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Chapter V Restructure
Section 1 Application for Restructure and Examination
Article 80 Provisions in this chapter only apply to those enterprise entities under circumstance provided in Article 3 of this Law with the hope of being saved.
Where corporate enterprises are unable to pay off debts due because of operational or financial difficulty, the restructure procedure provided by this Law may apply.
Article 81 Where the debtor or the creditor applies according the first paragraph of Article 9 of this Law, it may directly apply to the people’s court for restructure.
After the people’s court accepts the bankruptcy case and before it declares the debtor bankrupt, the debtor or the creditor may apply to the people’s court for restructure.
Where the debtor has a circumstance provided in Article 3 of this Law, investors holding more than 1/3 of the total registered capital of the debtor may directly apply to the people’s court for restructure, and may apply for restructure after the acceptance of the case and before the declaration of bankruptcy of the debtor.
Article 82 When applying for restructure, a written application for restructure shall be presented to the people’s court, together with relevant evidences and a primary project.
Where the people’s court, upon examination, considers that the application for restructure meets with provisions in this Law, it shall make a decision permitting the debtor to conduct restructure.
Section 2 Business Operation during the Period of Restructure
Article 83 The period of restructure is from the time when the people’s court makes a decision permitting the debtor to conduct restructure to the time when the people’s court makes a decision approving the restructure plan or terminating the procedure of restructure. The duration for restructure shall not exceed 12 months.
Article 84 The manager exercises functions provided in Article 30 of this Law during the period of restructure .
Article 85 During the period of restructure , the manager may, upon the agreement of the creditors’ conference, employ through contract professional persons in enterprise operation and management to take charge of the enterprise’s business operation.
Persons employed according to the proceeding paragraph shall acquire the permission from the manager when conducting activities provided in Article 31 of this Law.
Article 86 During the period of restructure , the mortgagee, pledgee and lienor of the debtor shall not exercise right of disposition over the object matter of the security. However, if the possible damage to the pledge or the lien or the possible deterioration of its value is sufficient to harm the right of pledge or lien, the pledgee or the lienor may sale through auction or sell off the object and deposit the price.
The manager may take back the object matter of the pledge or the lien in order to continue the debtor’s business operation, but substitute security shall be provided.
Article 87 Debts borne to the debtor in order to continue business operation during the period of restructure shall be deemed as common debts.
The debt, who makes loan to continue business operation during the period of restructure , may take property which is not the object matter of right of security as the guaranty for the obligatory rights.
Article 88 Where the debtor possesses other’s property with lawful basis, if the person having right over the property, in violation of conditions agreed, claims the property within the period of restructure , the manager may reject.
Article 89 The debts of the restructure creditor and debtor during the period of restructure may set off. The debt must be of the same kind and due before the acceptance of the bankruptcy case by the people’s court.
The restructure creditor’s rights received through transfer by the debtor’s debtor after the application of the bankruptcy case shall not be set off.
Article 90 During the period of restructure , the manager is entitled to decide on whether to dissolve or continue to perform the bilateral contracts concluded before the procedure of restructure while not yet performed and notify in a written form the counterpart. Where the manager fails to inform the counterpart within 3 months after the procedure of restructure, or fails to reply within one month after receiving summon exhortation from the counterpart, the contract will be deemed as dissolved. Damages resulted from the dissolution of the contract is an obligatory right that can be declared.
Where the manager decide to continue to perform a bilateral contract concluded before the procedure of restructure of which the performance has been started, the counterpart shall not refuse to perform the contract or terminate the contract in advance with the excuse of non-performance of debts before the restructure procedure.
Article 91 In order to continue business operation during the period of restructure , the manager shall, according to relevant laws, decide on the employment or non-employment of current staff and workers of the restructure enterprises, and it may also employ persons out of the restructure enterprises.
Article 92 Where the people’s court makes a decision permitting the debtor to conduct restructure, the investors of the debtor shall not claim for any property delivery to the debtor based on the investor’s rights.
Where the people’s court makes a decision permitting the debtor to conduct restructure, directors, managers and other personnel of high management shall not transfer part or all of its stock rights to the debtor to a third person.
