The Directors Bear The Civil Liability For Creditors

When a corporation in good health, the object of the directors’ fiduciary duties is generally believed that the company or directors, but when the company is near insolvency, there is none interests of the shareholders in the company and the creditors become claimants of the residual value of the company. In this case, some of our scholars assume the directors should own fiduciary duties to creditors.This paper sorted out and studied the principal legislative model and enumeration legislative model.Additional,the paper studied the basic theory of directors owe liability to creditors which is the fiduciary duty, unlike civil law, common law willgenerally assume only directors owe fiduciary duties to the creditors when the company is on the verge of bankruptcy. In the United States Judicial practice, the scope of on the verge of bankruptcy is uncertain, the range of directors of fiduciary duties owed by creditors is uncertain. In accordance with the relevant case law, we classified scope of the fiduciary duty from narrow to medium to broad. the U.S. Department of Justice has experienced a negation of the directors of the creditor’s responsibility to determine, the Delaware jurisprudence Youyi NACEPF the v. Gheewalla case landmark cases as of the end of the proceedings of the types of cases.I started with the law about directors owe liability to creditors in many countries, based on basic theory of law (including debt theory of relativity and corporate bodies), economic theory, and corporate finance theory. I also collated and analyzed the data in many countries’judicial practice,especially focused on the question that whether directors owe liability to creditors when the campnay was on the verge of insolvent. That maximize the value of the company was irrelevant to shareholders’ or creditors’preferance of risk.As long as the directors fulfill fiduciary duties owned by the comany, they do not need to consider the special preferences shareholders or creditors who have conflict of interest between each other. As long as the directors maximize the assets of the company, to maximize cash flow, cash flow to cover the debt, debt interest and dividends from that sense, in fact, is to fulfill their fiduciary duties.In the he existing legal system in China, the protection of creditors is sufficient, additional requirements for directors to creditors bear civil liability is not necessary, if there is no other system to be his assistant, it would not work.If given the civil liability of the directors of the creditors, then it is quite possible creditor would be negative in ask the court to company bankruptcy, one of the reasons is that the creditor can ask the director to bear civil liability and civil liability of directors of creditors as a kind of indirect responsibility makes it easy for other creditors hitchhike; opposite, when the law does not require directors civil liability burden on creditors, the creditors know the company insolvent when more incentive to let it go to institute bankruptcy proceedings.