The Institution Of Controlling Corporation's Subordination Debt To Its Affiliated Corporation In Bankruptcy

Controlling corporation's Subordination Debt to its affiliated corporation in bankruptcy, means that controlling corporation's debt to its affiliated corporation will be subordinate to the affiliated corporation's other creditors in the course of the affiliated corporation bankruptcy, no matter if there is exemption right or priority. The rude of Subordination Debt comes from American Law and is named"Deep rock doctrine"or"equitable subordination", which is one of three important rude to prevent controlling corporation form misusing its controlling power. Now the disputes concern about the controlling corporation's debt become more and it breaks the balance in bankruptcy. The legal profession in our country begins to pay attention to the problem and many of them propose to set up the rude of Subordination Debt. Then, it's a problem if it shall set up the rude in our country and how to set it up. For the answer, the paper does the research by deduction, positivism and comparison method. It considers that building the rude of Subordination Debt is advisable and gives a tentative idea on legislation, legal principles, and applicable law, by discussing the meaning and characters of the rude, analyzing the actuality of our country's controlling debt problem, and comparing with the law of the U.S.A, Germany, and the district Taiwan.The findings of High People's Court of Guangdong Province and argue of the first session bankruptcy law forum show that it indeed a problem controlling corporation's debt to its affiliated corporation in bankruptcy in our country, but our present law, no matter"pari passu", right of rescission or lifting the veil of the corporation, can not solve the problem, so that the Subordination Debt rude must be build.It is better to make law of the Subordination Debt in the corporation law and bankruptcy law, apple the law under the principle of justice and principle of good faith, judge the debt must be subordination when controlling corporation or other affiliated corporations compelling the affiliated corporation to do unfair dealing or other non-beneficial business by abusing the controlling power, and use civil action and inversion of responsibility for proof citation.