Article 93 After the restructure procedure starts and before the restructure plan is approved, under the following circumstances when persons with related interests applies, the people’s court may, upon examining and ascertaining, make a decision to terminate the restructure
procedure:
1) The debtor’s business and property situation continue to deteriorate and there is little possibility for revitalization;
2) The debtor conducts fraudulent activities, purposefully mitigates enterprise property, suspends without fair justification or conducts other activities obviously unfavorable to creditors; and
3) The manager is unable to perform duties because of activities of the legal organ of the debtor and other personnel.
The people’s court may, based on its function, terminate restructure procedure one month in advance before the period of restructure expires where the restructure plan is not approved in advance.
Under the circumstance of the proceeding two paragraphs, where the debtor has a circumstance provided in the first paragraph of Article 3 of this Law, the people’s court shall make a simultaneous decision on declaring the debtor bankrupt except that the debtor or the creditor applies to solve debts through a way of conciliation before bankruptcy declaration.
Section 3 Restructure Plan
Article 94 The debtor shall draft on the restructure plan . The restructure plan shall be reported to the people’s court for rectification after being approved at the creditors’ conference.
Article 95 The draft of the restructure plan shall include the following contents:
1) business project of the restructure enterprise;
2) project for adjustment of creditor’s rights;
3) project for liquidation of creditor’s right;
4) restructure executor;
5) execution period of the restructure plan; and
6) other projects favorable to the restructure plan.
Article 96 Creditor’s rights in the restructure plan can be divided into the following kinds:
1) creditor’s rights with a property security;
2) labour creditor’s rights;
3) tax; and
4) ordinary creditor’s rights.
Article 97 The restructure plan can adopt respectively the following measures to adjust various kinds of creditor’s rights:
1) to decrease the liquidation rate proportionately;
2) to pay off at one time or by installment or through suspension;
3) to modify other conditions of the creditor’s rights; and
4) other measures consistent to laws and administrative regulations.
Creditor’s right of the same kind in the restructure plan shall be liquidated at a same condition.
Article 98 The restructure plan may include a project for merger or division of the restructure enterprises.
Article 99 Provisions in Article 29 of this Law shall apply to the qualification for the restructure executor.
Article 100 The manager shall present to the people’s court the draft of the restructure plan and feasibility report within the period set by the people’s court.
Article 101 After receiving the draft restructure plan, where the people’s court considers it satisfying with this Law upon examination, it shall convene the creditors’ conference timely and present for voting.
The debtor and the manager shall explain to the creditors’ conference on the draft restructure plan and reply to inquiries.
Article 102 Investors of the debtor may attend the creditors’ conference when discussing the draft restructure plan.
Article 103 Where the creditors’ conference votes on the draft restructure plan, it shall divide into groups to vote according to the kinds of the obligatory rights provided in Article 96 of this Law.
Where more than half creditors in a same voting group who attend the conference agree on the draft restructure plan and the amount of creditor’s rights represented makes up more than 2/3 of the total amount ascertained, the draft restructure plan will be deemed as passed in that group.
Where each group passes the draft restructure plan, the restructure plan will be deemed as passed.
Article 104 Where the creditors’ conference fails to pass the draft restructure plan , the people’s court shall make a decision concluding the restructure procedure and declaring the debtor bankrupt.
Article 105 The manager shall apply to the people’s court to approve the restructure plan within 15 days after the restructure plan is passed.
After receiving the application, where the people’s court considers it satisfying provisions in this Law upon examination, it shall make a decision approving the restructure plan.
Article 106 Before the people’s court makes a decision according to Article the second paragraph of Article 105, it shall hold a hearing and listen to opinions of the manager, the supervisor, parties and relevant departments and experts.
Article 107 Where the people’s court, upon examination, considers that the restructure plan does not meet provisions of this Law, it shall make a decision rejecting the application for the approval of the restructure plan.
After the people’s court makes a decision rejecting the application for the approval of the restructure plan, where the debtor is under a circumstance provided in paragraph one of Article 3 of this Law, the people’s court shall declare the debtor bankrupt. Where the debtor is not under a circumstance provided in paragraph one of Article 3 of this Law, the people’s court shall make a decision concluding the bankruptcy case.
