empowered by the law.If there is no explicit empowerment by the law,such damages need to be corrected;the judges are more established in the review of improper damages to legitimate rights and interests.Based on the principle of fairness,justice and balance.In fact,only on the premise that the rights are not illegally damaged and the legitimate rights and interests are not improperly damaged,the judge can enter the judicial review for compulsory approval of the draft reorganization plan.The judicial review for compulsory approval of the draft reorganization plan actually follows the dichotomy of trustee behavior,that is,the review of business discretion,which focuses on whether the behavior is fair,just and balanced.For this reason,it evolved into the following review standards:(1)feasibility review;(2)minimum acceptance;(3)minimum expected interest review of dissidents and(4)review of compliance with the principle of priority.Conclusion and SuggestionThe article believes that the current "Bankruptcy Law" too emphasizes the initiative of judges.For example,the rule that only companies can enter the bankruptcy reorganization process after the judges review and rule them out actually empowers the judges to make full business judgments on whether to reorganize or not.The lack of experience of judges in business judgments has led to a low percentage of cases entering reorganization procedures in judicial practice in the overall bankruptcy cases.The article does not suggest substantial revisions to the Bankruptcy Law.It only suggests that the Bankruptcy Law use the team production theory as the theoretical hypothesis to transform the function of judges into the functions of observers and guides.Judges will only make judicial adjustments on the basis of discovering that the trust teams behavior does not conform to the principle of uncertainty determination and the discretionary behavior of business judgment does not conform to the principles of fairness,justice and balance.In the case of a judge’s dissent,the judicial review of the mandatory approval of the draft reorganization plan can be compulsorily supported if no improper damage to the legitimate rights and interests of stakeholders is found.The legitimate damage to the legitimate rights and interests of stakeholders requires clarification of the current judicial review standards of the Bankruptcy Law. |
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