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>>>> Chinese Draft Law of Enterprise Bankruptcy and Restructure
of the People’s Republic of China
(June 2000)
Table of Contents
Chapter I General Provisions
Chapter II Application and Acceptance
Section 1 Application
Section 2 Acceptance
Section 3 Manager
Section 4 Declaration and Investigation of Creditor’s Rights
Section 5 Bankruptcy Costs and Common Debts
Chapter III Creditor’s Conference
Section 1 General Provisions
Section 2 Supervisor
Chapter IV Conciliation
Section 1 Application for Conciliation
Section 2 Conclusion of Conciliation
Chapter V Restructure
Section 1 Application for and Examination of Restructure
Section 2 Business during the Period of Restructure
Section 3 Restructure Plan
Chapter VI Bankruptcy Liquidation
Section 1 Declaration of Bankruptcy
Section 2 Bankruptcy assignee
Section 3 Bankruptcy Property
Section 4 bankruptcy Obligatory Rights
Section 5 Right to Set-off
Section 6 Right of Priority
Section 7 Appraisal and Distribution
Section 8 Conclusion of Bankruptcy Cases
Section 9 Exemption
Chapter VII Summary Procedure
Chapter VIII Legal Liabilities
Chapter IX Supplementary Provisions
Chapter I General Provisions
Article 1 The law is enacted in order to try bankruptcy cases fairly and openly, protect lawful rights and interests of creditors and debtors, promote enterprises’ independent operation and responsibility for their own profits and losses, establish a mechanism of survival of the fittest enterprises, maintain economic order and meet the need of developing socialist market economy.
Article 2 This Law applies to following civil subjects:
1) enterprise entities;
2) partnership enterprises and their partners;
3) solely-invested enterprises and their investors; and
4) other profit-making economic organizations established according to law;
Enterprise entities which have been dissolved but not yet liquidated shall be deemed as exist within the procedural scope provided by this Law.
Article 3 Where a debtor fails to pay off debts due, the debts shall be liquidated according to procedures in this Law.
A debtor who ceases to pay for debts due shall be presumed unable to pay.
Article 4 Cases of bankruptcy are under the jurisdiction of the people’s court at the debtor’s domicile.
Article 5 Decisions made by the people’s courts according to procedures in this Law will come into effect at the date of the decision made.
Decisions made by the people’s courts according to procedures in this Law is not subject to appeal, except for otherwise provided by this Law.
Decisions made by the people’s courts according to procedures in this law shall be publicized, except for otherwise provided by this Law.
Article 6 Public notice provided in this Law shall be published on newspapers and journals specified by the Supreme People’s Court for publication and pasted to the notice board of the people’s court where the case is tried.
The public notice comes into effect from the next date after the date of publishing.
Article 7 Procedures of bankruptcy, conciliation and restructure started outside the territory of the People’s Republic of China is not effective to properties of the debtor in the territory of the People’s Republic of China.
Article 8 Where no provisions are stipulated in this Law concerning the hearing of bankruptcy cases, provisions of Civil Procedure Law shall apply.
Chapter II Application and Acceptance
Section 1 Application
Article 9 Where the debtor is under circumstances provided in Article 3 of this Law, both the creditor and the debtor may apply to the people’s court for the acceptance of the bankruptcy case.
Where debtors are partners, written document shall be presented on the unanimous consent of all partners when applying.
Article 10 The applicant shall present to the people’s court written application for the bankruptcy case and relevant evidences.
Written application for the bankruptcy case shall specify the following items:
1) basic situation of the applicant and the person applied;
2) the amount of creditor’s rights, whether there is property security and the basis for the occurrence of the creditor’s rights and their expiration;
3) Justification and basis for the application; and
4) other items that the people’s court considers necessary.
Where the debtor applies, it shall present to the people’s court a written explanation on its property situation, list of obligatory rights and duties and relevant financial reports.
Article 11 After the creditor or the debtor applies, the applicant may claim for withdrawal of application before the hearing of the case by the people’s court and the people’s court shall decide on whether to grant permission.
Section 2 Acceptance
Article 12 After receiving the application for bankruptcy, the people’s court shall decide on whether to accept the case within 15 days. The people’s court shall make the decision if it decides to hear the case of bankruptcy.
Article 13 After accepting the case of bankruptcy, the people’s court shall notify the debtor within 5 days since the date of the decision.
