A Study On Legal Issues Of Bank Insolvency In China

Before the mid-1990s, China's banks basically have no problem of exiting from marketplace. Since banks in China are recessively secured by governmental credit and then the banks rarely go bankrupt. According to the market competition principle of survival of the fittest, the poor managing bank will certainly be out of market. Under the circumstances of market competition, the consummate bank bankruptcy legal system can not only improve the optimum distribution of financial resources, but also maintain the stability of the entire financial system. However presently China has no systematic bank bankruptcy system, the relevant legal system does not match with the rapid development of China's banking industry .Especially under the backgrounds of global financial crisis in 2008, it is very meaningful to study problems of China's bank bankruptcy legal system.This paper is divided into five parts. The following is the brief introduction of each part.The first part is an introduction which briefly describes this paper's aim of writing, the current situation of foreign and domestic bank bankruptcy legal system research, theory significance, practical value and study methods.The second part explains the basic theory of bank bankruptcy legal system. This part firstly defines the scope of China's bank and the concept of the bank bankruptcy. Then it analysis the specialty and generality of bank bankruptcy and ordinary enterprises bankruptcy and give us elementary knowledge of China's bank bankruptcy situation.The third part mainly discusses how to choose the legislative model of China's bank bankruptcy. Firstly it introduces the present legislative model of bank bankruptcy around the world ,with US's supervision bankruptcy legislative model and Britain's judicature bankruptcy legislative model as examples. Based on the the special national situation of China and regulation theory,China should choose the weak supervision pattern combined with administrative power and judicial power. The weak supervision pattern emphasizes the efficiency of bank bankruptcy process at first. Every item involving specialty and technique is determined by banking supervision department. And matters relating to the rights of property or property confirming, changing and termination should be decided by court. The weak supervision pattern not only takes the efficiency and order as the basic value but also focus on the value of Equality, and is suitable with the actual situation of China. The forth part emphatically explains the bank bankruptcy standard. the bank bankruptcy standard refers to the legal fact which recognizes the debtor whether losing discharge ability and the banking supervision department relies on to start bankruptcy procedure. The bankruptcy standard could be divided into reorganization standard and liquidation standard. The liquidation standard is the standard according to which banking supervision department decides to appeal to court to bankruptcy liquidation the crisis bank. The liquidation standard includes several subsidiary liquidation standard. The core of the liquidation standard is the supervision standard. Reorganization standard means the standard of Applicant appeal to court to put the crisis bank enter into reorganization procedure. It is a highly subjective standard with a certain degree of flexibility. The banking supervision department can reorganize bank on the basis of "too big and cannot fail". However the application of "too big and cannot fail" policy is easily overflowing, therefore "too big and cannot fail" should be regulated strictly. Then, the understandings of the meaning of bankruptcy standard in theory and in judicial practice are different. In order to avoid the ambiguity caused by different understandings, legislators should detail the meaning of the bankruptcy standard with legislative techniques.The fifth part introduces the problems in China's bank bankruptcy procedure. The part of reorganization involves the applicant who starts the reorganization procedure, reorganization manager, bank reorganization measures and so on. The part of liquidation firstly determine the banking supervision department to be the only bankruptcy liquidation applicant. Considering the professional character of deposit insurance organization, there is no doubt that deposit insurance organization is the best insolvency administrator. After starting liquidation procedure, there is no need for personal savings depositors to report claims. But the other claims should be reported. After finishing claims, it up to deposit insurance organization to allocate bankrupt property according to certain orders and pursuant to allocate principles. After insolvency administrator finishing allocating bankruptcy property or there is no need to continue the liquidation for some reasons, insolvency administrator can file court the application to end liquidation procedure. The court will make a order to terminate liquidation procedure.