A Study On The Applicable Standards Of The Bankruptcy Rules Of Substantive Consolidation Of Affiliated Enterprises

Based on the substantive merger and bankruptcy cases of affiliated enterprises from January 1,2018 to December 31,2019,this paper analyzes the specific problems in judicial practice and puts forward feasible solutionsThe first chapter of this paper,through the study of judicial cases,puts forward the problems existing in substantive merger bankruptcy cases and analyzes the causes of the problems.There are two problems in the application of substantive merger bankruptcy rules to adjudicate the bankruptcy cases of affiliated enterprises:first,there is no consensus on the applicable standards of substantive merger bankruptcy rules.That is to say,when the courts at all levels use the substantive merger bankruptcy rules to adjudicate the merger bankruptcy of affiliated enterprises,the applicable standards are different.Some courts only adjudicate the merger and bankruptcy of affiliated enterprises on the basis of "the confusion of corporate personality",while others take the criteria of "the confusion of corporate personality","the differentiation of costs","the income of creditors" and "the need of reorganization" as the conditions for adjudging the merger and bankruptcy.Secondly,the court's specific identification methods of various standards are not uniform.For example,for the determination of the standard of corporate personality confusion,some courts hold that as long as the subsidiary is controlled by the parent company and cannot make independent decisions,they should consider that there is a corporate personality confusion between the parent company and the subsidiary company;other courts hold that only when there is a confusion of people,property and material between related companies,can they recognize that there is a corporate personality confusion between related companiesThe problems injudicial practice can be traced.First of all,the most fundamental reason lies in the fact that the wrong application of substantive merger bankruptcy rules in our judicial practice comes from the lack of legislation.On the one hand,China's enterprise bankruptcy law does not include the substantive merger and bankruptcy rules in its regulatory scope.At present,the only document that regulates the rules is the minutes of national court bankruptcy trial work issued by the Supreme People's court,but the minutes also do not clearly identify the specific identification method of applicable standards.On the other hand,the attitude of the local high court to the substantive merger bankruptcy rules is also quite different.Secondly,the substantive merger bankruptcy rules mechanically draw on the applicable standards of the substantive merger bankruptcy rules in the common law system.On the one hand,our country lacks the case law system and the compensation mechanism of equity law.The improper reference to the applicable standards of substantive merger bankruptcy rules under the common law system will lead to the judicial practice lagging behind the economic and social development.On the other hand,in the process of reference,our understanding of applicable standards and consideration factors deviated,copying the "consideration factors" in British and American case law from the specific facts of the case,thus affecting the general applicability of applicable standards.Thirdly,there is no clear difference between the start-up of substantive merger bankruptcy rule and the start-up of general enterprise bankruptcy.The start-up of general enterprise bankruptcy requires the bankrupt enterprise to have bankruptcy reasons,while there are three kinds of start?up situations of substantive merger bankruptcy rules.Injudicial practice,the court does not distinguish different starting situations for reasoning,which is also one of the reasons for the application of confusionThe second chapter of this paper mainly from the perspective of independent applicability and necessity,analyzes the factors that should not be taken into account in the application of substantive merger bankruptcy rulesFirst of all,the distinguishing cost of assets and liabilities between affiliated enterprises should not be taken as the standard of applying substantive merger bankruptcy rules alone but should be incorporated into the standard of corporate personality confusion and be taken as the single standard of applying substantive merger bankruptcy rules together.On the one hand,in judicial practice,the differentiation cost of assets and liabilities often appears at the same time with the standard of corporate personality confusion;on the other hand,the differentiation cost of assets and liabilities actually has internal consistency with the standard of corporate personality confusion.Secondly,the standard of creditor's income should not be used as the applicable standard.On the one hand,the standard can be divided into absolute income standard and relative income standard,while the court does not distinguish different situations in practice.On the other hand,no matter which of the above standards,they should not be applied as "standards".Finally,the standards needed for reorganization should not be used as applicable standards.On the one hand,the applicable standards should be able to apply to all insolvency proceedings,not only to reorganization proceedings.On the other hand,in judicial practice,the standard of reorganization needs to appear together with the standard of legal person's personality confusion without exception.Therefore,the court only needs the standard of legal person's personality confusion to adjudicate the substantive merger and bankruptcy,and there is no need to determine the standard of reorganization.The third chapter of this paper mainly analyzes why the standard of high confusion of corporate personality should be the only standard to apply the substantive merger bankruptcy rules.The standard of high confusion of corporate personality should be used as the standard of applying substantive merger bankruptcy rules.On the one hand,as far as its independent applicability is concerned,in judicial practice,the high degree of confusion of corporate personality is regarded as the premise of the application of substantive merger bankruptcy rules,and the "minutes" also recognizes the standard.On the other hand,it is necessary to apply the standard of high confusion of legal personality.Specifically,the establishment of this standard is helpful to break the formal fairness and pursue substantive fairness when affiliated enterprises go bankrupt.In addition,the standard of highly confused corporate personality is different from the company law in terms of definition,value pursuit and constituent elements,which cannot be replaced by the system of denial of corporate personality.The fourth chapter of this paper focuses on the matters needing attention in the application of the standard of high confusion of legal personality.First of all,it is clear that the substantive merger bankruptcy rules should be strictly applied.Secondly,the discussion should be limited to such situation as some of the related companies had already stepped into the process of insolvency and based on the facts,the court coerces other related parties to join in the process above because in this case,it has more practical significance of research,and the application of the standard is more specific.Thirdly,the author puts forward the considerations that the court should pay attention to when applying the standard.First of all,it needs the fact that there is a confusion of corporate personality between affiliated enterprises.Specifically,it can be considered from the independence of property and will among affiliated enterprises.Secondly,the degree of asset and liability confusion between affiliated enterprises is too high.It can be divided into expense cost and time cost.Finally,the reasonable trust of the creditor is taken as the defense of the standard of high confusion of the legal personality.Because the creditor's reasonable trust is the subjective state of the creditor,when considering the objection creditor's defense to the application of the substantive merger bankruptcy rules,the court can specifically determine by considering the time point of the trust,the rationality of the trust,whether to do the necessary duty of care and other factors.