Research On The Design Of Commercial Bank Insolvency Mechanics

On the 27th, August, 2006, the Bankruptcy Law of China was passed by the Standing Committee of National Congress on the 10th session, as a result of ten years of heated legislative debate and discussion. As a core stone of the socialist market economy, the Bankruptcy Law stimulates in Article 134 that "The financial regulatory commissions of State Council shall submit application for restructuring plan or liquidation of the financial institutions to People's courts, if commercial banks, securities firms, insurance company, or other financial institutions fall into the scope of the Article 2 of the Law. When the financial regulatory commissions of State Council have taken custodian or receivership measures against a financial institution, the commissions may submit application to the courts to suspend any lawsuits or enforcement measures against the financial institutions. State Council has been empowered to make specific regulations regarding the bankruptcy of a financial institution."This thesis specifies the specific approaches to the bankruptcy of financial institutions and dedication to the State Council regarding specific ways of its enforcement. It clarifies that the bankruptcy rules that applies to other commercial entities is also effective to financial institutions. If the preconditions of bankruptcy are complete, the financial institutions will follow the regular bankruptcy rules and take an exit. The Law also has authorized State Council to stimulate the detailed enforcement under the framework of the Law. The Law is a result of a number of debated topics over the past years, like the bankruptcy capacity, applicable laws, and status of the financial regulatory commission in the case of commercial banks. Therefore, how to design the legal framework of bankruptcy law for commercial banks is topic that needs theoretical and practical study. This thesis analyzed the law making experiences of advanced legal jurisdictions and the reality of current Chinese legal practice in this field, and aims to raise a constructive proposal.This thesis consists of eight chapters with emphasis on the features and steps of insolvency of commercial banks.Chapter one, The brief introduction of commercial bank insolvency, such as definition, features, differences with other market exits. The purpose of this part is to present the necessity and importance of commercial bank insolvency.Chapter two, Legal framework of commercial bank insolvency. This Chapter presents the insolvency models of commercial banks in advanced jurisdictions and discussed the current legal frame in China. This thesis proposes to make a special law to govern the commercial bank insolvency, including the legislative status, principle, scope, insolvency application, confirmation of creditors, creditors meeting, restructuring, the liquidation. This is the core body of this thesis. Furthermore disccuss the Relationship of different entities among the insolvency of commercial banks. The exterior relation includes courts, banking regulatory commission, central bank, deposit insurance agency.Chapter three, The Start of commercial bank insolvency. This chapter lays out the legal framework of China commercial bank insolvency law, regarding insolvency standards, applicants, application and acceptance of the court.Chapter four, The Receiver of commercial bank insolvency. This chapter discusses the requirements of the receiver, qualifications and selection process.Chapter five, The Confirmation and Organization of creditors. This chapter discusses the confirmation and organization of creditors under different jurisdictions. It also analyzes the role of creditors meeting when there are huge number of creditors.Chapter six, Restructuring of the bank, including entity, plan, approval and acts.Chapter seven, The liquidation of commercial bank insolvency. This Chapter propose a framework of commercial bank insolvency including the announcement, clearance and confirmation of insolvency property, pricing and allocation, foreclosure. Chapter eight, The issues in cross-border commercial bank insolvency. Issues include the off-border jurisdiction, recognition and enforcement of the tribunal awarded by foreign courts or arbitration. It also lays out the applicable laws, payment, and set-off principles.The creativity of the thesis is that it proposes the legal framework of commercial bank insolvency in China, including the legislative principle, scope, the status of governing authority, insolvency application, approval, confirmation and meeting of creditors, receiver, restructuring and liquidation and cross-border issues. In addition, this thesis also emphasizes the role of the banking regulatory commissions and raises to use the visible hands to ensure the safe market exit of commercial banks, reach a fair and efficient allocation of market resources...