Article 108 When the people’s court makes a decision approving the restructure plan, it shall notify the manager to transfer the debtor’s property and management affairs to the restructure executor. The restructure executor starts to perform its function from the date when the people’s court approves the restructure plan. The manager stops duty performance since the date when the people’s court approves the restructure plan.
Article 109 The restructure plan approved by the people’s court is binding on all obligatory rights created before the acceptance of the bankruptcy case by the people’s court.
Restructure obligatory rights that fails to be declared according to this Law shall not be exercised during the execution of the restructure plan. After the restructure plan completes in execution, they can be exercised according to the liquidating terms for obligatory rights of the same kind in the restructure
plan.
Liabilities for liquidation borne to the guarantor of the restructure enterprise or other joint debtor will not be affected by the restructure plan.
Article 110 The restructure executor is in charge of the execution of the restructure plan.
Article 111 Where the restructure enterprise is unable to or fails to execute the restructure plan, the people’s court shall, upon the application of persons with related interests, make a decision terminating the execution of the restructure plan.
Where the people’s court makes a decision terminating the execution of the restructure plan , the people’s court shall declare the debtor bankrupt.
Under the circumstance provided in paragraph one of this Article, conciliation made by the restructure creditor in the restructure plan loses effect. But, security provided for the execution of the restructure plan continues to be valid within the scope of security provided by the restructure
plan.
Article 112 When the execution of the restructure plan completes, the restructure executor stops its duty performance and presents to the people’s court on the execution report timely. The people’s court, upon examination and recognition, shall make a decision concluding the bankruptcy case.
The debtor’s liability for liquidating the part of the restructure obligatory rights mitigated according to the restructure plan will be exempted from the date when the people’s court makes a decision concluding the bankruptcy case.
Chapter VI Bankruptcy Liquidation
Section 1 Declaration of Bankruptcy
Article 113 Where the people’s court declares the debtor bankrupt according to this Law, a written decision shall be made and be served to the debtor within 3 days after the decision is made.
Article 114 Where the people’s court with jurisdiction for the bankrupt case discovers in the process of hearing civil cases or civil enforcement that the debtor has a circumstance provided in the first paragraph of Article 3 of this Law, it may, based on its function, declare the debtor bankrupt.
The people’s court shall deliver the decision to the debtor within 3 days after the decision is made declaring the debtor bankrupt according to its function.
Articles 15,16, 17, 19, 20, 21, 38, 44 and 45 of this Law shall apply to cases in which the people’s court declares bankruptcy based on its function.
Article 115 After the people’s court makes a decision declaring the debtor bankrupt shall make a public notice within 10 days since the date on which the decision is made. The public notice shall include the following items:
1) the main body and date of the decision on bankruptcy declaration;
2) the name of the bankruptcy assignee where it is already appointed, the address where business is dealt with and contacting telephone;
3) the debtor or property holder of the bankrupt person shall pay off debts or deliver property to the manager or the bankruptcy assignee; and
4) other items that the people’s court deems that shall be included in the public notice.
When the people’s court declares the debtor bankrupt based on its function, the public notice shall also specify items provided in item 2 and 5 of the second paragraph of Article 16 of this Law.
Article 116 Before declaring bankruptcy, the people’s court shall make a decision concluding the procedure of bankruptcy and publicize the decision under one of the following circumstances:
1) Relevant authorities of the government provide support or adopt other measures to help the debtor in paying off debts;
2) Other organizations or individuals provide security for the debt or help the debtor in paying off debts;
3) The debtor has already liquidated all of the due debts.
Article 117 Where the property of the partnership enterprise is not sufficient to liquidate debts due, the people’s court shall declare the partnership enterprise bankrupt, and meanwhile declare all partners bankrupt. But, where the partner has provided property which is sufficient to pay off all debts of the partnership enterprise, the people’s court will not declare all the partners bankrupt while declare the partnership enterprise bankrupt.
The provision in proceeding paragraph shall apply to the bankruptcy of solely-invested individual enterprises.
