The Protection Of The Interests Of Creditors In Corporate Merger

To confine the company combination and discriminate it from the capitaldisposals of companies in daily operation is the foundation to protect the creditors’ fthe companies that are being sold. The protections of the purchased companycreditors are mainly to avoid the purchased companies to dodge its creditors throughselling its capitals with extremely low price while confirm the situations that thepurchasing company won’t afford the debts from the purchased companies. As onemain kind of company combination, the company combination can be understood asthe purchasing actions of one company to another in order to get the operation andcontrolling rights. The detailed participants is the purchasing companies and thepurchased companies, the selling modes can be cashes or just other kinds of capitals.Company combination is the important change during the operating process of onecompany; its great change will do violate the benefit of some parties, such as sellingthe share holders’ benefit, or selling the creditors’ benefits. In company combination,the creditors will enjoy the rights as the knowing right, paying off rights and the rightsto clarify for the guarantees.The risks for the creditors in the company combinations can be listed as below:the company in debt just dodges a debt through company combination, the definitiontoward the capital of the company in debt being unclear, the incompleteness of theprotecting clauses in the company laws toward the rights of the creditors’. Toward the“main capital” of the company that is being purchased, there aren’t clear definitions inthe company laws in our country, the quantified operational definition are alsomissing. So it’s hard to testify the quantity, quality of the capital that are beingtransferred by the company that is being purchased or combined. On the issue oflocating the main property of the companies, there are still defects in our companylaws, under this background, not only the rights of the store holders can’t be guaranteed, the rights of the company creditors’ are even lack of the measuringstandards, this is very dangerous situation. Our country is in urgent need to mirror theAmerican relative property testifying standards, set standard and actual processes andsystems for the companies in our country to confirm their core properties. From theangle of legislation, the relative parties wouldn’t always protect the rights of thecreditors’, they will consider synthetically, this will to some extent give some excusesfor the companies that are in debt to do the false things, so as to cause theincompleteness of the laws in our country to protect the creditors’ rights, which aremainly reflected by the limitation of the range for the creditors to ask for the debtpayment and the supply of guarantees. As well, when companies that are in debt don’tnotice the creditors or supply guarantees, there are certain conditions for the creditorsto protect their rights. In relative practicing process of the company law, there areoften some companies to combine companies without noticing the creditors, some ofthem daren’t to notice the creditors while fearing the argues and disputes, some ofthem are just afraid of the long processes and the redundant discussion period.