Securities Company Bankruptcy Procedure

Security companies are most important participators in the security market. On the one hand, they provide their professional service as bridges for issuers and investor, such as assisting and recommend issuers to be listed on the stock market, delivering securities, working as stockbrokers. On the other hand, they are investors and engaged in investment staff. However, with the adjustment of our security market, those fundamental problems and fatal conflicts about security companies, which have been existed for a long time, broke out at the same time. Dozens of security companies are close down, some of them filed of their bankruptcy petition with court, but only few of these petitions are accepted. Lack of necessary system support and approach, the bankruptcy procedure of security companies doesn't measure up the rules of market economy and doesn't meet the requirement of law.At present, the bankruptcy procedure of security companies in our country is administrative and judicial. China Security Regulation Committee (CSRC) will take some administrative measures to the security company who needs to exit market through bankruptcy, such as punishment of closing down or dismissing its license to dealing with security business. The court will not accept bankruptcy petitions about any security company until liquidator authorized by CSRC has liquidated it and meet the standard of "two agreements and five accomplishments". First of all, this article set forth the keystones of administrative and judicial stages. In the administrative process, executive liquidator has five duties. The first one is to clear up security company's assets. The second is to register creditor's rights of individuals and customer's balance, then pay for them. The third one is to transfer security asset of the security company to another one. The forth is to posit its employee or constitute a feasible plan about employee arrangement. At administrative stage the court will give some judicial assistants, of which the most important one is to issue "deferment". Deferment here means all the courts in our country should suspend acceptance for those civil cases whose defendants are security companies having been taken measures by CSRC, suspend trail for those having been accepted, and suspend enforcement for those executive cases whose object is the security companies having been taken measures by CSRC. At judicial stage, the court will set up a judicial liquidator; organize a creditor meeting and distribute property of the security company. Judicial process along with administrative process has some rationality in the situation in which there is no rule referring to bankruptcy of security company, however it also has some problems, such as administrative force leading bankruptcy instead of judicial force, difference treatment between individual investors and institution investors. The greatest problem is some measures are not only obey the law, but also conflicted with them.Part 3 recommend a good example of security company's bankruptcy in other countries—the bankruptcy of security brokerage firms in USA, emphasis on the Security Investor...