Section 2 Bankruptcy assignee
Article 118 After declaring the debtor bankrupt, the people’s court shall appoint bankruptcy assignee within 7 days since the date on which the decision is made. Before the bankruptcy assignee accedes, the manager will act for the bankruptcy assignee, executing its function.
The bankruptcy assignee will be called liquidating workshop when its number is more than one. Members of the liquidating workshop jointly execute its function. The chief of the workshop will be appointed by the people’s court.
After appointing the bankruptcy assignee, the people’s court shall publicize in time the name of the bankruptcy assignee and address for dealing with business affairs.
Article 119 Article 29 of this Law shall apply to the qualification of the bankruptcy assignee.
Article 120 The bankruptcy assignee is responsible for the management, liquidation, appraisal, sale and distribution of bankruptcy property and conducts all civil activities in its own name within the business scope the bankruptcy liquidation.
Where the bankruptcy assignee performs duties, Article 30 of this Law will apply.
The bankruptcy assignee shall report to the people’s court on its work when performing duties and be subject to supervision of the creditors’ conference and the supervisor.
Article 121 Article 32 of this Law shall apply to the remuneration of the bankruptcy assignee, costs and liabilities necessary for performing duties.
Article 122 Article 33 of this Law shall apply to the bankruptcy assignee when relieving from the position.
Section 3 Bankruptcy Property
Article 123 All properties and property rights belonging to the bankrupt person when declared bankrupt and those acquired by the bankrupt person before the conclusion of the bankruptcy procedure constitute the bankruptcy property.
Article 124 Where disputes arose among the bankruptcy assignee, bankrupt person or other persons with related interests on the belonging of the bankruptcy property, they may bring suit to the people’s court where the bankruptcy case is heard.
Article 125 As to property not belonging the bankrupt person, the person having a right over the property may claim the property through the bankruptcy assignee.
Article 126 Where the seller has transported the object matter of the sale, while the bankrupt person has not yet received and not paid off the total price when declared bankrupt, the seller may claim the object matter in transportation. But the bankruptcy assignee may pay the total price and ask the seller to delivery the object matter.
The proceeding paragraph does not affect the application of Article 132 of this Law.
Section 4 Bankruptcy Obligatory Rights
Article 127 As to Non-monetary obligatory rights and obligatory rights expressed in foreign currencies, the amount of the bankruptcy obligatory rights shall be the amount of the obligatory rights evaluated at the time of bankruptcy declaration.
The standard for calculating the evaluated amount of the obligatory rights provided in the proceeding paragraph apply the second paragraph of Article 44 of this Law.
Article 128 Where one or more joint debtors are declared bankrupt, the creditor may take the total amount of its obligatory rights at the time of bankruptcy declaration as bankruptcy obligatory rights and exercise rights separately to each bankrupt person.
Article 129 Where one or more joint debtors are declared bankrupt and the other joint debtor has paid off debts for the bankrupt person, it may exercise its right to recourse as the bankruptcy obligatory right.
Where one or more joint debtors are declared bankrupt, other joint debtor may exercise its future right to recourse, when paying off debts for the bankrupt person, as the bankruptcy obligatory right, except that the creditors have already exercised the total amount of the obligatory rights.
Article 130 Article 129 of this Law applies to the guarantor of the bankrupt person.
Article 131 Where partners is declared bankrupt according to this Law, every partner shall liquidate separately.
Creditors to partners and creditors to the partnership enterprise is equal in the procedure of bankruptcy liquidation for each partner.
As to the part of the bankruptcy obligatory rights which the bankruptcy property of the partnership enterprise are not enough to pay off, creditors to the partnership enterprise may, according to Article 128 of this Law, exercise its right in the procedure of bankruptcy liquidation for each partner. But, the total amount received from the distribution through exercising the right shall not exceed the amount of the obligatory right to be liquidated.
Article 132 The bankruptcy assignee has the right to decide on dissolving or continuing to perform a bilateral contract not yet performed to the bankrupt person.
The counterpart of the contract not performed may set a time limit for the bankruptcy assignee to summon by exhortation it to make the decision on whether to dissolve or continue to perform the contract. If the bankruptcy assignee fails to reply within the time limit, the contract shall be deemed as dissolved.
