Director’ Duties In The Vicinity Of Insolvency

In the process of enterprise operation,due to improper operation and management,the company may be unable to pay,insolvency and other bankruptcy reasons and enter the bankruptcy process.The stage before the start of the bankruptcy process is called the stage of the enterprise on the verge of bankruptcy.Directors,as business decision makers,determines whether the company is going to "die" or "rise from the dead",so the direction of their obligations and the assumption of responsibilities are crucial.China has not extended the fiduciary duty of directors from shareholders to creditors,the repayment rate of creditors is low.Since the contents of directors’ fiduciary duty were not clearly stipulated at this stage,the directors lacked the legal obligation to file bankruptcy applications,resulting in a large number of "zombie enterprises".Due to the lack of "safe haven" for directors’ behaviors,the professionalism of directors on the verge of bankruptcy is restricted,which weakens the possibility of enterprises returning to the normal business track.Difficult to solve the enterprise "death" and "setback" also difficult conditions,the state can be the object of the directors’ duty of faith from shareholders to creditors,large and equal status to avoid benefit main body bring chaos,can clear the directors’ duty of faith first high-level object for the creditors,the second high-level object for the shareholders and the company other members.It also requires the directors to fulfill the duty of loyalty which prohibits fraud,improper transactions and payment to shareholders,and the duty of care which timely files bankruptcy application.A complete system of directors’ fiduciary duty "responsibility in" and "responsibility out" is constructed,and "safe haven" is provided for directors by business judgment rules.