Research On Rules On Executory Contracts In Bankruptcy Proceedings

Simply speaking, an executory contract refers to a contract which has been entered into before the acceptance of a bankruptcy petition but is not yet been fully executed by both parties after the acceptance of a bankruptcy petition.In practice, when an enterprise goes into bankrupt proceedings, most of its contracts are entered into before the bankruptcy. How to handle the executory contracts and its effects will be directly concerned with whether the debtor can continue operating, and will also affect the property value of the debtor. There are some articles regulating how to deal with executory contracts in Law of the People’s Republic of China on Enterprise Bankruptcy ("Bankruptcy Law"); however, compared with some developed countries, the relevant stipulations in Bankruptcy Law are simpler which does not reflect the complication and universality of the executor contracts.Firstly, this paper defines the concept of executory contract in China, introduces and analyzes several definition standards, and on this basis defines the executor contract in the context of our country. Since the general rules under the contract law go against the policy objective of the Bankruptcy Law which aims at rescuing bankrupt enterprises and creditors’ collective settlements, the Bankruptcy Law establishes special rules different from those under contract law to deal with the executor contracts which grant bankruptcy administrator the right of choice, breaking the general principle of the contract law. Therefore in the second chapter of this paper, it researches the relationship between the rules for executory contracts and relevant systems under Contract Law as well as the handling, with the focus on defense right system for contract execution and contract termination system under Contract Law.Then in the third chapter it analyzes the principles for executing the option of bankruptcy administrator, saying principle of maximizing the property value and principle of non-seperation, and further details the contents of option of executory contracts. In the following Chapter Ⅳ, Chapter Ⅴ and Chapter Ⅵ, the paper respectively discusses the problems of elements, validity and limits etc. for the bankruptcy administrator to choose to continue executing the contracts or terminating the contracts, and defines that the laws should grant the bankruptcy administrator with the right of choosing to transfer the contract, meanwhile, it also puts forward the elements and limits for executing transfer right. In the research process, the parts of laws in other countries which can be used by us are referenced by means of comparative study, making an attempt to propose reasonable suggestions for improving the handling rules for executory contracts in Law of the People’s Republic of China on Enterprise Bankruptcy.