Where the creditor applies, the debtor shall present to the people’s court within 15 days after receiving the notice of the people’s court a written explanation on property situation, list of obligatory rights and duties and relevant financial report.
Article 14 Where the people’s court decides not to accept the bankruptcy case, it shall make the decision and explain its justification.
Decision provided by the proceeding paragraph shall be notified to the applicant within 5 days after the date of the decision by the people’s court, but need no publication.
Where the applicant disagrees with the decision of the people’s court that the case is not to be accepted, it can appeal to the people’s court at a higher level within 10 days after the date when the decision is served.
Article 15 The people’s court shall form a collegial panel to hear the case after the acceptance, except for otherwise provided by the Law.
Article 16 After the acceptance of the bankruptcy case, the people’s court shall notify creditors with clear addresses within 30 days after the date of decision and issue a public notice.
The notification and the public notice shall include following items:
1) the main body of the decision by the people’s court on the case of bankruptcy and the date of acceptance;
2) duration for declaring creditor’s rights and points for attention in the declaration;
3) name of the manager and address for handling business;
4) the debtor to the debtor shall pay off the debts to the manager and the holder of the debtor’s property shall deliver the property to the manager;
5) date and place for the convention of the first creditors’ conference; and
6) other items that the people’s court thinks that shall be specified.
Article 17 After the acceptance of the case, the people’s court shall suspend any other civil enforcement procedures concerning the debtor’s property, except for otherwise provided by this Law.
After the acceptance of the case by the people’s court, any other preserving measures related to the debtor’s property shall be suspended.
Article 18 After the people’s court accepts the case of bankruptcy and before the declaration of bankruptcy, the exercise of the right of mortgage, pledge or lien to the property or rights of the debtor shall be suspended.
Article 19 After the people’s court accepts the case, civil litigation relating to the property and property rights of the debtor that has been started but not yet completed shall be suspended. After the manager takes over the debtor’s property, the litigation resumes.
Article 20 The debtor is borne to the following duties since the date of acceptance of the bankruptcy case by the people’s court:
1) take proper care of all properties, accounts, documents, materials, seals and other articles that it possesses and manages;
2) work according to the requirements of the people’s court, the manager, the executor of the restructure, bankruptcy assignee and answer inquiries according to the facts;
3) attend the creditors’ conference and answer the creditors’ or supervisor’s inquiries according to the facts; and
4) not to leave place of its domicile without the permission the people’s court.
The proceeding paragraph applies to representatives of enterprise entities, partners and persons in charge of partnership enterprises, investors and persons in charge of sole-invested enterprises and persons in charge of other economic organizations and may apply to financial management personnel and major business personnel upon the decision of the people’s court when necessary.
Article 21 After the people’s court accepts the case of bankruptcy, the debtor shall not pay off debts to individual creditors.
Article 22 After the people’s court decides to accept the bankruptcy case, the debtor’s debtor or property holder shall pay off debts or deliver property to the manager, restructure executor or bankruptcy assignee.
Article 23 The following activities concerning the debtor’s property and property rights shall not be against the creditors which happen within 6 months before the people’s court accepts the bankruptcy case:
1) free transfer of property and property rights;
2) sale of property at an abnormal low price;
3) provide property security to debts which originally had not a property security;
4) pay off undue debts in advance;
5) give up creditor’s rights;
6) donation and sponsorship already made by the debtor; and
7) other activities harming the interests of creditors.
Where the debtor has one of activities provided in proceeding paragraph, the manager or liquidator shall apply to the people’s court to rescind.
Article 24 Within 6 months before the people’s court accepts the bankruptcy case, if the debtor knows it can not pay off due debts while still liquidates to the individual creditor, and thus harms the interest of other creditors, the liquidation received by the creditor can not be against other creditors.
Where the debtor has the activity provided in proceeding paragraph, the manager or liquidator shall apply the people’s court to rescind.
Article 25 Following activities concerning the debtor’s property and property rights shall be void whenever it happens:
1) conceal and distribute properties;
2) counterfeit debts or recognize untrue debts.
Article 26 Where the debtor’s property or property rights are acquired due to revocation or void declarance resulting from activities provided in Article 23, 24 or 25 of this Law, the manager or bankruptcy assignee is entitled to recover.
Article 27 After the people’s court accepts the bankruptcy case, if the investor of an enterprise entity fails to perform the duty of investment, it shall pay for its investment .
Section 3 Manager
Article 28 The people’s court shall appoint a manager when accepting the bankruptcy case. The manager takes over daily management and business of the debtor’s property and is responsible and report to the people’s court.
