Research On Protection Of The Interests Of Affiliated Enterprise External Creditors In Bankruptcy

Starting with the phenomena that affiliated enterprises damaged external creditors’benefit through their associated relationship, this paper is to research and discuss the legal issues on how to protect interests of affiliated enterprises external creditors in bankruptcy through the bankruptcy principle of equity.The main difference between affiliated enterprises and the single independent enterprise is the existence, between those affiliated enterprises, of some special "dominate-subordinate" relationship or some relationship with significant impacts (as associated relationship). This particularity of affiliated enterprises has posed a challenge to the traditional legal system which regulates the single enterprise, which calls innovation for the related legal system. For the protection of interests of affiliated enterprises external creditors in bankruptcy, every country has established its own system in the long-term judicial practice, which has its own characteristics and also can be good reference.This paper, based on improving the Corporate Personality Denial System, Bankruptcy Revocation System and Bankruptcy Invalid System under the new Company Law and Company Bankruptcy Law and referenced with other foreign effective systems, is to seek some legal path to protect interests of affiliated enterprises external creditors in bankruptcy and make some effective recommendations for improving related systems in China.This paper, excluding the introduction and conclusion, consists of five chapters in total.Chapter1describes the definition of affiliated enterprises and its related theories. This chapter defines the concept of affiliated enterprises (mainly referring to companies) as two or more enterprises with "dominate-subordinate" relationship or some relationship with significant impacts, or under the control of the same enterprise. The essence of affiliated enterprises is mutual associated relationship between enterprises, and its extension is the two or more single independent enterprises with independent legal status. Based on this, the legal characteristics of affiliated enterprises and the inevitability and necessity of the existence are discussed, which lays a theoretical foundation for the following.Chapter2studies the particularity of the protection of interests of affiliated enterprises external creditors in bankruptcy, which is also the one of focuses of this paper. This chapter, with the introduction of the conflict between the particularity of affiliated enterprises and creditors’fair settlement protected by Bankruptcy Law, draws forth the research topic and analyzes causes of how affiliated enterprises damage external creditors’ benefits, as well as some specific performances.Chapter3introduces the basic system to protect affiliated enterprises external creditors in bankruptcy. In terms of the protection of their benefits, every country has set up a number of typical systems, practices and theories in its judicial practice. These systems have their own applicable conditions and adjustment effects, which have significance in improving legal protection system in China.Chapter4discusses current status and the shortcomings of legislation to protect affiliated enterprises external creditors in bankruptcy. Although the Corporate Personality Denial System, Shareholder Fiduciary Duty, Information Disclosure System, Bankruptcy Revocation System and Bankruptcy Invalid System, established under the new Company Law and Company Bankruptcy Law, have protected interests of affiliated enterprises external creditors in bankruptcy to some extent, the related systems still have defects and need to improve effectively.In Chapter5, some recommendations are made in terms of improving the legal system to protect interests of affiliated enterprises external creditors in bankruptcy in China. With the comparison of analyzing related theories and systems, and the reference of foreign experience and the current situation in China, suggestions are drawn to establish systems in terms of both pre-regulation and post-regulation and to help solve the problem regarding to protecting interests of affiliated enterprises external creditors in bankruptcy.