Where the bankruptcy assignee decides to continue to perform the contract, while the counterpart requires it to provide corresponding security in provided or reasonable period, the contract shall be deemed as dissolved if the bankruptcy assignee fails to provide security in the provided or reasonable period.
Where the bankruptcy assignee dissolves the contract and the counterpart has already paid a deposit, the right for claiming the deposit will be the bankruptcy obligatory right.
Where the contract is dissolved according to provisions in proceeding four paragraphs, the counterpart’s right of claiming damages will the bankruptcy obligatory right.
Article 133 A contract of mandate terminates due to bankruptcy declaration. But, if the agent has not received the notice of bankruptcy declaration and is unaware of the fact of bankruptcy declaration, and continues to dispose the authorized affairs, obligatory rights thus incurred
will be bankruptcy obligatory rights.
Section 5 Right of Set-off
Article 134 Where the creditor owes debts to the bankrupt person before bankruptcy declaration, regardless whether the kind of debts is same, the creditor may claim for set-off to the bankruptcy assignee before the project on bankruptcy distribution is publicized.
Article 135 Under one of the following circumstances, set-off provided in
Article 134 of this Law shall not apply:
1) The bankruptcy creditor owes debts to the bankrupt person after the bankruptcy declaration;
2) Debtors of the bankrupt person acquire others’ bankruptcy obligatory rights after bankruptcy declaration;
3) The bankruptcy creditor already knows that the bankrupt person stops payment or declares for bankruptcy and still owes debts to the bankrupt person, except that the creditor owes debts due to reasons provided by law or reasons took place one year before the application for bankruptcy.
4) The debtor of the bankrupt person already knows that the bankrupt person stops payment or applies for bankruptcy, but still acquires obligatory rights from the bankrupt person, except that the debtor acquires obligatory rights due to reasons provided by law or reasons took place one year before the application for bankruptcy.
Section 6 Right of Priority
Article 136 Persons having a right of mortgage, pledge and lien over the property or the rights of the bankrupt person are person with right of priority.
Persons with right of priority enjoy right of priority in liquidation by the object matter to the right.
Article 137 Persons with right of priority, when exercising the right, is not subject to restriction for the procedure for bankruptcy liquidation.
Where creditors with right of priority exercise the right, but are not fully liquidated, the part of creditor’s rights not paid off shall be exercised according to the procedure of bankruptcy liquidation.
Where creditors with right of priority give up the right of being liquidated in prior, they shall exercise the right according to the procedure for bankruptcy liquidation.
Article 138 The bankruptcy assignee may claim the object matter to the right of priority through paying off debts or providing other relevant security.
As to liquidation of debts provided in the proceeding paragraph, when the value of the object matter to the right of priority is lower than the amount of obligatory rights secured, the value shall not exceed the market price at that time.
Section 7 Appraisal and Distribution
Article 139 The bankruptcy assignee shall sell off bankruptcy property timely according to appraisal project for bankruptcy property passed by the creditors’ conference or upon the permission of the supervisor.
Article 140 The bankruptcy assignee shall prepare the appraisal project for bankruptcy property timely and present to the creditors’ conference for discussion. The project passed by the creditors’ conference will be enforced after being presented to the people’s court to make a decision.
Decision made in the proceeding paragraph need not be publicized.
Article 141 Bankruptcy property appraised shall be sold through auction, except for otherwise provided by the resolution made by the creditors’ conference.
Integrated equipment in the bankruptcy property shall be sold off in whole.
Where it can not be sold in whole, it may be sold off separately.
Bankrupt enterprise can be sold off in whole or in part. When the enterprise is sold, individual property can be sold separately.
Property that can not be sold through public auction or sold publicly shall be sold off in a way provided by the state.
Article 142 Bankruptcy property shall liquidate according to the following sequence after paying off in prior the bankruptcy costs and common debts:
1) salaries owed to laborers, owed costs for social security that shall be paid and other costs which shall be paid to laborers according to laws and administrative regulations;
2) tax owed by the bankrupt person;
3) ordinary bankruptcy obligatory rights;
Where the bankruptcy property is insufficient to pay off debts in the same sequence of liquidation, it shall be distributed proportionately.