The manager is subject to the supervision of the creditors’ conference when performing its duties. The manager shall attend the creditors’ conference and report on its performance of duties and answer inquiries.
Article 29 The manager shall be persons with necessary professional knowledge.
The Supreme People’s Court will, according to this Law, make measures for the qualification of the manager and its examination and rectification.
Article 30 The manager exercises the following duties since the appointment:
1) take over all properties, accounts, documents, materials, seals and other articles of the debtor;
2) investigate the debtor’s property situation and civil activities, including salaries owed to labourers, expense for social security and taxes;
3) make a report on the investigation of property situation;
4) decide the debtor’s regular expenses and other necessary expenses;
5) apply for deciding whether the debtor can continue business;
6) manage and apply for disposal of the debtor’s property;
7) accept the third person’s delivery of property to the debtor;
8) decide on the debtor’s inner management affairs;
9) employ necessary management personnel, professional technical personnel and other staff;
10) require to convene the creditors’ conference;
11) represent the debtor to participate in litigation or arbitration concerning the debtor’s property disputes; and
12) other functions that the people’s court think to be exercised by the manager.
Article 31 Before the convention of the first creditors’ conference, if the manager has one of the following activities , permission of the people’s court shall be acquired:
1) transfer real estate ownership;
2) transfer property rights such as right of mining, right of land use, right of patent, copyright, right of exclusive use of trademarks;
3) transfer total repertory or business;
4) loan;
5) create property security;
6) transfer personal estate valued over RMB1000 which is required by continuous operation of business;
7) transfer obligatory rights and valuable securities;
8) claim for performance of bilateral contracts;
9) conciliate, arbitrate, litigate or act through other legal procedures concerning the debtor’s property;
10) give up rights;
11) agree on the person having a right of claiming the property to take back the property;
12) withdrawal object matters for the right of priority.
Where the creditors’ conference fails to select and appoint a supervise, permission shall be acquired from the creditors’ conference to conduct activities provided in the proceeding paragraph.
The creditors’ conference may directly make resolutions on activities listed in the first paragraph of this Article , or substitute the permission of the supervisor with resolutions.
Where the supervisor’s resolution disagrees with that of the creditors’ conference, the resolution of the creditors’ conference shall prevail.
Article 32 The remuneration for the manager shall be decided by the people’s court. The remuneration for the manager and the cost necessary for performing duties shall be paid from the debtor’s property. When performing duties, the manager shall be liable for compensation for losses incurred to the debtor’s property due to purposeful or materially negligent acts. If the managers are several persons, each manager shall be jointly liable.
Article 33 Without the permission of the people’s court, the manager can not resign from the position after accepting the appointment by the people’s court.
Where the manager is incompetent for the work, or has a malpractice or other illegal activities, the people’s court may dismiss and replace it upon the application of persons of related interests or out of the court’s function.
Section 4 Declaration and Investigation of Creditor’s Rights
Article 34 Obligatory rights to the debtor which has been created before the people’s court accepts the bankruptcy case shall be exercised according to procedures provided in this Law.
The Obligatory rights provided in the proceeding paragraph is called conciliated obligatory rights when conciliation is reached, restructure obligatory rights when the procedure of restructure is applied and bankrupt obligatory rights after the declaration of bankruptcy.
Article 35 Debts undue is deemed as due when the bankruptcy case is accepted.
As to obligatory rights due after the acceptance of the case which has an interest, interest shall be stopped to calculate since the acceptance of the case. As to those without an interest, legal interest for the period from the acceptance of the case to the expiration of the obligatory rights shall be deducted. But, obligatory rights of loan without an interest is not fall into the category.
Article 36 Obligatory rights with a condition shall be exercised with its full amount.
Article 37 After the people’s court accepts the bankruptcy case, creditors shall declare their rights within the period ascertained by the people’s court for declaration.
Creditors’ rights provided in the proceeding paragraph refers to those rights enjoyed by the creditors to the debtor and created before the acceptance of the bankruptcy case by the people’s court. But rights of claiming for labourers’ salaries and social security cost and taxes may not be declared.
Where labourers declare to the people’s court the claim for salaries, they may mandate a representative for declaration.
Article 38 After the acceptance of the bankruptcy case, the people’s court shall decide on the duration for creditors to declare their rights which can be no less than 30 days and no more than 90 days.
