The Application Of Substantive Consolidation Principle In Chinese Affiliated Enterprises' Bankruptcy Law

The legal system and rules may not keep up with the pace of economic and social development.For example,one affiliate enterprise faces problems when exiting the market because of insufficient legal support.But in order to efficiently solve the creditor's rights disputes.It is necessary to use substantive consolidation to solve the bankruptcy of affiliated enterprises.Substantive consolidation is a procedure derived from American bankruptcy law,in which the assets of individual members of a corporate group are pooled so that claims of third-party creditors may satisfied during bankruptcy proceeding.At the stage there is no provision concerning substantive consolidation in legal regulations in China.However,in our judicial practice,many courts have already applied this principle in certain special bankruptcy cases.But our country still presents a number of problems,such as no clarity in candidacy,no uniform in consolidation principle,variety of bankruptcy reasons,etc.Therefore,the article analyzes the real world application of the substantial consolidation principle and related theories by case study.Except for introduction,the article consists of the following four parts:1.Case introduction and focus of debate.Based on research,key focuses of debate are whether the applicable conditions of affiliated enterprises bankruptcy liquidation and require separate damage to the interests of creditors;affiliated enterprises' bankruptcy is applied by the creditor or the debtor or by the bankruptcy administrator;affiliated enterprises' bankruptcy is determined by a court decision or by other means.2.The applicable conditions of the substantive merger of affiliated enterprises.In this case,there are two different views about the applicable conditions of affiliated enterprise bankruptcy.Creditors believe that should prerequisite to damage the interests of creditors under the applicable requirements of the substantive consolidation rule.On the other hand,the court held that the personality mixed with bankruptcy substantive consolidation can be achieved between related enterprises.This paper carries on the analysis to the related theory,that the court of our country hold the opinion that the applicable conditions of the affiliated enterprise bankruptcy substantive consolidation mainly adopt the personality confusion standard,which does not require separate liquidation related enterprises to harm the interests of creditors.The United States now calls for a measure of whether the mandatory separation of liquidation damages the interests of creditors.According to the present situation of our country,whether separate liquidation damages the interests of creditors with a certain degree of difficulty in the proof.Judge can dealing with specific cases according to the facts of the case.It's more suitable for China's current situation of affiliated enterprise bankruptcy.3.The application and decision of the substantive consolidation.There are mainly creditors,debtors and bankruptcy administrators in the academic circles about the applicant.Through the comparison of the creditor and debtor and bankruptcy administrator,the bankruptcy administrator has advantages in affiliated enterprises' bankruptcy.On the other hand,in the process of substantive consolidation.It is usually used to decide whether or not to proceed with the substantive procedures by using the hearing,the creditors' meeting and the court's decision of the three procedures.Through the analysis and comparison of the three systems in the affiliated enterprise bankruptcy application,the court has the information superiority in the master case.In our country it is more suitable for the court as the main decision of substantive consolidation program.4.The judgment of the case and its enlightenment.The case does not support the appellant's grounds for appeal.It can be seen that China adopted in the applicable conditions of affiliated enterprise bankruptcy substantive consolidation on the legal personality confusion standard,and for the interests of creditors of the liquidated damages are separated by judges discretion.The application on the main body of this case is the debtor application.When deciding on the subject is the court decision.However,there is no unified situation in the applicable conditions and applicable rules for the merger and bankruptcy of affiliated enterprises.Although the personality system for the development of bankruptcy substantive consolidation provides relevant reference.But substantive consolidation bankruptcy is in urgent need of the introduction of relevant laws and regulations and judicial interpretations or by guiding case in the form of a unified standard.In order to better meet the related enterprises at the present stage of economic development under the market exit procedures.