Creditor’s Benefit Protecting During The Compulsory Corporate Liquidation Procedure

Shareholders’ applying for compulsory liquidation is a type of company compulsory liquidation, which directly makes their civil subject qualification extinct, that is companies’ losing their artificial legal personalities. In the process, companies, shareholders and creditors’ interests conflict with each other. Although the 10 th chapter of the current company law stipulates the basic procedure about dissolution and liquidation, most rules are too outlined to be practical.Introduction uses an actual case as a trigger, refine law theories involved in the shareholders applying for compulsory liquidation and the creditors’ protection, and demonstrates the purpose and significance of the topic. On this basis, research and sort the main presentation among the domestic theories and the practice, ultimately specify the research thoughts, research methods and the structure.The first chapter mainly discusses the basic theories of the shareholders for compulsory liquidation company issues, clarify its legal attribute, and lay the foundation for follow-up study. Most shareholders’ applying for compulsory liquidation of the company are caused by company deadlocks(including shareholders deadlock and the board deadlock), which is presided by the court. So there’s a huge difference among the shareholders’ applying for compulsory liquidation, company liquidation, bankruptcy liquidation, which of the important difference is that the shareholders apply for company compulsory liquidation under the condition that the companies’ sets are insolvent. In the process, companies, shareholders and creditors’ interests conflict among them. The first article of our corporation law makes it clear that one of its legal purposes is that “Protect the legitimate rights and interests of companies, shareholders and creditors”. However, the corporation law doesn’t clarify that which one should be placed the first rate to be protected. The creditors of the company include the employees, the government and the society, the ordinary creditors, and the ordinary creditors are also divided into secured and unsecured creditors. In the process, The public interests and the interests of creditors should come the first, for compared with the creditors’ interests, companies and shareholders’ interests belongs to “private interests”, numerous creditors’ interests largely is related with the "commonweal" and "joint interests" of the society, and information companies and shareholders get is more symmetrical than “outer” creditors, therefore when it comes to protecting their own interests, companies and shareholders take advantages obviously, so In the judicial practice, the interests of the "ordinary creditor" are more vulnerable to illegal infringement, so the priority should be given to protect the interests of the "ordinary creditors". In this paper, the creditors refer to the companies’ "ordinary creditors" in addition to the employees, shareholders, and the government, mainly forming the creditors’ rights in the companies’ business or transactions.The second chapter chiefly talks about the problem that shareholders’ applying for compulsory liquidation deters the execution of creditor’s rights. When confronted with the shareholders’ deadlock, companies will be dissolved by the court and forced liquidation, where is that shareholders for their own interests apply for the company compulsory liquidation to solve “the private dispute” between the shareholders, so it’s not reasonable to stop the execution of the creditors’ judgment because of shareholders’ applying for compulsory liquidation. The corporation law should set a time to determine whether it complies with the "bankruptcy" conditions about the cases on shareholders’ applying for companies’ compulsory liquidation. If the answer is positive, it should enter into “the bankruptcy procedure” according <Enterprise Bankruptcy Law>;if not, it should deal it as general clearing. Anyway, shareholders’ applying for companies’ compulsory liquidation can’t deter the execution of the creditors’ rights. When it comes to plea for withdrawing the applicant for companies’ compulsory liquidation out of resolutions of the shareholders’ meeting and the shareholders’ general meeting to exist, it should refer to the bankruptcy reorganization to rule and to protect the interests of creditors. If the liquidation obligations are not liquidated, the liquidation shall bear the legal responsibilities.The third chapter places more attention on the topic that whether the procedure of bankruptcy can be applied into the procedure of shareholders’ applying for compulsory liquidation or not. The current judicial interpretation above provisions shows that the legislation of the companies’ liquidation including the shareholders’ applying for the company’s compulsory liquidation is still blank. Supreme People’s court set that the bankruptcy procedure can be used into the company’s compulsory liquidation, which has brought great numbers of questions in juridical practice. The substantive conditions that leads to the boot of the bankruptcy is that the company can not pay off the debt maturity, and the assets are not sufficient to pay off all the debts or obviously lack of liquidity, which is to get the debts paid off with fair; Nevertheless the procedure of shareholders’ applying for compulsory liquidation, many companies aren’t in "bankruptcy", on the contrary, their assets are substantial, sufficient to meet all the debts, and have the ability to pay off the debts. It obviously can’t solve the questions in the liquidation, if the bankruptcy procedure is used into the company’s compulsory liquidation, which highlights the need to develop the company’s compulsory liquidation. After the companies are judged to go bankrupt, the execution of the judgment where the companies are the debtors are suspended, and the shareholders apply for the companies’ compulsory liquidation, if all the provisions are used without any regulation, it will damage the legitimate rights and interests of creditors.The fourth chapter mainly focus on the liability of the liquidator and the shareholders, director, actual controller of the company. When the liquidation can’t enforcement or delayed owing to these above subjects, they shall pay off the debts.The last part proposes on making advice and suggestion to the system design of the compulsory liquidation legislation of the shareholders’ application for compulsory liquidation based on the first three chapters, hoping to provide reference for the similar cases in the judicial practice.