Mandatory Approval Of Bankruptcy Reorganization Plans

The normal approval and cram down of the reorganization plan are the following concepts of the reorganization plan approval.The cram down system is a supplement to the normal approval.The cram down of the reorganization plan is the draft reorganization plan approved by the court but not approved by the creditors' meeting.Cram down power is the power exercised by the court according to the application,which has the nature of jurisdiction,equity,combination of entitative law and procedural law.The cram down of the reorganization plan has legal effect on all parties in action.The cram down of the reorganization plan has the system value of maximizing social benefits,protecting the interests of creditors and promoting enterprise regeneration.The cram down of the reorganization plan requires three steps: application,submission of draft reorganization plan and review by the court.The application for cram down shall be applied for by qualified applicants,and the holders and creditors shall not apply to the court.When the applicant submits the draft reorganization plan,in principle,the draft reorganization plan which has not been adopted by the last vote should be submitted to prevent the abuse of the power of the applicant to unilaterally adjust the draft reorganization plan;When reviewing the draft reorganization plan,the court considers that the enterprise has the necessity and possibility of reorganization,but if the draft reorganization plan does not meet the requirements of cram down,it may adjust the draft reorganization plan according to its authority.The cram down of the reorganization plan should follow the principle of legality,the principle of minimum acceptance,the principle of feasibility,the principle of best interest of creditors,the principle of fair treatment and the principle of absolute priority.The cram down system of reorganization plan has two problems about judicial practice and system design.In the judicial practice of the cram down of the reorganization plan in China,there are some phenomena such as the lack of protection of the rights and interests of the creditors who hold opposing opinions,the uncertainty of the review elements of the feasibility standard,the uncertainty of the judicial discretion standard and the non-compliance with the legal procedure.These phenomena lead to a lack of predictability about the outcome of the cram down of the reorganization plan.In the design of the cram down system of reorganization plan in China,there are some problems such as imperfect procedures,unclear applicable standards and lack of necessary protection system of objection.As for the practical problems and system design problems existing in the cram down system of the reorganization plan in China,it should be standardized from three aspects: establishing the objection system of the cram down of the reorganization plan,clarifying the applicable standards of the cram down of the reorganization plan,and prudently applying the cram down system of the reorganization plan.