An Empirical Study On The Judicial Application Of Substantial Merger Bankruptcy Standards

The current Law cannot solve the problem of improper association behavior between affiliated enterprises that causes damage to the interests of creditors.The Supreme People’s Court issued the "Minutes of the National Court Bankruptcy Trial Work Conference"(Law [2018] No.53)(hereinafter referred to as the "Minutes of the Conference")in 2018.The prudential application of substantive merger bankruptcy and its applicable standards have formed a rudimentary form in practice,and the "Minutes of the Meeting" was later formally and clearly stipulated.The combined disposal of assets and liabilities of affiliated enterprises solved the problem of the time limit of the bankruptcy revocation right one year before the bankruptcy acceptance,and the problem of excessively high differentiation costs caused by the exercise of the bankruptcy set-off right.The disregard of personality system is only applicable to companies with a shareholding structure,but the substantive merger and bankruptcy system can also be applied to affiliated companies based on contracts and agreements.In judicial practice,how to apply the three principled standards stipulated in the "Minutes of Meetings" ? The substantive merger bankruptcy system solves the problem of the fraud of affiliated enterprises harming the interests of creditors in practice at the legislative level,but the specific application at the judicial level is still unclear.The "Minutes of the Meeting" stipulated the three principled standards of the substantive merger bankruptcy system,but the specific determination criteria for substantive merger bankruptcy and the determination relationship between the standards were not clear.Local courts may have inconsistent understanding of the three principled standards,leading to different rulings in similar cases.Therefore,the author takes the merger bankruptcy ruling as the research object,and uses the empirical research method to explore the judicial application of the substantive merger bankruptcy standardThe author sorted out 116 merger bankruptcy cases.The cases in this article are derived from the following three websites: "China Judgment Documents Network","Peking University Magic Treasure·Judicial Case Library",and "National Enterprise Bankruptcy Reorganization Case Information Network".The author conducted a fuzzy search based on the search method of civil case combined with keywords,and found a total of 413 cases.64 unqualified cases were eliminated on the grounds that the content of the judgment document was irrelevant to the research content of this article;the case number,trial court,business entity,and trial procedure were used as the basis for judging whether the case was the same case,and 231 repeated cases were eliminated.The ambiguity of the substantive merger bankruptcy standard not only caused inconsistent court rulings,but also caused academic controversy.The "Minutes of the Meeting" established the principled standard for the substantive merger and bankruptcy system.Due to the ambiguity of the principle itself,the courts in different regions have issued different rulings due to different understandings of the connotation.In 2019,the Supreme People’s Court issued the "Minutes of the National Civil and Commercial Trial Work Conference of the Courts"(Law [2019]No.254)(hereinafter referred to as the "Minutes").However,the "Minutes" still failed to completely solve the problem of inconsistent court rulings.The author believes that it will take some time for the substantive merger and bankruptcy standards to permeate local courts.The ambiguity of substantive merger bankruptcy standards has also aroused controversy in academic circles.It can be roughly divided into whether the principled standards should be refined,and the newly-added principled standards.The research in this article helps to enrich the discussion on the theoretical level and also helps to unify the trial at the practical level.This article is mainly divided into the following five parts:The first part of this article raises the question of what the judicial status quo is after the "Minutes of the Meeting" is issued.Based on the background of the judicial application of the substantive merger bankruptcy standard and the current research situation in the academic world,the author further clarifies the research objects of this article.The second part of this article combs the legislative evolution of substantive merger bankruptcy and the basic characteristics of merger bankruptcy cases in judicial practice.In the judicial overview section,the author found that there is a correlation between the substantial merger and bankruptcy cases and the number of enterprises.The third part of this article is the author’s empirical research on the judicial determination of the consolidated bankruptcy standard.The data shows that the criterion for "highly mixed personalities of legal persons" is personality independence;the criterion for "excessive distinction costs" is the mix of assets and liabilities;the criterion for "impaired creditors’ interests" is to consolidate debts to increase the overall creditor repayment rate.The fourth part of this article is the author’s rethinking of academic disputes and legislation on the basis of empirical research.The author found that judicial practice partially confirms and partially refutes academic disputes.There are still some disputes that cannot be tested by judicial practice.The fifth part of this article is the author’s legislative suggestions based on the fourth and fifth parts.First,improve the legislative level of the consolidated bankruptcy system;second,further clarify the identification standards of the three principle standards of the "Minutes";third,add a new substantive consolidated bankruptcy standard: fraud.