On The Cram-down In Reorganization Procedure

Reorganization plan is the"action guideline"of a reorganization process, playing a key role in pursuing a successful reorganization implementation. It embodies the re-adjustment of rights and compromises of interests of all parties involved in the reorganization procedure, so painful negotiations are bound to be experienced in the process of its reachment. In order to ensure the timely reachment of the plan and further to achieve the maximization of social benefits. A cram-down procedure has been developed with the modern reorganization theory, with the court to decide whether a draft reorganization plan is in line with the statutory standards and could be put in effect. How to improve both the procedural and substantive rules to reconcile the protection of private rights and implementation of public power has become the focus. China has adopted this rule in its 2006 Bankruptcy Law. However, the related provisions are too simple. This paper is to discuss the procedural and substantive rules for cram-down in China's current legislation, and trying to propose useful legislative amendments.In addition to the introduction and the conclusion section, this article includes three chapters. In the first chapter, the writer focuses on the basic theory of the compulsory approval of reconstruction plan. The writer begins with the concept and analyzes from three different points of view of law, politics and economics on the necessity and rationality of the mandatory approval system as well as to reveal its"big values". The second chapter is analysis about the compulsory approval of reconstruction plan both on the substantial and procedural aspects. At the startup stage, there are two big problems existing in the law: how to supervise the applicants? What documents and materials shall be provided for application? Although we have a basic standard for approval, there are still a few questions unresolved. In the third chapter, the writer gives suggestions on how to perfect the system. Based on the questions in the second chapter, the writer provides four feasible suggestions: 1, strengthen the construction of the Objection Coordination System.; 2, add a"damping system"; 3, clarify the discretionary standards to reasonably restrict the power of judicial discretion.