On The Path To Relief For Retention Of Titles Sellers In Bankruptcy Proceedings

The Civil Code introduces a larger level of change in the remedies for retention-of-title sellers’ rights,providing for two parallel remedies for rights of recapture and security rights.The "security right" remedy focuses on the functionalization of retention of title.This modification inevitably affects the seller’s "right of recall" remedy in bankruptcy proceedings.It also has a significant impact on the expansion of the seller’s remedies in bankruptcy proceedings.First of all,in the context of the functionalization of retention of title,the seller’s remedy of "right of recall" in bankruptcy proceedings needs to be reconsidered.On the one hand,if the functionalist approach is adopted,then the essence of the retention-of-title contract should be a "security contract",where the seller’s obligations are fulfilled when the subject matter is transferred to the buyer.The seller’s right of recall in bankruptcy proceedings is premised on the option of the administrator,which cannot be applied.However,the retention-of-title contract with embedded "security clause" is still a contract of sale,and before the seller completes the transfer of the main payment obligation of "ownership",the retention-of-title contract is still a "contract that has not been performed" The administrator still has the right to choose.On the other hand,due to the functionalization of retention of title,some scholars believe that the seller’s claim in rem based on ownership is extinguished and applied to bankruptcy proceedings,the seller’s path to relief for bankruptcy retrieval is extinguished.However,the functionalization of retention of title is not complete,and the "security nature" of retention of title is only positioned in terms of objective function,which does not mean that at the legal level the seller is deemed to be a "security owner".The seller is still formally the "owner".Therefore,the seller can still exercise the right of recall in bankruptcy based on ownership as a remedy in bankruptcy proceedings.Second,in terms of the specific application of the "right to recall" remedy in bankruptcy proceedings.The "right of recall" remedy in bankruptcy proceedings includes the right of retention of title and the right of recall in bankruptcy.The exercise of the right of recall presupposes the exercise of the administrator’s right to pick and choose performance,but the presumption of the administrator’s right to choose is not based solely on Article 18 of the Enterprise Bankruptcy Law.Moreover,the administrator shall not have the right to discharge in the event of the seller’s bankruptcy.In the event that the administrator chooses to continue to perform the contract,the corresponding conditions for the exercise of the right of retraction and the liquidation rules of the Civil Code continue to apply in the Enterprise Bankruptcy Code.When the administrator elects to discharge the contract,the seller has a right of recall in bankruptcy based on its ownership status.The negative condition of retention of title "the buyer has paid 75% of the total price of the subject property" does not apply in the case of a right of recall in bankruptcy due to the nature of the right of withdrawal.The nature of the claim arising from the exercise of the seller’s right of recall in bankruptcy should not be subject to the "common interest debt" provided for in the legislation,which undermines the "common interest debt" system and should be subject to the "general claim" provision.This undermines the system of "common debts" and should be adopted as "ordinary claims".In addition,Article 38 of the Judicial Interpretation of Bankruptcy Law(II)does not provide for the relief when the seller cannot retrieve the property.Through the analysis,we should follow the general rules of the Enterprise Bankruptcy Law for the treatment of common interest debts and ordinary claims,and there is room for the application of the right of substitution for recall.Finally,the seller may assert both the right to exercise the right to retrieve and the right to declare the claim.Finally,the "security interest" remedy in the context of the Civil Code is the "exemption rights" path in bankruptcy proceedings.Based on the fact that most of the mainstream countries have adopted retention of title as the basis for the right of aliens in bankruptcy and that the remedy of aliens in bankruptcy matches the current legislative norms,a seller who retains title can exercise the remedy of aliens in bankruptcy to remedy its rights in the bankruptcy of the buyer.For this reason,the provisions of Article2(2)of the Judicial Interpretation of Bankruptcy Law(II)need to be deleted in order to break the systemic barrier of application.Another bankruptcy exemption is focused on the application of preferential payment.In order to comply with the international trend,the scope of retention-of-title contracts to which the seller’s right of aliens in bankruptcy applies needs to be expanded to include expansionary retention-of-title contracts and extended retention-of-title contracts.In order to protect general creditors,sellers do not enjoy the remedy of insolvency exclusion for unregistered retention-of-title contracts and retention-of-title contracts registered during the critical period.