Protection The Interests Of The Creditors In The Bankruptcy Reorganization Of Listed Companies

The1970s witnessed an unprecedented renovation campaign in the field of bankruptcy law. Fallowing the issuance of the U.S. Federal Bankruptcy Code in1978as a substitution of its much-recast version of1898, the other western countries such as Franc, Britain, Germany and etc, responded to the U.S move with a stream of new enactments of bankruptcy legislation replacing the then insolvency laws, or with fierce modification made within the then insolvency laws. The reform was targeted at the core area, i.e., setting up and improving the reorganization mechanism. Reorganization, one of the three main processes or mechanism of bankruptcy operation covering the process of liquidation and settlement, is a mechanism to rescue the debtor so proactively as to rejuvenate the bankrupt enterprise. The introduction of reorganization system to the insolvency law marked out a turn from individual oriented value to community based value and a transition from a winding up centered system to a reconstruction-based system in the real sense. It is by reason of its function of supplying the deficiency with the traditional bankruptcy law that the reorganization is a favorably commented on.Nevertheless, none of legal systems is astute enough to arrive at an absolute balance of the interests of the parties concerned. Its strengths come with its weaknesses. It is also the case to the reorganization system whose object of promoting the debtor to revive may result in prejudice to the creditor’s interests. In the view of the debtor, it is of course desirable of postponement or alleviation in payment of the debt due so that it may relieve the debtor from the financial burden and enable him to reorganize the company as soon as possible. However, from the view of point of the creditor, it may be in his best interest to expect the debt to be realized earlier in order to avoid the injury that occurred from the debtor’s postponement or alleviation in payment of the debt due. So, is it possible to reconcile this conflict? If possible, then how? The<Enterprise Bankruptcy Law of the People’s Republic of China>, which came into force on June1,2007, formally introduced bankruptcy reorganization system. As one of the three systems of bankruptcy law, the bankruptcy reorganization system is of great significance to bankrupt enterprises, especially to the listed companies.However, during the past four years’enforcement of this system, some problems also emerge, such as the excessive intervention of the government, the unreasonable distribution of the reorganization risks, the weak protection of creditors’rights, and the abuse of power of the administrators and courts, etc. The protection of the interests of creditors is particularly prominent, as it covers the other issues.