Research On Legal Issues Of Substantial Merger System In The Bankruptcy Of Affiliated Enterprises

With the rapid development of large-scale economy,affiliated enterprises have played an increasingly important role in promoting industrial restructuring and promoting economic development.While pursuing economic benefits,affiliated companies often create complex associations through improper connected transactions,breaking the original balance structure of interests.When the affiliated companies enter the bankruptcy process,the problems arising from the related party transactions will become more prominent: the economic relations and management relationships of the various affiliated enterprises are seriously confused;the related transactions are conducted through fraudulent means,the assets are transferred to avoid debts,the fair settlement order is destroyed,and the outside is damaged.In view of this,the original single bankruptcy model has been unable to adapt to a series of problems brought about by the bankruptcy of affiliated enterprises,and the introduction of the substantive merger system has become an inevitable choice.Although the application of consolidated bankruptcy in the judicial practice of China's bankruptcy law has become the norm,the relevant laws do not systematically stipulate the system,resulting in the courts can not be relied on in the application process,there is no unified application standard and appropriate application procedure,resulting in a series of legal problems.This paper explores the common cases of applying substantive merger and bankruptcy in judicial practice,sums up the common problems of substantive merger in judicial application,deepens the understanding of relevant entities on the substantive merger system,and promotes the development of substantive merger system in the field of bankruptcy law in China.The first chapter of this paper focuses on the basic theory of substantive merger,which mainly includes the concept and origin of the substantive merger system,as well as the rationality and legitimacy of the system.The substantive merger system is a special remedy that stems from the judicial practice of the US bankruptcy law.It can break the "barrier" established by the bankruptcy debtor and achieve fair settlement of bankruptcy.The article mainly discusses the legitimacy of substantive merger through three aspects: First,the theoretical perspective of enterprise law.Substantial merger is the inevitable outcome of the transfer of substantive law theory to the theory of enterprise law,which satisfies the development trend of economic integration of affiliated enterprises.The second is the perspective of the company law.The substantive merger system and the corporate law personality denial system have similarities in jurisprudence.They all break through the basis of limited liability under certain circumstances and deny the independent personality of the enterprise.Therefore,the substantive merger system can be regarded as the corporate law personality denial theory in the bankruptcy field.The third is the angle of fair settlement of the bankruptcy law.Then,the article demonstrates the rationality of establishing a substantive merger system in China from the perspective of the special problems of affiliated companies in bankruptcy procedures and the lack of existing relief paths.The second chapter analyzes the application status of the substantive merger system in China from the perspective of judicial practice.Although the legislation does not stipulate the system,there are many cases of merger and bankruptcy reorganization in judicial practice.This paper selects three typical cases in recent years,and concludes that there are three main problems in the court when applying the substantive merger system: 1.The applicable standards and scope of application are not clear.Each court has different applicable standards,which is not conducive to the unification of the judiciary;does the application of the substantive merger require the enterprise to have bankruptcy reasons? And is the court entitled to include companies that do not have bankruptcy reasons in the scope of consolidation? 2.The issue of creditor protection in the process of substantive merger.3.Apply the legal effect after the substantive merger..Not long ago,the Supreme People's Court published the "Meetings of the National Court Bankruptcy Trial Work Conference" and mentioned some issues concerning the application of substantive mergers.Some courts directly made a merger ruling based on the "Minutes".However,this paper believes that no matter from the rationality or effectiveness of the content,the "Minutes" are not sufficient as the legal basis for substantive merger,and the substantive merger system should still be established through legislation.The third chapter mainly expounds the applicable standards and scope of application of substantive merger,and briefly discusses the discretionary authority that the court should follow in the process of applying substantive consolidation.In the judicial practice,the application standards of the court lacked unity,and most of them only made the ruling of merger and bankruptcy reorganization based on the reason of personality confusion,ignoring the complexity of affiliated enterprises.This paper proposes the criteria for applying substantive mergers from both formal and substantive standards.Formal standards refer to the serious mismatch between assets and liabilities,fraud and the reliance interests of creditors;The substantive criteria are discussed from the perspectives of interest measurement,the concept of fair settlement of bankruptcy law,judicial efficiency,and social economic benefits.The fourth chapter discusses the issue of creditor protection in the process of substantive merger.Creditors are in a natural weak position in the process of bankruptcy of affiliated companies,and substantive mergers will affect the settlement rate of some creditors.Therefore,it is necessary to systematically lean toward creditors to maintain the legislative goal of fair settlement of bankruptcy law.This requires the court to fully respect the creditor's right to know and vote before making a merger decision,and to protect the opposition party's right of dissent.The fifth chapter is about the legal effect of substantive merger.The first is the problem of the physical merger with other procedures;after the merger decision is made,the bankruptcy proceedings before the merger are still valid,and if the substantive merger fails,it will of course be transferred to the substantive merger bankruptcy liquidation.The second is the issue of the existence of the entity after the merger.Different from the viewpoint of the Minutes,this paper believes that after the merger,the issue of the existence of the subject should be determined according to the development of the enterprise itself,and the law should not interfere too much.