Research On Directors’ Fiduciary Duties Under The DIP System Of Bankruptcy Reorganization

Trust theory is the theoretical basis of the fiduciary obligation of directors,on the basis of mutual trust between the company and the directors.The company as a legal entity has independent property rights,has the right to entrust its own property to the directors to manage and dispose of,the directors to maximize the management of the company’s property in order to maximize the interests of the company,the company legal system for the directors to establish fiduciary obligations to reconcile the conflict of interests between the directors and the company.Directors under a normal company have only fiduciary obligations to the company,which include the duty of loyalty and the duty of diligence.The duty of loyalty requires that directors must not put their personal interests above the interests of the company and not use the company for personal gain;the duty of diligence requires directors to act in good faith and with reasonable care and honesty in the best interests of the company.However,the bankruptcy reorganization DIP system directly affects the performance of the duties of the directors of the self-administered debtor: the debtor company loses its solvency and enters the bankruptcy reorganization procedure,and needs to complete the distribution of losses among different types of creditors,the conflict of interest between relevant stakeholders is more intense and complex;the Enterprise Bankruptcy Law of the People’s Republic of China Paying attention to the protection of the overall interests of creditors and the legislative purpose of safeguarding the social public interest;the bankruptcy reorganization system has the institutional function of saving the debtor company;and the bankruptcy legal system gives the debtor only this one chance of rescue;the specific authority of the DIP and the constraints of creditors on the DIP,etc.,all of the above affect to a certain extent the theoretical basis of the directors’ fiduciary obligations,the subject of the fiduciary relationship,the objectives of the fiduciary relationship,the specific content of the fiduciary obligations,and the judgment criteria for directors’ breach of fiduciary duties.First of all,because of the reality that the bankrupt company cannot pay off,the pattern of the company’s interests has changed,and the creditor has become the claimant of surplus value,which is the ultimate risk burden subject.At this time,if the trust theory continues to be adopted,it may lead to higher agency costs between the directors and creditors,so the risk burden theory is added to the trust theory,requiring the directors to bear fiduciary obligations to the creditors.Secondly,creditors should become the counter party to the fiduciary relationship of directors,which not only conforms to the basic definition of fiduciary relationship,but also conforms to the legislative purpose of the bankruptcy law to protect creditors,and is the most realistic and effective way to achieve creditor protection.At the same time,the fiduciary relationship between the directors and the company still exists.Thirdly,the purpose of the directors’ fiduciary relationship shifts from maximizing the interests of the company to realizing the preservation and appreciation of the debtor’s property,and in bankruptcy,the value of the debtor’s property is concentrated to represent the interests of the company,and the directors still perform their fiduciary obligations for the interests of the company,in addition to equal protection of the interests of creditors.Fourthly,the content of the fiduciary obligation of directors also changes with the change of subject and purpose,and the content of the duty of loyalty and the duty of diligence are more substantial and complex,which is also closely related to the diversified conflicts of interest in bankruptcy reorganization and the function of saving troubled enterprises.Under the bankruptcy reorganization DIP system,the situation of directors performing their duties is very complicated and the obligations are more onerous.Finally,bankruptcy reorganization is already the last attempt of the debtor company to be reborn,and DIP is not allowed to have any rash behavior,and the interests of creditors cannot be used as victims of the rescue of the troubled enterprise,so a higher duty of diligence is put forward for directors,and the threshold of attribution for breach of fiduciary obligations is lowered,and general negligence is attributed.Therefore,the author suggests that Chapters 8 and 11 of the Bankruptcy Law should provide for directors’ fiduciary duties under the bankruptcy reorganization DIP system,clarify the targets of directors’ fiduciary duties,standardize the subjective judgment standards for directors’ breach of diligence duties,and set up legal responsibilities to provide for directors’ breach of duties.Enriching the provisions of the bankruptcy reorganization DIP system in our country’s bankruptcy legal system can not only enrich the theory and system connotation of directors’ fiduciary duties,but also improve the DIP system and strengthen the constraints and guidance on debtors.