Study On The Cram-down Of The Reorganization Plan System

Bankruptcy law plays a very significant role in the law system of commodityeconomic society. In comparison with the traditional bankruptcy law, modernbankruptcy law centers on “rescuing”. Since the1700s, each developed country hascarried out reform for the bankruptcy reorganization procedure, rescuing theenterprises in debt trouble by powerful legal measure. The new ‘enterprise bankruptcylaw’ formally implemented since June1st,2007introduced the unusual bankruptcyreorganization system. And most important of all, the cram-down system involved inthe bankruptcy reorganization system aims at improving the success rate ofreorganization. The reorganization plan is the key elements of the reorganizationprocedure, whose approval and effective implementation can result in a decisiveinfluence on the reorganization procedure for the enterprise. Nevertheless, it will alsocause a substantial effect on the creditors and other interest parties. In practice, theapplication of compulsory approval system is very cautious as an exotic. How tounderstand the necessity of the cram-down system? How to further confirm thecriterion for the cram-down system, and how to relief the improper applications of thesystem? It is the three difficult problems that the academic and practical circles couldn’tavoid facing up to. All mentioned above, this paper focused on the cram-down of thereorganization plan system.There are26000words in the article except the Introduction.This paper is divided into four parts.The first part outlines the cram-down of the reorganization plan. First of all, wedefine the concept of the reorganization plan by analysis and comparison. Secondly, wedescribe the normal approval and compulsory approval respectively and discuss therationality of the compulsory approval system. Finally, we introduce the law in terms ofcram-down of the reorganization plan system in United States of America, Britain,Germany, France and Japan.The second part concerns on the use of the cram-down power. At first, weintroduce the necessary condition for examination and based on that we will summarizeseveral basic principles the court should obey which composed of the principle ofminimum acceptation, the best interests, fair and equitable, feasibility principle as well as the absolute priority rule and the “new value” exception. And then we describe howthe courts examine the reorganization plan under the guidance of these principles andfinally make the decision for the approval.The third part makes study on the abuse and relief of the power for cram-down.This part points out the cause of abuse including the power rent-seeking, externalintervention, the ability of adjudicating of the judge and the abuse of power of filingpetition for cram-down by parties. These problems may lead to very negative influenceon the realization of legislative purpose of cram-down power. Thus we introduce twokinds of relief procedure preventing the power from being abused at the end of this part.The fourth part focuses on the improvement of related systems of cram-downsystem. Regarding the problems exist in the process of the exertion of cram-downpower, we make simple exploration on related law system in China and raise someproposals from four aspects.