The Construction Of Personal Liability System Of Directors To Creditors In The State Of Company Insolvency

The theme of this paper is the construction of the civil liability system of directors to creditors in the event of de facto bankruptcy.With China's economic development entering a new stage,traditional enterprises are facing more and more financing difficulties and market risks,and the number of bankrupt enterprises is increasing year by year.However,many enterprises that have reached the bankruptcy standard fail to stop operation and withdraw from the market as soon as possible,but continue to engage in high-risk business activities,which further reduces the debt-paying assets of enterprises.Due to the lack of creditor's fiduciary duty theory and personal responsibility mechanism,directors often ignore the interests of creditors.Therefore,it is necessary to study the current economy in China.In order to protect the interests of the creditors of the bankrupt company,it is feasible to construct the system of personal civil liability of the directors of the factual bankrupt company to the creditors under the legal environment.The first chapter of this paper analyses the current situation of the liquidation of creditor's rights faced by the factual bankruptcy of Chinese companies and the shortcomings of the current legal provisions.A notable feature of the current practice of bankruptcy trial in China is that directors deliberately delay the process of corporate bankruptcy,which results in that the amount of liabilities of bankrupt enterprises is generally much higher than that of corporate debt-servicing assets,resulting in a very low proportion of ordinary creditor's rights.Specifically,a large number of enterprises continue to operate through loans or delays in debt performance,even high-risk business activities,when they are insolvent or unable to pay for a long period of time.As a result,when they finally enter the bankruptcy proceedings,there are few company assets that are relatively sufficient,resulting in the failure of creditors' creditors' rights.However,the existence of the company's independent personality system makes creditors can only be paid off by the company's property,and can only accept the result of insufficient bankruptcy property.However,directors who know or should know that the company is insolvent or unable to pay and still let the company continue to operate or even operate at high risk do not need to bear any personal responsibility for this.Therefore,the bankruptcy legal system,originally designed to protect the interests of creditors,has become a haven for debtors to escape debts.In view of the dilemma of liquidation of creditor's rights faced by the factual bankruptcy of Chinese companies,due to the absence of the provisions on "director's personal liability to creditors",the current legal provisions can not effectively solve this problem.First,there is a lack of general provisions on directors' liability to creditors.The general principles of civil law stipulate that the directors' professional behavior is absorbed by the legal person's behavior,which results in directors having no space to bear responsibility for the external third party.In addition,although there are provisions on directors' personal responsibility for the specific third party outside the company in the company law,the scope of the third party does not include the creditors of the company.Second,there is a lack of special provisions on the liability of directors to creditors when a company goes bankrupt.The Bankruptcy Law passed in 2006 stipulates for the first time that if a company goes bankrupt due to director's misconduct,it shall bear civil liability according to law.However,the object ofobligation determined in this article still refers to the company itself,and the object of compensation for directors is the company itself,so it can not protect the overall interests of creditor groups.In addition,although article 128 of the Bankruptcy Law provides for the personal responsibility of directors to third parties,it is only for specific acts.Thirdly,because it is difficult to identify that directors have subjective malice to damage the interests of creditors,bankrupt creditors can not claim compensation from directors on the basis of "pure economic loss" under the Tort Liability Law.In view of the dilemma of liquidation of creditor's rights and the deficiencies of current legislation,Chapter II focuses on the necessity of directors' civil liability to creditors when the company's factual bankruptcy occurs.At the same time,it puts forward the theory of directors' fiduciary obligation to creditors,which serves as the theoretical basis for directors' civil liability to creditors.The fiduciary duty of directors is mainly the duty of loyalty and the duty of care.Generally speaking,the director's fiduciary duty is directed at the company and shareholders.However,when the total assets of an enterprise are insufficient to pay off all debts,the shareholders' interests in the company's property are in fact negative.Generally,company laws in various countries stipulate that the remaining assets of the company's assets,including bankruptcy expenses,wages of employees,taxes,will be distributed by creditors according to the proportion of creditors' rights.Therefore,it is fair at this time.The remaining assets of the company are essentially owned by the creditors.Under such special circumstances,the interests of enterprises have been transformed into the interests of creditors of enterprises.This determines that the company directors should extend their fiduciary obligations to the creditors of the company.Chapter III of this paper makes a comparative analysis of the relevant systems of foreign countries,mainly discussing the German model of directors' delayed liability for bankruptcy applications and the British model of liability for improper transactions,and further analyzing the possibility of