Article 143 Bankruptcy distribution shall be conducted in a monetary way except that the resolution made by the creditors’ conference has special provisions.
Article 144 Bankruptcy assignee shall prepare distribution project for bankruptcy property in time and present to the creditors’ conference for discussion.
Distribution project provided in the proceeding paragraph shall specify the following items:
1) name and address of creditors participating bankruptcy distribution;
2) amount of creditor’s rights involved in the distribution;
3) amount of property subject to the distribution;
4) sequence, ratio and amount of bankruptcy distribution;
5) measures for implementing bankruptcy distribution.
After the creditors’ conference passes the distribution project for bankruptcy property upon discussion, the bankruptcy assignee shall present to the people’s court the distribution project for bankruptcy property to make a decision.
The distribution project for bankruptcy property comes into effect since the date when the court makes the decision.
Article 145 After the distribution project for the bankrupt property comes into effect, it shall be implemented by the bankruptcy assignee.
The bankruptcy assignee may make distribution for once or more times according to the distribution project.
Where the bankruptcy assignee makes distribution for several times, it shall publicize the amount of property and creditor’s rights for distribution this time.
When the bankruptcy assignee makes the final distribution, it shall specify in the public notice, together with items provided in the second paragraph of Article 148 of this Law.
Article 146 As to obligatory rights with a term of dissolution, the creditor may receive distribution after providing corresponding security.
After the creditor referred to in the proceeding paragraph receives the distribution, where the term to its right is not satisfied within 30 days after the publication of the final distribution, the creditor will be exempted from the liability of security already provided. Where the security object has been delivered, it shall be returned. Where the term to the obligatory right is satisfied within 30 days after the publication of the final distribution, the distribution received shall be recovered.
Article 147 As to obligatory rights with a term of validity, where the creditor receives bankruptcy distribution, the bankruptcy assignee shall deposit its distribution quota.
The proceeding paragraph applies to obligatory rights with a term of dissolution where the creditor fails to provide any corresponding security.
Where the bankruptcy assignee deposits the distribution quota according to proceeding two paragraphs, the deposited distribution quota shall be
distributed to other creditors if the term of validity is not satisfied or the term
of dissolution is satisfied within 30 days after the publication of the final
distribution. Where the term of validity is satisfied or the term of dissolution is
not satisfied within 30 days after the publication of the final distribution, the
deposited distribution quota shall be delivered to the creditor.
Article 148 The bankruptcy assignee shall deposit the distribution quota
that the creditor does not accept.
Where the creditor does not accept within 60 days after the publication of
the final distribution, it will be deemed as giving up the right of the
distribution. The bankruptcy assignee shall distribute the deposited quota to
other creditors.
Article 149 In bankruptcy distribution, as to obligatory rights subject to
objection or those in pending litigation, the bankruptcy assignee shall deposit
their distribution quota. But where the distribution cannot be accepted within
2 years after the conclusion of the bankruptcy procedure, the people’s court
shall distribute the deposited quota to other creditors.
Section 8 Conclusion of Bankruptcy Case
Article 150 Where the bankruptcy assignee fails in implementing the
bankruptcy distribution according to the project of bankruptcy distribution, it
may apply to the people’s court to make a decision concluding the
bankruptcy case.
The bankruptcy assignee shall present report on the distribution of
bankruptcy property timely after the distribution finishes and apply to the
people’s court to make a decision concluding the bankruptcy case.
After the people’s court receives the application of the bankruptcy assignee
for concluding the bankruptcy case, it shall make a decision on whether to
conclude the bankruptcy case within 30 days.
Article 151 The bankruptcy assignee shall, holding the decision of the
people’s court on concluding the bankruptcy case, apply to the original
registration authority of the bankrupt enterprise to cancel the registration
within 10 days after the case is concluded.
Article 152 The bankruptcy assignee terminates in performing its duties
since the day next to the day on which the registration is cancelled.
Article 153 Within 2 years after the bankruptcy case concludes according
to the fourth paragraph of Article 48 or Article 150, the creditor may apply to
the people’s court to add to the distribution according to the project for
distributing the bankruptcy property under one of the following
circumstances:
1) discover that there is property that shall be recovered according to
Article 26 of this Law;
2) discover that the bankrupt person has other property that shall be
subject to the distribution.
