Construction Of A Pre-Restructuring Regime

The key drawback of out-of-court restructuring is that there is no clear legal regulation and operational guidelines,and the restructuring agreement reached in out-of-court restructuring is not enforceable and difficult to bind all creditors.The key drawback of in-court reorganization is that it takes a long time and is expensive,which leads to a lack of motivation of debtors and creditors to apply for reorganization,and thus some troubled enterprises are no longer qualified for reorganization and eventually go into bankruptcy and liquidation.In order to solve the institutional shortcomings of out-of-court reorganization and in-court reorganization procedures,a pre-restructuring system has emerged in judicial practice,which refers to a procedure in which the parties voluntarily agree to a reorganization agreement during the out-of-court reorganization stage,and then proceed to the in-court reorganization stage after the creditors have voted to approve the reorganization agreement,which is then enforceable by the court.However,the Bankruptcy Law of China currently does not provide for pre-restructuring.This paper consists of four main parts,in addition to the introduction and conclusion,as follows:The first part systematically compares the current status of China’s pre-restructuring regime in terms of both national-level policy texts and local-level operational guidelines,and analyzes the divergent performance of pre-restructuring guidelines of local courts and individual governments in China,with different procedures in most court-made rules,which reflect the different legal nature of pre-restructuring.The second part analyzes the problems in the judicial practice of pre-restructuring in China.Due to the inaccurate understanding of the purpose of the pre-restructuring regime by some local courts or the government,and the misunderstanding of the basic nature of the parties’ voluntary negotiation for restructuring in the out-of-court restructuring phase of pre-restructuring,there are many deficiencies in the content of the pre-restructuring guidelines and rules formulated by them.In the actual implementation of the pre-restructuring process,the excessive interference of the court’s judicial power in the pre-restructuring,the excessive interference of the government’s administrative power in the process,the appointment of interim administrators by the court or the government,the vague scope of information disclosure,and the provision that pre-restructuring has the effect of automatic suspension need to be addressed.Part III examines and draws on four aspects of the U.S.legislation on pre-restructuring,information disclosure requirements,the role of the court in pre-restructuring proceedings,and the practice of freezing creditor recovery,in the hope of shedding light on the establishment of a pre-restructuring system in China.Part IV proposes a solution to the problems in our pre-restructuring practice.First,it is necessary to clarify the purpose of the pre-restructuring system and correctly understand the legal nature of pre-restructuring.In addition,it is necessary to clarify the roles of the parties involved and improve the institutional mechanisms,so as to better utilize the advantages of the pre-restructuring system.