Research On Substantive Consolidation Of The Affiliated Companies In Bankruptcy

We enforce Bankruptcy Law in 2007,which deals with the single corporate entity.Obviously,insolvency of affiliated companies doesn't stipulated in Bankruptcy Law.The rule is "one company,one insolvency,one proceeding".However,affiliated companies are composed of entity which has a legal personality,and gradually become economic unit.When the aiffiliated companies enter bankruptcy at the same time,due to the assets and liabilities seriously mixed,creditors' benefits can't be fairly protected.Despite the absence of legislation,judges face with issues that may better be addressed by reference to a single enterprise rather than a single corporate entity,developing substantive consolidation in bankruptcy to achieve results that more accurately reflect the economic reality of affiliated companies.And this paper mainly research legality and rationality of substantive consolidation in our judicial practice,introducing a new legal system to solve the problems and interests-imbalance caused by the bankruptcy of affiliated companies.This article is divided into five chapters,apart from the introduction:Chapter one identifies the standard of affiliated companies and the basic meanings of substantive consolidation in bankruptcy proceeding,mainly by introducing its connotation,distinctions of restrictions on affiliated companies damaging the interests of external creditors due to improper transactions,among Bankruptcy Law and Corporation Law,further analyzing its value-basis to justify it.Chapter two uses the method of empirical investigation,selecting the judicial cases to analyze the constitutional elements of substantive consolidation in bankruptcy so as to better dig out the problems and find the root of the problems.Chapter three based on the above two parts,focusing on the legitimacy and rationality of substantive consolidation in bankruptcy.The theoretical basis is enterprise entity doctrine.At the same time,the paper attempts to analyze the rationality from theories and economic analysis of law.Chapter four firstly summarizes different mechanisms dealing with the bankruptcy of affiliated companies and divides into substantive consolidation and non-substantive consolidation.Then,comparing to the America,United Nations and Germany,the paper devotes to finding one approach matching our circumstance.Chapter five based on analysis in the above different routes,China should introduce the principle of substantive consolidation from the three aspects,and construct the legal system of substantive consolidation in bankruptcy,which including the substantive requirements,the procedural requirements and the exceptions,in order to respond to the illegal status of substantive consolidation of affiliated companies in current bankruptcy judicial practice.