Improvement Of The Legal System About Reorganization In Chinese Corporation

The legal nature of corporation reconstruction shows the combination of Debt Discharges and Corporation Reconstruction, the coordination of private-right nature and social standard .The main purpose of Reorganization System is Debt liquidation and Corporation Rescue. Reorganization System can maintain the operation of business so as to avoid the value of corporation operation without realization; Reorganization System uses various means on the arrangement of Distressed Enterprise to help enterprises revive and to improve the efficiency of Resource Allocation; By doing this, it can retain the employment opportunity for enterprise staff and workers. It has the function to quiet down social unrest caused by staff reduction. The features of Reorganization System includes: broad-based reasons of reorganization ; diversification of starting procedure; the public rights of reforming process; more flexible and various measures to reorganize; the priority of reorganization procedure; the non-priority of security interest and the diversification of reorganization objects. With more and more practice on the reorganization system after the Law of Bankruptcy came into effect on June 1, 2007, some problems on the legal applicability of the Reorganization System have to be solved, and some difficulties and realistic predicament on it have appeared and left to be studied and settled.These problems displayed mainly: the complexity of the reorganization cases and the inexperienced judges who are lack of judging experience of reorganization cases; the vague standard of "the debtor has the potential to be saved" that courts hold.; it is hard to force to approve the performing of reorganization program; the ability to obtain trust and support from the creditor banks becomes an very important factor in enterprises' reviving; lack of protection for debtors and investors' benefits; corporation reconstruction may become a way for debtors to evade debt maliciously.For these problems occur in practice which can be solved and improved as follows: the courts take full play to the functions of corporation reconstruction, and try to set up specialized bankruptcy court for reorganization cases; we should understand "the company has the possibility to revive and reestablish" from multi-level in the economic, social and legal fields to enhance the assertions of operability; the compulsory approval of reorganization program should be fellow the principle of best interests of creditors, the principle of fair treatment and the principle of absolute priority, so as to reduce the uncertainty in application; the banks can make the bankruptcy administrator confirm that every dollar are used for legitimate purpose. By such means of monitoring funds, we can reduce the doubts of creditor banks and achieve mutual trust. We should optimize the way of right exertion of debtors and investors; practically realize the protection for debtors and investors' benefit during the reorganization procedure; we should make full play to the professional advantages of the professional and to improve the efficiency of corporation reorganization.