On The Protection Of Creditor 's Interests In The Dissolution And Clearing Of Chinese Companies

Protecting the interests of company creditors has been one of the core values of theCorporate Law. Dissolution and liquidation, as an essential part of the company’smarket exit and termination, are vital for shareholders, creditors and employees.When a company is dissolved, it cannot profit from external operating and its relevantparties can only claim on the extent of existing assets. As the outsider of the company,the creditors usually cannot directly participate in and effectively monitor theprocessing of liquidation, thus their interests are likely to be infringed by shareholders.This article carries on the discussion about the procedures for dissolution andliquidation, and the realization of interests of creditors in a fair, impartial and efficientway. In addition to the introduction and conclusion, the article is organized into threeparts.The first part describes the meaning and concepts related to dissolution liquidation. Itclarifies the reasons and significance of protecting the interests of creditors. Valuingand improving the dissolution liquidation is a practical issue and should not beneglected.The second part analyses and demonstrates the dissolution and liquidation system.The system is applies to regulate conducts of relevant main bodies, enable theliquidation procedures to operate smoothly and protect creditors’ rights and interests.This part gives a systematic overview of the liquidation procedures and also paysgreat attention to the essentials closely linked to the interests of creditors, such as thepositive role and deficiency of liquidation group set-up, credit confirmation andprocedures connected between dissolution and liquidation. The author advocates thatcreditors should have rights to select members of liquidation group and strengthensupervision over the liquidation group. And also believe that the specific issues ondissolution and liquidation procedures need to be further refined. The more creditorsare informed about the liquidation processing, the less their interests will be infringed.The third part explains the relief system when creditors’ interests are infringed.Although a well established liquidation system could standardize the proceedings ofliquidation, the system itself does not necessarily guarantee the realization of creditors’ interests. The system will work only if the corresponding responsibilityinvestigation system is set up and matches up with it. The author provides a practicalapproach to claiming creditors’ rights combining legal liabilities concern civil lawwith liquidation regulations in commercial law. It includes responsibilities of therelevant obligations during the period that the company is dissolved but not liquidatedyet; responsibilities of the liquidation administration after the procedure of liquidationis started and responsibilities of shareholders under special circumstances, such asregulating thoroughly the responsibilities of main bodies closely connected to theinterests of the company and creditors in order to protect and realize creditors’interests.