Research On The Bankruptcy Substantial Consolidation System Of Affiliated Enterprises

This article is based on the Minutes of the National Court Bankruptcy Trial Work Conference issued by the Supreme People’s Court on March 4,2018(hereinafter referred to as the “Meeting Minutes”).Drawing on the third part of the United Nations UNCITRAL,Legislative Guide on Insolvency law,Part three: Treatment of Enterprise Groups in Insolvency(hereinafter referred to as the “Treatment of Enterprise Groups in Insolvency”)Combined with the judicial practice of bankruptcy of affiliated enterprises in China,trying to improve the related entities to improve the substantive consolidation system,to guarantee the fair settlement of creditors,realize the balance of interests of all parties,and realize the legislative purpose of fair settlement of bankruptcy law.The text consists of the following five parts:The first part is “Overview of the consolidation of bankruptcy of connected companies”.Firstly,it introduces the origin and development status of the substantive consolidation,and then compares the insolvency entity consolidation system of the related enterprise with the relevant system,which explains the necessity of studying the insolvency consolidation system of the related enterprise.The second part is “Investigation on Legislation and Judicial Practice of the Insolvency Subsidy of China’s Affiliated Enterprises”.Firstly,it introduces the status quo of the legislation of affiliated enterprises in China,and investigates the status quo of judicial practice of bankruptcy of affiliated enterprises Secondly,it analyzes the current situation of the fact that China’s affiliated enterprises have no legally stipulated substantive consolidation and bankruptcy,and has not formed a unified norm in the judicial practice of substantive consolidation and bankruptcy.Then analyze the important impact of the consolidation on the bankruptcy of affiliated enterprises,this highlights the necessity of perfecting the substantive consolidation system and reflects the urgency of perfecting the substantive rules and procedural rules and safeguarding the system.The third part is “Affiliated Enterprise Bankruptcy Substantial Consolidation Entity Rules” Firstly,it is clear that the scope of substantive consolidation is not limited to related enterprises that have met the bankruptcy conditions,and the members of the enterprise that have not yet gone bankrupt can also be included in the scope of substantive consolidation and bankruptcy.Secondly,the entity standard of substantive consolidation is constructed.The first criterion is that the personality of the affiliated enterprise is highly mixed.It is necessary to comprehensively consider the creditor’s reliance interest,distinguish whether the cost of the property of each affiliated enterprise is too high,and whether it seriously damages the creditor’s fair settlement interest.Any of the above criteria is not decisive and may not be used independently as the physical standard for the application of the substantive consolidation system.Discussing the creditor’s reasonable reliance on interests can be used as a reason for the opposition objector to oppose the substantive consolidation.The fourth part is the “Procedure rules for the bankruptcy substantive consolidation”.The substantive consolidation bankruptcy procedure is based on the principle of application initiation.The scope of the application body should include the bankrupt debtor,creditor and manager;the burden of proof adheres to the general rule of “who advocates and who gives evidence”;The application of the substantive consolidation system relies on a sound information disclosure system;the application for substantive consolidation should in principle be considered by the creditors’ meeting.The court shall uphold the principle of prudent application,and conduct formal examination and substantive examination at the same time.The substantive examination of the court may adopt a hearing to listen to the opinions of all parties,and comprehensively consider whether or not to apply the substantive consolidation.The fifth part is the “guarantee system guarantee for the consolidation of bankruptcy entities of related enterprises”.Including the perfect manager system,the manager should be hierarchically managed and graded.The substantive consolidation system should improve the dissent relief system of the interested parties,improve the reconsideration procedure on the basis of the existing law,and give the dissident party the right to appeal when the circumstances are special.At the same time,the parties should also be given the right to appeal.When the degree of mixed personality of the affiliated enterprises is relatively light and should not be applied to the substantive consolidation system,it should also focus on procedural coordination,bankruptcy and coordination,in order to strengthen cooperation between courts,administrators and creditors,and reduce duplication.Labor costs,improve bankruptcy benefits.