The duration for declaring creditor’s rights is calculated since the publication of the decision on accepting the bankruptcy case by the people’s court.
Article 39 When declaring their rights, the creditors shall explain in a written form the amount of their obligatory rights and whether there is a property security and present relevant evidence. Explanations shall be made if rights declared are joint ones.
Article 40 Where the creditor fails to declare its right due to irresistible causes or other fair justifications, it may apply to the people’s court for extending the duration for declaration. If the creditor fails to declare its right within the period set forth by the people’s court for declaration of obligatory rights, it may supplement the declaration before the conclusion of the bankruptcy case. All costs for examining and ascertaining the obligatory rights supplemented shall be borne to the supplementing declarer.
Where the creditor fails to declare its right within the period set forth by the people’s court, it shall not exercise rights according to procedures provided in this Law except for situations provided by the proceeding paragraph.
Article 41 As to joint creditors, one creditor can represent all the joint creditors in the declaration of obligatory rights and they may also declare separately.
Article 42 The guarantor to the debtor or other joint debtors shall declare to the people’s court its obligatory rights as to its right of recourse rising out of bearing of joint duties.
Article 43 Where joint debtors are applied to procedures of this Law simultaneously or in sequence, their creditors are entitled to declare to the people’s court all the obligatory rights separately in each bankruptcy case.
Article 44 After receiving materials for declaring obligatory rights, the manager shall register and compile a form of obligatory rights.
When the people’s court compiles the form of obligatory rights, nonmonetary obligatory rights shall be calculated the amount according to average market price at the place of debt performance on the date of decision made by the people’s court on accepting the bankruptcy case. As to monetary obligatory rights in foreign currencies, the amount shall be calculated according to the datum price of RMB market exchange price on the date of decision made by the people’s court on accepting the bankruptcy case.
The original of the form of obligatory rights and materials for declaration shall be kept in the people’s court and the duplicate be kept by the manager for reference by persons with related interests at any time.
Article 45 The form of obligatory rights compiled according to Article 46 of this Law shall be presented to the first creditors’ conference for investigation.
But, obligatory rights already decided through an arbitration award or a judgment of the people’s court and still pending in litigation or arbitration are not subject to the investigation of the creditors’ conference.
Where the manager, debtor and creditors’ conference do not object to the obligatory rights specified in the form, the obligatory rights is deemed as ascertained upon the decision of the people’s court.
Where the obligatory rights specified in the form cannot be ascertained due to objections, the creditor may apply for a decision on ascertaining the obligatory rights to the people’s court which accepts the bankruptcy case.
Section 5 Bankruptcy Costs and Common Debts
Article 46 The following costs which happen after the people’s court accepts the bankruptcy case are bankruptcy costs:
1) cost needed for managing, appraising and distributing the debtor’s property;
2) litigation fee for the bankruptcy case;
3) remuneration for the work of the manager and liquidator and costs for duty performance and costs for employed personnel;
4) remuneration for the work of the supervisor and cost for its duty performance;
5) other expenses used in bankruptcy procedure for common interests of creditors.
Article 47 Following debts which happen after the people’s court accepts the bankruptcy case are common debts:
1) debts arising out of the manager or the liquidator’s claim for performing bilateral contracts;
2) debts arising out of abstract management over the debtor’s property;
3) debts resulting from unjustified profit to the debtor’s property.
Article 48 Bankruptcy costs and common debts shall be paid off from the debtor’s property at any time.
Where the debtor’s property is insufficient to pay for bankruptcy costs or common debts, the manager and liquidator shall suggest the people’s court to conclude the bankruptcy case. The people’s court shall make a decision on concluding the case within 10 days after the people’s court receives the request for conclusion by the manager and liquidator.
Chapter III Creditors’ Conference
Section 1 General Provisions
Article 49 All creditors who declare their obligatory rights according to the law are members of the creditors’ conference. All members of the creditors’ conference are entitled to participate the creditors’ conference and enjoy a right of voting. But, creditors whose rights have not yet decided shall not exercise the right of voting. The creditors’ conference has one chairman who will be appointed by the people’s court among creditors of voting right.
The chairman of the creditors’ conference presides over the creditors’ conference.
Creditors with a property security who does not give up the right of priority in payment do not have voting right to resolutions provided in item 7 and 8 of the first paragraph of Article 51 of this Law.
Article 50 The creditor may authorize an agent to participate in the conference and exercise voting right. Where an agent participates in the conference, it shall present to the people’s court or the chairman of the creditors’ conference the creditor’s written form of authorization.