Where there is a circumstance provided in the proceeding paragraph, but
the amount of the property is too little to be added to the distribution, no
distribution will be added.
Article 154 The guarantor of the bankrupt person and other joint debtors
shall continue to be liable for liquidation to obligatory rights not paid off in the
procedure of bankruptcy liquidation after the conclusion of the bankruptcy
case.
Section 9 Exemption
Article 155 Where the bankrupt person is a natural person provided in
paragraph one of Article 2 of this Law, it shall, after the conclusion of
bankruptcy case, before exemption according to Article 156, be liable for
liquidation for the part of bankruptcy obligatory rights unpaid off with its total
property acquired deducting the costs necessary for basic livings and
performance of legal duties.
The bankrupt person provided in the proceeding paragraph may draft a
plan for liquidating debts after the conclusion of the bankruptcy case and
present it to the creditors’ conference for recognition before the conclusion of
the bankruptcy case. The plan for liquidating debts recognized by the
creditors’ conference is binding to both parties.
Article 156 After the conclusion of the bankruptcy case, under one of the
following circumstances, the liability of the bankrupt person shall be exempted from the unpaid part of the ordinary bankruptcy obligatory rights
except for damages for purposeful infringement upon personal rights:
1) Over 40 % of the total bankruptcy obligatory rights have been liquidated
at the time of conclusion of the bankruptcy case and three years have been
passed since the conclusion;
2) Over 30% but less than 40% of the total bankruptcy obligatory rights
have been liquidated at the time of conclusion of the bankruptcy case and
four years have been passed since the conclusion;
3) Over 20% and less than 30% of the total bankruptcy obligatory rights
have been liquidated at the time of conclusion of the bankruptcy case and
five years have been passed since the conclusion;
4) Over 10% and less than 20% of the total bankruptcy obligatory rights
have been liquidated at the time of conclusion of the bankruptcy case and
seven years have been passed since the conclusion;
5) Less than 10% of the total bankruptcy obligatory rights have been
liquidated at the time of conclusion of the bankruptcy case and ten years
have been passed since the conclusion.
Persons being imposed to criminal punishment due to bankruptcy crimes or
conducting activities provided in Chapter 9 or Article 27 of this Law will not
be exempted from the liability.
After being exempted, where the bankrupt person is willing to pay off debts
already exempted, the liquidated interests obtained by the creditor shall be
protected by law.
Chapter VII Summary Procedure
Article 157 After accepting the bankruptcy case, where the people’s court
investigates that the total amount of the debtor’s property is less than
RMB500,000 and the obligatory rights and duties are clear and the total
number of creditors is small, this chapter may apply.
Where this chapter has no provision, other provisions of this Law will apply.
Article 158 Where the people court tries bankruptcy cases to which this
chapter applies, the case may be tried by one judge.
Article 159 To bankruptcy case to which this chapter applies, the debtor
can only apply for conciliation once.
Article 160 Decisions made by the people’s court to cases to which this
chapter applies shall be delivered only through notice. But, decisions on the
acceptance of the bankruptcy case, the declaration of the bankruptcy of the
debtor and the conclusion of the bankruptcy case by the people’s court shall
be publicized in addition to the notice.
Article 161 After accepting cases to which this chapter applies, the
people’s court shall decide on the duration of the declaration of creditor’s
rights which can not be less than 7 days and more than 30 days.
The first creditors’ conference shall be convened within 5 days after the
expiration of the duration for declaring creditor’s rights.
Article 162 Bankruptcy cases tried by the people’s court to which this
chapter applies is not subject to the restriction of period provided in Article
56 of this Law.
Article 163 Bankruptcy cases tried by the people’s court to which this
chapter applies shall be concluded within 12 months after the acceptance of
the case.
Chapter VIII Legal Liabilities
Article 164 The people’s court may summon by force the debtor or its
representative who is obligated to attend the creditors’ conference if it
refuses to attend without fair justification after being summoned by the
people’s court, and the people’s court may at the same time impose a fine of
no less than 1,000 and no more than 5,000 yuan.
