Legal Problems Of The Bankruptcy Property Distribution Order

Bankruptcy means the objective state that the debtor appears severe deficit because of poor management and administration, which lead to the insufficiency to compensate for the debts by his all assets, or the incapability for paying off due debts. Bankruptcy law is the assembly title for the laws and regulations which state for bankruptcy. It includes that when the debtor is unable to pay off the owing debts or the liabilities overcomes the assets, the court will claim its bankruptcy and presides over the distribution on the whole assets coercively to pay the entire creditors in the fair way, or the concerned parties decide to reorganize through the reconciliation of two sides, instead of bankruptcy measure. Nevertheless, the concepts of bankruptcy and bankruptcy law experienced a vicissitudinous historical process. Early bankruptcy indicates the debtor' status of insolvency. Early bankruptcy legislation is a procedure which aims at preventing the fraud of debtor and giving fairness and sequential payment to all credits. But with the development of the economy and society, the emphasis of bankruptcy law moves to helping the debtor clear off the burden of failed management and begin his new economic life. The trend makes us knowing that in fact the bankruptcy legislation are searching for a resolution to the collision of rights by a impartial method, then fulfils the balance of the concerned parties' benefit. The sequence and the mode of bankruptcy distribution in the bankruptcy law would affect market orderliness and efficiency in which the law wants to construct for the best setup of resources and the maximum of social integral benefit. Thus, the sequence of bankruptcy assets' distribution is of great importance.In China, during a long period, we were under planned economy and deeply effected by dated thoughts. No condition can be resorted for the establishment and application of bankruptcy. We not only set a bankruptcy law, but also treat the bankruptcy as the exclusive phenomenon of capitalistic economy and refuse it. "Law of the People's Republic of China on Enterprise Bankruptcy (For Trial Implementation)" and "Civil Procedure Law of the People's Republic of China" (Procedure for Bankruptcy and Debt Repayment of Legal Person Enterprises) gradually set up. Many correlative judicatory explanations fashionably turned out. They played a significant role. New "Bankruptcy Law of the People's Republic ofChina (draft)" advanced to proceedings. It makes the newest stipulations on correlative systems. But the draft is still not very reasonable and integral on the problem of sequence of bankruptcy assets' distribution. The most salient problems are: the scope of bankruptcy assets isn't precisely defined; stipulations on exclusion right make the ascription of guaranteed debts contradict; the payment for the owing salaries and social insurance fee went bad in practice; the legal priority to tax payment became obstacle for the payment to creditors.The author summarized the principles of the bankruptcy assets' distribution in our country though the analysis to bankruptcy's cores and prehension of practical conditions in our bankrupt enterprises. These are the principle of legal sequence and the principle of substantial fairness. The author delivers the thought of our sequence of bankruptcy assets' distribution mode by referring the legislation abroad. The sequence is divided for 3 parts. The first one is the payment for the preferential debts. The second is for normal debts. The last is for inferior debts. In legislation of normal corporation's bankruptcy, we must make clear about the scope of bankruptcy assets, then pay off the debts as the sequence as follows: bankruptcy fares and debts for the entire creditors' benefit; salaries and social insurance fee; tax or guaranteed debts; normal debts; inferior debts. Thereinto, on the conditional system of bankruptcy fares and debts for the entire creditors' benefit, we should make adjustment moderately; for the payment of salaries and social insurance fee in normal corporations, we should have restrictions; when the tax and guaranteed debts occur conflicts, they should accept payment proportionally. Financial institutions in China, such as commercial banks and insurance agents, should protect the advantages of depositors, especially the depositors by personal saving accounts, and put its position in precedence according to the coming legislation of the sequence of bankruptcy assets' distribution. After the course of government assistance, the state-owned enterprises should obey the stipulations of the new bankruptcy legislation and then launch the distribution, namely to distribute the assets as the normal corporations do.