Article 51 The creditors’ conference has the following functions:
1) select, appoint and dismiss and replace the supervisor;
2) investigate into obligatory rights;
3) decide on whether to continue or stop the business of the debtor;
4) reach a conciliation agreement;
5) reach a restructure plan;
6) agree on a management project for the debtor’s property;
7) agree on a project for appraising bankrupt property;
8) agree on a distribution project for the debtor’s property; and
9) other items the people’s court thinks that shall be determined by the creditors’ conference.
The creditors’ conference shall make a written resolution when exercising the above functions.
Article 52 The first creditors’ conference shall be called for by the people’s court and convened within 15 days after the expiration of the declaration of creditor’s rights.
Creditors’ conference afterwards shall be convened upon the decision made by the people’s court when the people’s court thinks necessary or the manager, restructure executor, bankruptcy assignee, supervisor or creditors of more than 1/4 obligatory rights ascertained apply for the convention.
Article 53 When convening the creditors’ conference, the manager shall notify creditors already known 20 days in advance.
Article 54 Except for otherwise provided in this Law, resolutions made by the creditor’s conference shall be passed upon the approval of more than half creditors with voting right of which the amount of obligatory rights represented shall be more than two thirds of ascertained ones. Resolutions made by the creditors’ conference are binding over all creditors.
Article 55 Where the creditors’ conference fails to form a resolution as to item 3, 6 and 7 of the first paragraph of Article 51 of this Law, the people’s court shall make the decision.
Where the creditors’ conference fails to form a resolution for a second time as to item 8 of the first paragraph of Article 51 of this Law, the people’s court shall make the decision.
The people’s court shall announce decisions provided in the proceeding two paragraphs in the creditors’ conference without further notification and public notice.
Article 56 Where creditors disagree with the decision made by the people’s court according to Article 55 of this Law, they may apply to the people’s court of the same level for review . Enforcement of the decision is not affected during the period of review.
Section 2 Supervisor
Article 57 The creditors’ conference may select and appoint supervisors who shall be recognized by the written decision of the people’s court.
Supervisors can not exceed 3 persons.
Provisions in Article 32 of this Law shall apply to Supervisors’ remuneration, costs necessary for duty performance and liabilities.
Article 58 Provisions of Article 29 of this Law can be applied to the selection, appointment and modification of supervisors.
Article 59 The supervisor, representing the creditors’ conference during its closing of session, exercises the following functions:
1) supervise the management and disposition of the debtor’s property;
2) supervise the execution of the restructure plan; and
3) supervise bankruptcy distribution
The supervisor, when performing duties, is entitled to request the manager, restructure executor or bankruptcy assignee to explain matters within its function or provide relevant documents.
Where persons provided in the proceeding paragraph, in violation of this Law, refuse to be supervised, the supervisor is entitled to apply to the people’s court for a decision made on matters of supervision. Upon the application by the supervisor, the people’s court shall make the decision within 5 days.
Article 60 The supervisor shall be loyal to its functions, performing supervisory duties according to law and be responsible to all creditors. The supervisor shall be liable for compensation where damage is caused to the debtor or the creditor due to its purposeful act or material negligence.
Chapter IV Conciliation
Section 1 Application for Conciliation
Article 61 Where the debtor applies according to Article 9 of this Law, it may directly apply to the people’s court for conciliation.
After the people’s court accepts the bankruptcy case and before the declaring of bankruptcy , the debtor and the creditor may apply to the people’s court for conciliation.
Article 62 When applying for conciliation, the debtor shall present a written application and draft agreement on conciliation to the people’s court.
Where the creditor applies for conciliation, the people’s court shall notify the debtor upon receiving the application. The debtor shall express explicitly the agreement or disagreement for conciliation to the people’s court within 10 days upon receiving the notice of the people’s court. Where it agrees to conciliate, draft agreement on conciliation shall be presented within the time limit set forth by the people’s court.
Where a third person provides security for the debtor’s application for conciliation, the debtor shall present explanations on the security provided by the third person and relevant valid security documents.
Article 63 Where the people’s court, upon examination, considers that the application meets requirements provided in this Law, it shall require the manager to call for the creditors’ conference to discuss a draft agreement of conciliation. Right of mortgage, pledge or lien to the debtor’s property or right shall not be subject to the restriction provided in Article 18 of this Law since the date when the people’s court makes decision to permit conciliation.
