The Research On The Applicable Standards For Substantive Consolidation Of Affiliated Enterprises' Bankruptcy In China

Substantive consolidation is a special legal rule arising from bankruptcy judicial practice to solve the growing bankruptcy problems caused by affiliated enterprises.Substantive consolidation breaks through the barrier of independent personality of affiliated companies,centralizes and merges the assets of each affiliated company and pays off the creditors in a unified way.While reducing the cost of bankruptcy procedure and improving the efficiency of bankruptcy administration,it also completely changes the original order and the proportion of paying off the creditors,which has a fundamental impact on the interests of all creditors.Therefore,under what circumstances should substantive consolidation be justified,that is,the applicable standard of substantive consolidation rules has always been the core issue concerned by the theory field and practice,and is also the problem to be analyzed in this paper.At present,the substantive consolidation rule has been widely used in our country's judicial practice,but it has not yet been found in the legislative text.Judging from the existing typical cases,the applicable standards of substantive consolidation rule in China relies too much on the piercing the corporate veil rule of the corporate law,and lacks of attention and protection to creditors' reliance as well as the reasonable restraint to the court's discretion,resulting in an uncertain future of substantive consolidation.Through a comprehensive analysis on the development path of the substantive consolidation rules in the United States,it can be seen that the substantive consolidation rule in China and the United States have some certain commonness in the early stage,that is,the applicable standards for substantive consolidation are heavily dependent on other law systems instead of the bankruptcy law.However,the U.S.substantive consolidation rule gradually separated from other legal norms in the subsequent evolution and developed into an independent bankruptcy law rule,and judicial discretion was gradually restricted under the more stringent rules.As for the substantive consolidation rule in China,the applicable standards still lack a clear framework.And the academic circles now prefer to advocate the diversification of applicable standards,rather than reflect on therationality and judicial limits of individual applicable standard,which leads to the risk of abusing and misusing the substantive consolidation rules.In order to construct the applicable standards for substantive consolidation rule in China in the future,we must return the rules to the standard system of bankruptcy law.Starting from the value objective and legislative purpose of bankruptcy law,we should explore the applicable standards for substantive consolidation,that is,firstly,the application of substantive consolidation rule should be as predictable and certain as possible.Secondly,it shall conform to the principle of preserving and increasing the value of the debtor's property.Thirdly,the interests of creditors that have been determined before the commencement of bankruptcy proceedings should be reasonably protected so as to achieve fair and orderly liquidation.Fourthly,we should provide a certain path of interest balance for conflicts that may arise from the use of substantive consolidation rules.Based on this,applicable standards of substantive consolidation should focus on the bankruptcy administrative benefits with the degree of difficulty in asset separation as the core and the creditors' reasonable reliance to build a dualistic applicable standard.Specifically,when the court applies the standard of the degree of difficulty in asset separation,it should meet "Pareto Optimality" requirement as least.When applying the standard of reasonable trust of creditors,the court should first distinguish different creditors according to their contracting capacity,and then judge whether the trust of creditors is established according to individual cases.The former can maximize the value of the debtor's property,making the substantial merger increase the debtor's own value while solving the confusion of the related enterprise's property.The latter not only accords with the value purpose of protecting creditors' original rights and interests,but also provides a path for dissenting creditors to balance their interests.While pursuing the value goal of bankruptcy law,the dual application standard also pays attention to the reasonable trust of different creditors.Through the way of evidence review,which considers whether the evidence provided by supporters and opponents meets the standard of proof,it increases the certainty and predictability of the application of substantive consolidation,and conforms to the basic principle of prudent application of substantive consolidation.