The Research Of Equitable Subordination Doctrine

With the development of economy, the forms of business organizations are becoming more and more diversified. Affiliated company is able to improve business efficiency, and expand commercial scale. By contacting each other, Affiliated company can quickly mobilize a variety of resources to ensure the rapid increase in the company’s profits. However, it can not be ignored that those having control over the company will abuse their own interests, making some kind of inequitable conducts to obtain credit, resulting in damage to the interests of the subsidiary company. When the subsidiary company bankrupts, its creditors are not likely to get proper settlement.Equitable Subordination Doctrine is an assignment in bankruptcy that means to adjust the order of paying off credits, focused on whether those having control over subsidiary company should be subordinaed. After the reform of corporation capital systems, the monitoring system of company credit maintenance should pay more attention to “technology afterwards”. The Equitable Subordination Doctrine is an equity-based remedial measures for the protection of creditors of the company, and also is supplement to the system. This article analysis Equitable Subordination Doctrine from the following aspects.The first chapter introduces the basic theory and the beginning of a The Equitable Subordination Doctrine.The changes in the monitoring system of company credit maintenance provided an good opportunity for applying the Equitable Subordination Doctrine.This is a new methods to the protection of creditors’ rights. By analyzing three American classic case, the chapter summed up the general background of the Equitable Subordination Doctrine and its legal basis.The second chapter analyzes the development of the Equitable Subordination Doctrine in the United States and other countries and regions. Including the development process and the theoretical debate in United States between equitable subordination automatic subordination. It also describes the attitudes and legislation in Canada and Taiwan. These experience will provide some reference value to our country.The third chapter is the analysis of the necessity of applying the Equitable Subordination Doctrine.Our country once have tried to apply it to our law system though it was not been allowed. However, changes in monitoring model is a valuable opportunity. “Piercing the corporation’s veil” and “the right of bankruptcy rescission” can indeed protect the interests of creditors, but they still have their own limitations. The Equitable Subordination Doctrine is able to compensate the gapes in laws well.The fourth chapter is the analysis of elements of applying the Equitable Subordination Doctrine and some recommendations. This chapter discusses the subjects should be ruled, typically forms of misconduct, as well as the subjective element and the burden of proof, combined with existing laws recommendations with some modifications.