On The Construction Of China’s Prepackaged Bankruptcy System

The prepackaged bankruptcy system originated from the practice of the United States,which refers to the fact that before the applicant formally applies to the court for reorganization relief,the debtor,creditors,investors,etc.negotiate in advance and formulate a reorganization plan,and then submit a formal reorganization application to the court after passing the vote.In essence,the reorganization agreement reached through voluntary negotiation outside court is endowed with judicial force through the reorganization stage in court,so that the effectiveness of the reorganization agreement can be extended to the reorganization process.It can not only solve the constraint problem of out-of-court reorganization,make the reorganization plan constrain all creditors,but also reduce costs and improve the success rate of reorganization.At present,there is no unified legal norms for prepackaged bankruptcy in China,but rather a pilot guide for the relevant prepackaged bankruptcy system issued by the local court or government.However,there are various practical models in various regions,and the exploration of the prepackaged bankruptcy system is also different.This article explores the construction of the prepackaged bankruptcy system based on the central level’s description of the prepackaged bankruptcy system,namely,"the linkage mechanism between out of court reorganization and in court reorganization".According to the essence of prepackaged bankruptcy,it can be concluded that the phase of voluntary negotiation outside court is the key and dominant stage of the prepackaged bankruptcy system,and the construction of the prepackaged bankruptcy system should maintain the autonomy of the parties and avoid the interference of public power.Therefore,it is necessary to clearly define the nature and positioning of the prepackaged bankruptcy system.Although the prepackaged bankruptcy system can be seen formally as an out of court reorganization in the previous stage and a bankruptcy reorganization in the subsequent stage,it cannot be seen as a combination of pure out of court reorganization and traditional bankruptcy reorganization.The two stages of pre restructuring are interrelated and interconnected,and they are independent rescue mechanisms for troubled enterprises.The first stage of voluntary negotiation activities must be conducted out of court and comply with the provisions of relevant laws.After the creditors vote on the proposed reorganization plan,they can apply to the court for review and approval.In the later stage,the parties only cooperate with the court for review,and there are no new activities in the sense of reorganization.They are procedures that are specifically linked to give effect to the reorganization agreement reached during the out of court reorganization phase,and are different from bankruptcy reorganization in terms of content,method,and procedure.After the failure of prepackaged bankruptcy,the debtor applies for bankruptcy reorganization system relief again,and needs to draft a reorganization plan again.The previous consent to the prepackaged bankruptcy plan cannot be considered as consent to the draft reorganization plan.In terms of specific implementation rules,the principle of voluntary participation of the parties is also implemented.Therefore,the prepackaged bankruptcy system needs to rely on the voluntary negotiation of the parties,without the need for court review and consent.The prepackaged bankruptcy system is not applicable to judicial enforcement measures such as suspension of execution and suspension of interest accrual.Its applicable objects should maintain high-quality operating assets as much as possible.Therefore,it is not necessary for all creditors to participate in the negotiation and discussion during the prepackaged bankruptcy process,and only affected creditors can participate.Creditors’ rights such as employee’s rights and tax claims can be paid off in normal business activities.The creditors participating in the meeting can establish a creditor committee,and if necessary,a creditor committee of a financial institution can be established.The reorganization plan can be prepared and voted on in the out-of-court stage.After the review and approval by the court,the effectiveness will extend to the in-court stage.In addition,the failure of out-of-court negotiations does not directly lead to the bankruptcy and liquidation of troubled enterprises,and debtors can still apply for bankruptcy reorganization to save themselves.In addition to the specific design of the prepackaged bankruptcy system,it is also necessary to improve the relevant supporting design,mainly the information disclosure system,the administrator system,and the linkage mechanism with other legal systems.