Study On The Substantive Consolidation Doctrine

The highest purpose of bankruptcy law is to make all the creditors of bankrupt enterprises get a fair settlement, however, the emergence of related enterprises are a challenge for this purpose. Controlled enterprises usually exploit the subordinate enterprises, separation of bankruptcy is detrimental to creditors of subordinate enterprises. Substance consolidation provides a new way of thinking to solve this problem, that is, through to get rid of independent personality of all internal corporate affiliates, to pay for the creditors with total asset of all the associated enterprises after the merger. Though judicial practice in China has begun to apply the rule, the rule still face a number of uncertainties because of the absence of legal basis for it. Through the analysis of the rule of theory predecessor, background and development context, the defects of china’s affiliates Legislation, conclude the necessity and feasibility of the system in the present judicial application. In order to provide a theoretical reference for the establishment of the substantive consolidation bankruptcy system.