Research On The Compulsory Approval System For The Reorganization Plan Of Listed Companies In My Country

The compulsory approval system for the listed company's reorganization plan means that,if the plan conforms to statutory conditions the court can cram down the plan,regardless of the opposition of the creditors and shareholders.The courts interpose the negotiation between the creditors and shareholders because public interest should be protected.The compulsory approval system for the listed company 's reorganization plan can reduce the cost of reorganization by avoiding negotiation deadlock and make the process of reorganization more efficient.In this way,the courts have power cramming down the speculators who want to put off the reorganization process.Before cramming down the reorganization plan,the court must make sure that the plan has protect the interests of creditors and small shareholders.In the theory,the rules of compulsory approval make a negotiation framework which leading the creditors and shareholders focus more on how to allocate reorganization-value fairly.On the other hands,the authority of cram-down can balance the negotiating power of all parties,and avoid improper changes in reorganization value.The compulsory approval system must have theoretical support,because the system of bankruptcy and reorganization is a market mechanism.If the court crams down reorganization plan it must have enough reasons to support the referee logically.The theory basic of cram-down can be summarized as two points:first,full respect for the negotiation results of litigants.The power of cram-down must be controlled by the rules of bankruptcy law,and establish process to promote negotiations.Only the agreements of litigants can't arrive in the end,can the court cram down the reorganization plan by the principle of fairness.Second,make sure the reorganization value has been distributed fairly to the creditors and shareholders.The priority benefits of creditors must be support by the rules.Based on the theory of cram-down,this thesis analyzed 12 cases of cram-down on listed companies and shows that the china's compulsory approval system for the listed company's reorganization plan focusses more on effectiveness ignoring the fairness of creditors and minority shareholders.There are three reasons to apply:first,the rules of bankruptcy are incomplete and lack of operability,so the power of cram-down is out of control making the litigants' interest damaged.Secondly,these rules can't lead the plan fairly distribute the reorganization value,especially the liquidation value standard which changed to be a tool to suppress the creditors to accept the unfair plan.Thirdly,the supporting mechanisms of compulsory approval system,including information disclosure system and re-voting mechanism,does not establish a negotiate ng platform.So the creditors and minority shareholders can't achieve their goal by negotiating with others.This thesis has rectified the principles of the compulsory approval system.First of all,it clears the meaning of minimum acceptance principle that at least one group accepts the reorganization plan can the court cram-down it.Secondly,the principle of best interest must make sure that the plan does not worse off no one.It is a mistake that only creditors can be protected by this principle.Thirdly,the principle of absolute priority must fit the causes of bankruptcy.If the listed company's assets less than debt,only all of debts are payed back can the shareholders remain rights in the listed company.If the listed company's assets more than debt,the reorganization has to make sure the proportion of paying back for creditors must more than the scale of equities remaining in the company.The thesis suggests that china's reorganization law should refinement the conditions of cram-down for the courts.Using minimum acceptance principle to restrict the power of cram-down.Then setting the liquidation value standard as a general standard of reorganization plan and writing the principle of absolute priority in the law to protect creditors' interest.On the other hand,setting the re-voting mechanism as the pre-program of cram-down,and establishing objection hearing process to protect minority shareholders.