Research On Equitable Subordination

With the rise of the economy, corporation is developing from a single form into the group of companies, in which holding company and subsidiary company is the most typical manifestation. On the one hand, holding company and subsidiary company could maximize the profits due to the convenience in information collection, the reduction of transaction costs and other advantages in term of the close relationship, funds and personnel exchanges; on the other hand, however, the interests of creditors in the subsidiary company may be compromised if the holding company dominate improperly because of their control relationship. As the transactions between the shareholder and the company are not prohibited in the law, holding company may abuse the authority in the transaction process with subsidiary company and lead to the existence of unfair behaviors. According to the current bankruptcy law, in the subsidiary company bankruptcy, holding company based on inequitable conduct claims is associated with other creditors to participate in bankruptcy allocation; this is very unfair to other creditors of subsidiary company. The principle of equitable subordination arises from the American case law, it demonstrates when subsidiary company goes bankrupt holding company based on inequitable conduct on the subsidiary company are entitled to the claims should be subordinated to other creditors. Here, the principle is suggested to be introduced. And the content of this thesis is divided into four parts:firstly, the introduction on the emergence and development of the Equitable Subordination; Secondly, the discussion of the theoretical basis and practical significance; thirdly, explore the necessity of recommending this principle and the legislative options; finally, the applicable rules of the principles of equitable subordination。...