Research On The Merger Bankruptcy Institution Of Affiliated Enterprises

With the rapid development of our country’s economy,the enterprise owners usually do not choose a single company business model,for many purposes,usually operate in the form of two or more independent companies.As an initial economic phenomenon,affiliated enterprises have no clear and specific definition in China’s legal field.It is an inevitable product of China’s rapid economic development,which expands the scale of production and operation of enterprises,reduces the cost of enterprise market competition and helps enterprises gain advantages in market competition.However,the organization of affiliated enterprises is complex and internal transactions are frequent.The controlling enterprise obtains illegitimate interests and indirectly infringes the rights and interests of creditors.Affiliated enterprises have brought prosperity to China’s economy and challenges to the traditional legal system.They have aroused great concern and controversy in the judicial field.But China’s current legal protection for the interests of the affiliated enterprise external creditors is far from enough.Therefore,how to legislate and regulate the bankruptcy of affiliated enterprises has become an urgent task to improve the bankruptcy system in China.In the practice of bankruptcy law abroad,a solution to this problem is adopted,which is the Substantive Consolidation Doctrine.TheSubstantive Consolidation Doctrine is to try the cases of the affiliated enterprises that go bankrupt at the same time,and amalgamate the property,creditor’s right and debt of these enterprises,and formulate unified amalgamation disposition,liquidation or reorganization plan.Through the substantive consolidation doctrine,the difficulties of identifying each other’s property and paying off each other’s debts when several affiliated enterprises go bankrupt have been well solved,and the interests of creditors have also been protected.Along with the increasing of the affiliated enterprise bankruptcy cases,many courts have begun to explore using this principle,but in our country,there is no specific provision in the law,our country as a statute law country,in the face of more and more affiliated enterprise bankruptcy cases,the judges would be in a dilemma when make a decision.I hope that this paper would provide targeted and framework suggestions for our country to establish the system.The purpose of this paper is to introduce the consolidated bankruptcy system in order to solve the problems faced by the affiliated enterprises in the process of bankruptcy.The main contents include:The first part is the debate on the application of the principle of substantial merger in China.This paper introduces the current academic debate on the application of the principle of substantial merger in our country,analyzes the different bankruptcy cases.The second part is the theoretical analysis of the Substantive Consolidation Doctrine.This part includes the definition,connotation and theoretical basis of the Substantive Consolidation Doctrine.Entity merger is based on the enterprise subject theory,and the value appeal is to pay off all creditors fairly and efficiently.The United States Supreme Court created entity merger at the beginning of debtor fraud bankruptcy case.Since then,the court has been practicing continuously,and the principle of substantial merger has become an independent bankruptcy law rule.The third part is the necessity and feasibility of introducing the principle of substantial merger.Through the analysis of the deficiencies of the current regulations on the regulation of the bankruptcy of affiliated enterprises in China’s current legal system,such as the denial of corporate personality system in the company law,the bankruptcy revocation right and invalidation system in the bankruptcy law,the necessity and feasibility of introducing the principle of substantial merger in China are discussed.Through the analysis of the deficiencies of the current regulations on the regulation of the bankruptcy of affiliated enterprises in China’s current legal system,the necessity and feasibility of introducing the principle of substantial merger in China are discussed.The last part,the design and construction of the substantial merger bankruptcy system.This part puts forward some thoughts on the applicable conditions of the principle of substantial merger in China,and also puts forward some ideas on the procedural rules of the applicant,jurisdiction dispute,burden of proof and manager selection.