The Study On The Applying Of Equitable Subordination Doctrine In The Bankruptcy Distribution Of The Affiliated Enterprises

Nowadays, with the rapid economic development and the fast-appearing affiliated enterprises, the legal problems caused by the controller creditor’s rights are no longer tiny. When the subsidiary companies go bankrupt, how to deal with the controller creditor’s rights resulted from unfair behavior has become an urgent problem to be solved. However, our nation’s existing bankruptcy law system is rather traditional, and it lacks legislative regulation on the emerging problems, leaving some blank. Our country urgently needs to build a new legal system to deepen and remedy the existing one. Equitable Subordination Doctrine which stemmed from American case law can yet be regarded as an active exploration. This article, divided into four chapters, studies the application of Equitable Subordination Doctrine on the bankruptcy of affiliated enterprises.The first chapter puts forwards the questions. On the basis of introducing the present situation of the affiliated enterprises in China, this paper analyzes the phenomenon that due to the particularities of the affiliated enterprises, they pose a threat to the fair distribution of ordinary creditors and thus affecting the fair distribution of bankruptcy claims. Then the article proposes the issue how to deal with the claims in the bankruptcy distribution of affiliated enterprises.The second chapter introduces the origin and development of Equitable Subordination Doctrine. First, through the detailed exposition of the three landmark cases in American case law, this article shows the process from the initial appearance of this doctrine to its initial establishment. Afterwards, this article introduces the establishment of "three step test method", its written forms in American law and its development and application in other countries and regions. This chapter comprehensively expounds the doctrine and provides a reference for how to carry out the legislative construction in our country.The third chapter comparatively analyzes the denial of corporation personality, bankruptcy revocation system and bankruptcy void. There are some limitations in dealing with the problems of controller creditor’s rights in bankruptcy distribution, which reflects the necessity and urgency of creating or introducing a new system to deal with the problem of controller creditor’s rights.The fourth chapter puts forward the author’s own legislative proposals for the introduction of Equitable Subordination Doctrine to China. First of all, the author proposes to select a legislative model, and then analyzes the subject, the elements of the act, the subjective elements, and the results of the elements, the causality, the burden of proof distribution and other issues. In a word, this article preliminarily introduces the legislative framework of Equitable Subordination Doctrine in China.