Research On Insolvency Of Substantive Consolidation Of Affiliated Enterprises

Affiliated enterprises are an inevitable product of the increasingly large-scale,grouped,and fierce competition in the market economy.Thus,related-party transaction has become a common phenomenon in economic society.At the same time,the bankruptcy of affiliated enterprises requires special attention due to the special nature of the insolvent subjects involved.For a long time,insolvency of affiliated enterprises has complied with the provision of Article 2 of the "Law of the People's Republic of China on Enterprise Bankruptcy"(hereinafter referred to as "Enterprise Bankruptcy Law")which means the bankruptcy subject is an independent enterprise legal person.While the cases of bankruptcy of affiliated enterprises have many different debtors,it need to strictly control the starting conditions and procedures.However,China does not stipulate the applicable standards and procedures for insolvency of substantive consolidation of affiliated enterprises and legal procedure adopted by the courts in the provinces are also different.Therefore,it is necessary to sort out and analyze the standards,types and procedures of insolvency of affiliated enterprises,and to discuss the implementation of substantive consolidation in China.In addition to the introduction and conclusion,the article consists of four parts:The first part mainly analyzes the predicament and causes of the insolvency of substantive consolidation of affiliated enterprises.First,define the concepts of affiliated enterprises and substantive consolidation,clarify the scope of the subject of insolvency of substantive consolidation,and distinguish the difference between substantive consolidation in insolvency and procedural consolidation in insolvency.Secondly,summarizing the judgments and practices of the courts in the typical cases of substantive consolidation of affiliated enterprises in insolvency can pointed out that in the current judicial practice,the standards for the initiation of substantive consolidation in insolvency proceedings are not uniform,that is,"high degree of legal personality confusion","excessive cost of distinguishing the property of each affiliate member","serious damage to creditors' fair settlement interest" and other judgment criteria.Also,the operation of the procedure,such as the applicant,the competent court,and the trial method is inconsistent.Finally,analyze the causes of the above problems,Due to the lack of recognition and regulations on insolvency of affiliated enterprises in the legislation,the provincial courts have doubts about handling the insolvency of affiliated enterprises.The way of substantive consolidation in insolvency denies the independent personality of a corporate legal person,which is essentially contrary to the spirit of negation system of corporate entity,and this contradiction has made the court's decision more difficult.Therefore,how to determine the nature of affiliated enterprises in insolvency and determine the criteria and procedures for substantive consolidation is the focus of problem.The second part mainly discusses the necessity of substantive consolidation of affiliated enterprises and the typical methods of dealing with this problem in the field of extraterritorial insolvency law.On one hand,the substantive consolidation of affiliated enterprises has emerged injudicial practice.Although lack of legal requirements,some courts have explored this issue.Accurate interpretation and early establishment of the system of affiliated enterprises in insolvency is in line with China's realistic requirements and the value requirements of "Enterprise Bankruptcy Law".At the same time,it will warn the affiliated companies of improper related transactions,which is conducive to the standardization of market transactions.On the other hand,taking the US Bankruptcy Law and the United Nations "Guidelines on Bankruptcy Law Legislation" as examples,the article analyzes the rules adopted in the field of extraterritorial bankruptcy law in the initiation and operation of affiliated enterprises in insolvency,and give advice on how to determine the criteria for the commencement of an substantive consolidation and the role of the court under the procedure.The third part mainly analyzes the theory of affiliated enterprises in insolvency.From the starting conditions of substantive consolidation in insolvency,the protection of the overall interests of creditors,and the consolidation of creditor's rights and debts of affiliated enterprises,the article analyze the significance and impact of the negation system of corporate entity,the principle of equity,and the principle of substantive merger on the formation of a substantive merger system in China.First,analyze the connotation of negation system of corporate entity and compare its application with the "horizontal denial",the article and compare the similarity and difference between the "highly mixed personality of the legal person" and the "highly mixed personality" in the traditional legal personality denial system.Secondly,equitable Subordination doctrine is of great significance to protect the interests of creditors and adjust the debt-debt relationship.The article discusses and analyzes the theoretical significance of equitable Subordination doctrine and clarifies its impact on insolvency of substantive consolidation.Finally,it analyzes the connotation of substantive consolidation doctrine and the connection and difference between it and China's substantive consolidation of affiliated enterprises in insolvency,which provides a reference for China to establish a system of substantive consolidation in insolvency.The fourth part mainly discusses how to solve the substantive start-up standards and procedure design in China's system of substantive consolidation of affiliated enterprises in insolvency.The article summarizes the results of court trials in the cases of insolvency of affiliated enterprises in China for ten years,and combines the existing regulations on substantive consolidation of affiliated enterprises in insolvency,to discusses the principles,starting standards and procedural issues of substantive consolidation in insolvency in China.This article hopes that based on judicial interpretation,combining cases,existing academic achievements,and discussions on insolvency of substantive consolidation,discuss and distinguish more specific judgment standards in depth,and confirm the degree of confounding of various considerations of affiliated companies to provide a reflection for China to establish a system of substantive consolidation in insolvency.