Research On Fair Protection Of Reditors In Substantive Consolidation

Compared with single enterprises in the bankruptcy process,affiliated enterprises encounter more complex problems and contradictions,involving the challenges of independent legal personality system and limited liability system,facing the balance between judicial activism and creditors’ autonomy,which is more likely to cause conflicts between creditors’ rights.In order to effectively deal with the problem of bankruptcy of affiliated enterprises,the United States established the substantive consolidation system under the principle of equity,which was then used for reference and transplantation by China.Substantive consolidation will consolidate the assets of affiliated enterprises,eliminate the internal creditor’s rights and debts,and pay off the creditors according to the unified property.The amount and proportion of each creditor’s payment will inevitably be affected.Some creditors will appeal because the amount of payment is significantly reduced.The function of Bankruptcy Law is to protect the creditor’s right to be paid fairly.How to protect all creditors equally in substantive consolidation,especially the dissenting creditor’s rights has become an unavoidable problem.This article on the basis of exploring the theoretical basis,value orientation,system function and relevant legal theories of substantive consolidation,and combining with the cases in China,the article point the problems faced in judicial practice,such as inconsistent substantive consolidation standards,insufficient equal protection for creditors,lack of protection of dissenting creditors,and puts forward suggestions from multiple dimensions,including substantive consolidation standards,applicable procedures,and relief for dissenting creditors.This article is divided into five chapters.ChapterⅠ:Analysis substantive consolidation and equal protection of creditors.This paper summarizes the basic theory of substantive consolidation,sorts out the background,theoretical basis and development track,and analyzes the positive role of substantive consolidation in realizing the value of bankruptcy law.It summarized and sorted out the changes in the creditor’s repayment ratio and the damage to the interests of some creditors caused by the substantive consolidation.ChapterⅡ:Analysis the cases of equal protection of creditors in substantive consolidation in China.There are more and more substantive consolidation cases in China,but limited to the legislative field,substantive consolidation has not been established.In practice,it mainly relies on the minutes of the Supreme People’s Court,judges’ discretion and other ways to make decisions.There are situations that can not be followed,the operation is not standardized,and the legitimate rights and interests of creditors are violated.This article objectively analyzes the current situation of substantive consolidation in China’s judicial application from multiple aspects,so as to provide sufficient practical basis and basis for the next research.ChapterⅢ: From substantive consolidation standards,studies how to protect the legitimate rights and interests of creditors equally in the applicable standards.First of all,it summarizes the standards that are generally applicable internationally,then analyzes the current standards of substantive consolidation in China.At present,China mainly uses the highly mixture of corporate personality as a single standard,and the protection standard for creditors’ rights and interests has been missing for a long time.The single standard has neglected the interests of creditors,and caused the abuse of substantive consolidation.Therefore,it is necessary to improve and adjust the applicable standards for substantive consolidation,improve the comprehensive standards of highly mixture of corporate personality,and increase the protection standards for the interests of creditors,so as to ensure that all creditors of affiliated enterprises pay off fairly as a whole.ChapterⅣ: From the perspective of application procedure,analyzes how to equal protect creditors interests in the substantive consolidation procedure.In the commencement proceedings,the interests of creditors should be respected,and interested parties can apply to the court for substantive consolidation.In the review procedure,the creditors’ rights to know,to be present,to hear,to debate and other legitimate rights and interests should be protected.In the process of making decisions,the court should fully respect the party’s autonomy of will,play the positive role of hearing and creditors’ meeting,reasonably allocate the burden of producing evidence,pay attention to the interests of different creditors,and make neutral and objective judgments.ChapterⅤ:The path to protect dissenting creditors.Substantial consolidation can hardly avoid damaging the rights and interests of some creditors.When the court makes a decision on substantive consolidation according to its authority,it needs to respond to the maintenance of the rights of dissenting creditors.On the one hand,expand path from procedure,it can be explored to grant the dissenting creditors the right of appeal,revise the decision on substantive consolidation according to the reality.Meanwhile,it can establish various forms of interest compensation mechanisms for the creditors whose interests are damaged and who have independent trust in a single debtor,so as to realize the equal protection of all creditors.