Study On The Basic Rights Of Exemption Right And Its Achievement

Exemption Right is the creditors right to guarantee in their claims and enjoy the right of Priority for the bankrupt's specific property. Exemption right initially arose in Germany, and then gradually spread to other countries. Because of different understanding of exemption right, the concept of exemption right in different country is not the same. China has used two concepts to explain exemption right. In the first-edition Bankruptcy Law, it is "the credit of security interests"; in the present Bankruptcy Law, it is "the priority of security right". Although "the priority of security right" does some amendments on the defects of the connotation and denotation of "the credit of security interests", it can not reflect the scope and features of Exemption Right yet, due to the lack of the generalness and the richness of content of the concept of exemption right. It is suggested China's future insolvency legislation should adopt the concept of Exemption Right.As a right concerning the property of the bankrupt, it is based on the rights founded before a bankruptcy petition. The basic right mainly refers to the rights such as mortgage, ledge. Although the exertion of the exemption right is independent of the bankruptcy procedure principally, it is still constrained by the bankruptcy procedure. For the Exemption Right is based on right like pledge, the establishment of real right is decided by the transference of target property's possession, and the loss of target property will lead to the elimination of exemption right. However, for the real rights like mortgage, which do not need the transference of target property's possession and have the feature of depending on the value rather than the physical property, after the loss of target property, the real rights will continue to exist on the substitute or compensation, so the loss of target property has no influence on the duration of Exemption Right based on this kind of real right. The Exemption Right's owner has the right to disregard the bankruptcy procedure as a first-priority claim on the bankrupt's specific property, but it does not change the nature of specific property. There is no difference between this specific property and bankrupt's other properties, so the exemption right's target property belongs to the bankrupt's properties. In terms of the different guarantor, the relationship between exemption right and credit divide into two sorts: in addition to creditor and debtor, when the guarantor is a third person, exemption right is not bankrupt credit; and when the guarantor is the creditor himself, exemption right is bankrupt credit.The scope of the basic rights of exemption right decides what rights can constitute a exemption right, so the definition of the basic rights is very important for the protection of the owner of the Exemption Right. On the ground of national and international regulation of Exemption Right in bankruptcy law, the basic rights of Exemption Right are the civil law real right. According to the different regulation and the different nature, it can be divided into typical real right and non-typical real right. The former are mainly mortgage, pledge, and lien; the latter refers to special priority, retention of title.Typical security interests include mortgage, pledge, and lien. The mortgage can be divided into normal mortgage and special mortgage, the latter of which includes the maximum-limit mortgage, legal mortgage, the consortium unsecured mortgage, and floating mortgage. All these are the basic rights of exemption because they can meet the basic characteristics of exemption right. There are different regulations between nations on lien. Some have the regulations that only commercial lien can constitute exemption right. Chinese law considers the lien as a kind of real rights, so when the lien meets the elements of enforcement, it can constitute an Exemption Right. Guarantee is based on the credit of the guarantor. It does not give creditor the right of priority for the bankrupt's specific property, so guarantee can not be the basic right of exemption right. With regard to the deposit, if it has the pure currency as collateral, it can not constitute an Exemption Right; if it has non-specific which can turn into currency as collateral, it constitutes an Exemption Right.Besides typical real rights, non-typical real right like special priority, retention of title, transfer guarantee might be the basic rights of Exemption Right. The special priority has the general attributes of real right, belonging to the legal real right. What retention of title retains is not the ownership, but the expectation and guarantee of paying the balance. Special priority and retention of title are all guaranteed by the bankrupt's specific property, so they can be the basic right of Exemption right. In the transfer guarantee, when the debt is not paying off in accordance with the terms of the guarantee agreement, the secured party can have the specific property directly; the party who set up transfer guarantee also has the right to get the ownership back after paying-off, and to retain the ownership before paying off period. So when the person who set up transfer guarantee goes bankrupt, the secured party can have the specific property according to the "getting-back" right; when the secured party going bankrupt, the person who sets up transfer guarantee can get the ownership back after paying-off.Because the "getting-back" right which the creditor owns is based on the ownership of the specific property, transfer guarantee is not the basic right of Exemption Right. With the introduction of the new Bankruptcy Law, the exercise and achievement of the Exemption Right have changed a little. The main changes mainly occur in the aspect of its registry, ascertaining, and the reimbursement sequence & scope. The new Bankruptcy Law also stipulates some concerning the Exemption Right in the process of reconciliation and re-engineering. However, due to the so-called socialist market economy, it is necessary to give a full analysis of the foreign equivalents for their aspiration.