The people’s court may impose a fine of no less than 1,000 and no more
than 5,000 yuan to the debtor and other persons who are obligated to make
explanations when they refuse to explain or reply or make false statement or
reply.
Where a crime is constituted, criminal liability will be investigated according
to law.
Article 165 Where, in violation of this Law, the debtor refuses to present
written explanations on its property situation, lists of obligatory duties and
rights and other relevant financial reports or presents false ones, the
people’s court may impose a fine of no less than 2,000 and no more than
10,000 yuan to persons of direct liability.
Where, in violation of this Law, the debtor refuses to deliver to the manager
or bankruptcy assignee property and relevant accounts, documents,
materials and seals concerning the property, the people’s court may impose
a fine of no less than 2,000 and no more than 10,000 yuan.
Where a crime is constituted, criminal liability will be investigated.
Article 166 Where the debtor conducts void activities provided in Article 25
of this Law and one of the following activities within 12 months before the
acceptance of the bankruptcy case by the people’s court, the people’s court
may impose a fine to persons of direct liability of no less than RMB10,000 and no
more than RMB100,000. Where a crime is constituted, criminal liability will
be investigated:
1) sell property at an abnormally low price;
2) pay off undue debts in advance;
3) give up creditor’s rights; or
4) counterfeit or destroy relevant evidences and materials which results in
property situation unclear.
Article 167 Where the debtor conducts one of the following activities, the
people’s court may impose a fine of no less than 5,000 and no more than
50,000 yuan to persons of direct responsibility. Where a crime is constituted,
criminal liability will be investigated according to law:
1) already know the inability to pay off debts, but still provide property
security for debts without property security within 6 months before the
acceptance of the bankruptcy case by the people’s court;
2) already know the inability to pay off debts, but still pay off individual
debts within 6 months before the acceptance of the bankruptcy case by the
people’s court.
Article 168 Where the debtor already knows or should know its inability to
pay off due debts, but still expends money and property irrationally or splurges property, the people’s court may impose a fine of no less than
3,000 and no more than 30,000 yuan to persons of direct responsibility.
Where a crime is constituted, criminal liability will be investigated.
Article 169 Where the manager, the restructure executor, the bankruptcy
assignee, the supervisor, the creditor or its representative exploits its
function or position in enforcing this law to ask for or receive bribery or
obtain other improper interests, the people’s court may impose a fine of no
less than 10,000 and no more than 100,000 yuan according to the
seriousness of the circumstance. Where a crime is constituted, criminal
liability will be investigated.
Article 170 Where the manager, the restructure executor, the bankruptcy
assignee, the supervisor, the creditor or its representative gives bribery in
the process of enforcing this Law, the people’s court may impose a fine of no
less than 2,000 and no more than 3,000 yuan to persons of direct
responsibility according to the seriousness of the circumstance. Where a
crime is constituted, criminal liability will be investigated.
Article 171 The people’s court may admonish or summon by force
whoever violates the provision in item 4 of the first paragraph of Article 20 of
this Law and may at the same time impose a fine of no less than 5,000 and
no more than 50,000 yuan.
Article 172 Where the manager, the restructure executor, the bankruptcy
assignee or the supervisor causes economic damage to the creditor, the
debtor or a third person because of negligence of duties or other illegal
activities, it shall be liable for compensation. Where a gross damage is
caused, a fine of no less than 10,000 and no more than 100,000 yuan and a
punishment of detention may be imposed according to the seriousness of the circumstance. Where a crime is constituted, criminal liability will be investigated.
Chapter IX Supplementary Provisions
Article 173 The Bankrupt enterprise and the local government where the bankrupt enterprise locates shall well resolve the settlement of enterprise workers and staff according to laws and regulations.
Article 174 Where a state enterprise established before the Company Law of the People’s Republic of China took effect is to fall under bankrupty, the State Council is authorized to make otherwise provisions.
Article 175 The law will come into effect from the date of promulgation.
The Law of Enterprise Bankruptcy of the People’s Republic of China (trial) will be nullified since the date of promulgation. >>>> Chinese
【Links】
· Draft Bankruptcy Law of the People's Republic of China
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