various directors' liability regulation models for bankrupt creditors to learn from China.German Civil Code and Bankruptcy Law stipulate directors' obligation to apply for bankruptcy against creditors.According to article 823,paragraph 2,of the German Civil Code and article 15 A of the Bankruptcy Law,when a company meets the bankruptcy criteria,directors should apply to the court for bankruptcy without delay,otherwise they need to bear personal responsibility.For the time limit for applying for bankruptcy,the German Bankruptcy Law clearly stipulates three weeks.In order to limit the unreasonable trading behavior of directors of factual bankruptcy companies when the company's prospects are uncertain,the UK has established the system of directors' liability for improper trading.Specifically,directors and shadow directors should bear civil liability to creditors if they know or should know that the company's bankruptcy liquidation is inevitable,but they have not taken any reasonable measures to reduce the losses to creditors.?On the basis of comparative analysis of the above two typical models of extraterritorial liability regulation,this paper advocates that the British model of liability for improper transactions should be the main one,while the German system of liability for delayed application for bankruptcy should be adopted to construct the personal liability mechanism of directors to creditors in the event of corporate de facto bankruptcy in China.On the premise of defining the responsibility system of directors to creditors when transplanting the relevant systems of Britain and Germany to construct the de facto bankruptcy system of our company,the fourth chapter of this paper demonstrates the concrete content of the system construction in detail.Firstly,the principle of directors' liability to creditors and the burden of proof should be established.In principle,directors' fault should be taken as the precondition,that is,directors' knowing or knowing companies have entered the de facto bankruptcy state.Effective measures should be taken to stop improper transactions,prevent further deterioration of business conditions and apply for bankruptcy declaration to the court in time after the arrival of a specific time point,but no such action has been taken.In the allocation of burden of proof,creditors only need to prove that their rights and interests are damaged by the director's behavior,and thedirector bears the burden of proof whether the director has fault or not.The second is to clarify the starting standard of directors' fiduciary obligations to creditors.Directors shall assume fiduciary obligations to the creditors of the company when the company meets the bankruptcy criteria.The bankruptcy standard stipulated in the Bankruptcy Law of our country is higher than that of Germany and other countries.Only the payment by the debtor can not constitute the bankruptcy of the debtor.In order to urge the debtor to pay the debts due in time and prevent the debtor from further weakening its ability to pay debts,in order to better protect the interests of creditors,it is necessary to take the insolvency or insolvency of the debtor as the criteria for determining the bankruptcy of the debtor.Therefore,it is clearly stipulated that directors should assume fiduciary obligations to creditors when the company is unable or insolvent to pay its debts.The third is to stipulate the rights and obligations of directors to apply for bankruptcy.According to the provisions of the current Bankruptcy Law,the application for bankruptcy belongs to the debtor's rights rather than obligations.However,in the absence of statutory mandatory circumstances,unless the debtor's assets are on the verge of exhaustion,we can hardly expect the debtor to apply for bankruptcy in time to ensure the adequacy of the remaining assets.In order to solve this problem,it is necessary to draw lessons from German regulations and establish bankruptcy filing as the rights and obligations of directors at the same time.In addition,based on the risk of business activities and the principle of enterprise maintenance,in order not to interfere excessively in the operation of the company,it is necessary to give directors a certain choice space.Directors should be allowed to judge whether the company has the possibility of resuming normal operation and make efforts to do so through a comprehensive review of the overall operation of the company.Therefore,a statutory maximum time limit for filing for bankruptcy should be set for directors.This paper holds that it is advisable to set the time limit for bankruptcy filing to 30 days.If the company's operation improves within 30 days,the time limit for bankruptcy filing can be extended for another 30 days.Fourthly,it stipulates the nature of director's liability for creditor's personal civilliability,the scope of compensation for damages and the reasons for exemption.Directors' personal liability to creditors should be defined as supplementary liability;the scope of damages should be differentiated according to the time of creditor's rights.For creditors who enter before the company's factual bankruptcy and whose creditor's rights relationship survives until the company's factual bankruptcy,the scope of compensation should be the difference between the amount of liquidation that directors can get from the company before the implementation of the wrongful act and the amount of liquidation that directors can get from the company after the implementation of the wrongful act;for creditors who enter after the company's factual bankruptcy,the losses they suffer belong to In the case of "loss of trust interest",the scope of loss extends to all creditors' rights.Finally,in order to prevent the excessive responsibility of directors from restricting the development of companies,China can also follow the example of the United States to introduce business judgment rules to limit the liability of directors appropriately.