Research On Creditor Protection In The Bankruptcy Of Affiliated Corporations

Affiliated corporations have become the choice of more and more managers because of their advantages,such as reducing transaction costs and forming economies of scale.The concealment of the dominance among affiliated corporations exposes the interests of creditors of affiliated corporations to the risk of infringement at all times,and this risk transforms into actual damage due to the bankruptcy of affiliated corporations.The protection of creditors in the bankruptcy of affiliated corporations is mainly achieved in the case law by the application of the Substantive Consolidation Doctrine and the Equitable Subordination Rule.The "Minutes of the National Court's Bankruptcy Trial Work Conference" issued by the Supreme People's Court in March 2018 has initially established a system to protect creditors of affiliated corporations in the bankruptcy based on the Substantive Consolidation Doctrine and the Equitable Subordination Rule,but this system still has many deficiencies.Therefore,in order to maintain social credit and promote economic development,it is urgent to improve the protection system of creditors in the bankruptcy of affiliated corporations.This thesis mainly includes four parts.The first part defines and classifies affiliated corporations,and puts forward the concept of the affiliated corporation bankruptcy.On this basis,it is concluded that the affiliated corporation bankruptcy has the characteristics of the clique,the integration of bankruptcy applications,and the complexity of interest relationships.After that,it analyzes the actual needs and main theories of the protection of creditors,and proposes that the protection of creditors in the bankruptcy of affiliated corporations should follow the principles of fair settlement,balance of interests,and the principle of value maintenance and appreciation of the debtor's property.The second part analyzes the problems of the protection of creditors in bankruptcy of affiliated corporations in China from the system and practice.The deficiencies of the protection system for creditors in bankruptcy of affiliated corporations,including the unitary standard of the Substantive Consolidation Doctrine,the limited situation of the Equitable Subordination Rule,and the lacking of the Interest Compensation Rule.Through empirical analysis,it is found that the problems in judicial practice maintain the overall consistency with the deficiencies of the existing system.The third part summarizes the foreign experience of America and Germany.As the country of origin of the Substantive Consolidation Doctrine and the Equitable Subordination Rule,the United States has a variety of applicable standards for the Substantive Consolidation and a wide range of applications for the Equitable Subordination.Germany provides protection to the creditors in the bankruptcy of affiliated corporations through the provisions of the Interest Compensation Rule by making the controlling company assume corresponding responsibilities to the subordinate companies.The fourth part bases on the problems in China's existing system and practice,combines with foreign experience,puts forward the dualization of applicable standards of the Substantive Consolidation Doctrine,the expansion of the situation of the Equitable Subordination Rule,and the introduction of the Interest Compensation Rule in the bankruptcy proceedings,in order to improve the protection system for creditors in the bankruptcy of affiliated corporations.The applicable standards for the Substantive Consolidation Doctrine should include the confusion of corporate personalities and benefitting creditors.The applicable situation of the Equitable Subordination Rule should be expanded,including the existence of improper interest transfer behavior,acting as a mitigative alternative of the Substantive Consolidation Doctrine,and increasing the possibility of reorganization.The introduction of the Interest Compensation Rule should clarify the method of interest compensation and the coordination with other rules.