Article 64 Where the people’s court, upon examination, considers that the application for conciliation fails to meet with provisions in this Law, it may order the debtor to supplement correspondingly. Where the debtor refuses to supplement or it still fails to meet the requirements of this Law after making supplement, the people’s court shall make a decision to reject its application for conciliation.
The people’s court shall notify the applicant the decision within 5 days after the decision is made. But no publication is required.
Where the people’s court according to provisions of this Law, makes a decision to reject the application, it shall at the same time declare the debtor bankrupt.
Article 65 The resolution of conciliation agreement passed by the creditors’ conference shall be approved by more than half creditors with voting right and the amount of creditor’s rights represented shall be more than 2/3 of the total creditor’s rights ascertained.
Article 66 Where the draft agreement of conciliation fails in the creditors’ conference, it shall be deemed as that the creditors’ conference refuses to conciliate. The people’s court shall make a decision declaring the debtor bankrupt.
Article 67 Where the conciliation agreement reached between the debtor and the creditors’ conference violates the law, the people’s court shall make a decision declaring the conciliation void. Where the people’s court makes a decision declaring the conciliation void , it shall also make a decision declaring the debtor bankrupt.
Section 2 Conclusion of Conciliation
Article 68 Conciliation agreement reached between the debtor and the creditors’ conference will come into effect upon publication after the people’s court recognizes through the decision.
Article 69 Public notice made by the people’s court on the decsion recognizing the conciliation agreement shall include the following contents:
1) the main body and the date of the decision recognizing the agreement;
2) conclusion of the bankruptcy case; and
3) other items that the people’s court considers that shall be publicized.
Article 70 Where the people’s court makes a decision recognizing conciliation agreement, it shall at the same time decide on the conclusion of the bankruptcy case.
Where the people’s court decides on the conclusion of the bankrupt case, it shall notify the manager or the bankruptcy assignee to stop duty performance. The manager or the bankruptcy assignee shall deliver property and management affairs to the debtor and present a report on duty performance to the people’s court.
Article 71 Conciliation agreement is binding over the debtor and all conciliating creditors.
The conciliating creditors provided in the proceeding paragraph refer to those who enjoy obligatory rights to the debtor before the acceptance of the bankruptcy case by the people’s court.
The conciliating creditor’s rights not declared according to this Law shall not be exercised during the execution of conciliation agreement. After the execution of conciliation agreement completes, they can be exercised according to conditions for liquidation provided in conciliation agreement.
Article 72 Rights enjoyed by conciliating creditors to the guarantor of the debtor and other joint debtors will not be affected by the conciliation agreement.
Article 73 The debtor shall not, in violation of conditions set forth in conciliation agreement, award extra interests to individual creditors while harming interests of other conciliating creditors.
Article 74 The debtor shall pay off debts according to conditions set forth in the conciliation agreement.
Article 75 The conciliation agreement created through fraudulent or other illegal activities of the debtor shall be void.
Under the circumstance of the proceeding paragraph, the people’s court shall declare the debtor bankrupt.
Under the circumstance of the proceeding paragraph, the liquidation received by the creditor according to the conciliation agreement shall not be returned within the scope of the same proportion.
Article 76 Where the debtor fails to pay off debts according to conditions provided in the conciliation agreement, the conciliating creditor may apply to the people’s court for enforcement. The conciliation made in the agreement by the conciliating creditor will lose effect.
Article 77 Where the debtor fails or is unable to pay off debts according to conditions provided in the conciliation agreement, the conciliating creditor may apply to the people’s court for declaring the debtor bankrupt.
Where the people’s court declares the debtor bankrupt, liquidation received by the conciliating creditor from the debtor due to the execution of the agreement is still valid. The part of conciliating creditor’s rights that are not liquidated shall be exercised as bankrupt obligatory rights.
Creditors provided in the proceeding paragraph can only continue to receive the distribution when the bankruptcy distribution received by other creditors reaches the same proportion with the liquidation received by its own.
Article 78 Where there is a circumstance provided in Article 76 and 77, the security provided by the third person for the conclusion and enforcement of the conciliation agreement continues to be valid.
Article 79 After the people’s court accepts the bankruptcy case, where a conciliation agreement is reached through unanimous consent of all creditors, the debtor may apply to the people’s court for a decision recognizing the agreement and at the same time the decision for concluding the bankruptcy case.
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【Links】
· Draft Bankruptcy Law of the People's Republic of China
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