Special Protection For Involuntary Creditors

Nowadays, company tort occurs frequently. However, as the victims of company tort, namely "Involuntary creditor", does not distinguish from the "creditor" in The Company Law, so that the protection of involuntary creditor is very limited. And the lack of interest demands leads to a blank field in the protection of involuntary creditors.The main issue discussed in this article is how to protect involuntary creditor when company tort occurs during pursing the max profit because of its opportunism or adventurism behavior.Shareholders just bear limited liability in The Company Law. This design focuses on efficiency prior to fairness, which leads to acts of opportunism and adventurism behavior. This paper holds the view that, when the Company’s assets are insufficient to pay off the debt of the company’s infringement case, it should limit the application of limited liability of shareholders and let shareholders assume unlimited liability by shares in order to protect the company’s involuntary creditor. This paper is divided into five chapters and each chapter is as follows:The first chapter clarifies the basic concepts discussed in this article. Involuntary creditor is defined as a creditor suffered from company torts. In addition, this paper briefly introduces priority of compensation in bankruptcy and Liability Insurance System. And this paper just focuses on the Company Law, trying to negate limited liability and let shareholders assume responsibility.The second chapter explains the necessity of involuntary creditor protection. Because of huge risk of opportunism behavior, the company’s creditors are in a weak position. In the framework of the Company Law, the voluntary creditor can protect themselves via disclosure of information、beforehand rules and afterwards discovered rules. On the contrast, involuntary creditors can only protect themselves via afterwards rules. So involuntary creditors need more protection.The third chapter focuses on the obstacles to involuntary creditors protection caused by limited liability in Company Law. There is a controversy on limited liability between fair and efficiency value. To involuntary creditors, limited liability will inhibit risk prevention investment, stimulate excessive entry into risk areas, prompting the company to borrow money, alienation size of the company, resulting in negative behavior in risk management and induce company dissolved actively. Then it becomes huge obstacle of involuntary creditor protection.The fourth chapter, the core of this article, discusses the system of limited liability restraint of involuntary creditor protection, including the connotation of the limited liability restraint, applicable conditions, tort liability form, the shareholders. To involuntary creditor protection, generally the shareholders hold unlimited and pro rata responsibility.The fifth chapter discusses involuntary creditors protection from the legal level and practical level under China’s national conditions. On the legal level, limited liability limits is not entirely under the covers to the semantics of "company law" article 20, and needs further technology and consideration of interests in revision of the law. On the reality level, based on the society reform, the excessive pursuing profit and ignorance of social responsibility, we must strengthen the special protection of involuntary creditors.