Research On The Exceptional Rule Of Individual Discharge Avoidance During The Bankruptcy Critical Period

The individual discharge avoidance regime in bankruptcy law overrides payments that have already been performed by the debtor,protecting the rights of all creditors to be paid fairly and collectively at the partial expense of the security of the transaction and the debtor’s good faith performance.The conflict between the two values needs to be balanced by the individual discharge avoidance exception rule.Article 32 of the Bankruptcy Law of the People’s Republic of China stipulates the elements of individual discharge avoidance,and its proviso stipulates that "except when individual discharge benefits the debtor’s property" is the element of the exception to the avoidance rule.Articles 14-16 of the Provisions on Certain Issues Concerning the Application of the Enterprise Bankruptcy Law of the People’s Republic of China(II)provide specific provisions on the exceptions to the individual liquidation rule,which provide guidance for judicial practice.However,the proviso of Article 32 of the Enterprise Bankruptcy Law is simple and the judgment standard is vague,which leads to different views on its interpretation and application in practice and generates a lot of controversies.It is still doubtful whether Article 15 of the Interpretation(II)of the Enterprise Bankruptcy Law "individual liquidation through litigation,execution and arbitration procedures" should be exempted from avoidance,and the meaning of Article 16 "maintaining basic production needs" is unclear,and the scope of the listed exceptions is too narrow to cover the complex and diverse individual cases in practice.The scope of the exceptions listed is too narrow to cover the complex and diverse individual liquidation acts in practice.Moreover,the theory and practice are superficial in their reference to the exceptions to avoidance in comparative law,and do not discuss in depth the specific application issues.Therefore,the exception rule of individual satisfaction revocation still needs to be improved.This article is divided into three parts.The first part focuses on the element of the individual satisfaction avoidance exception rule,i.e.,"benefiting the debtor’s estate".In judicial practice,there are various interpretations of this element,including the positive increase of the debtor’s property,avoiding the decrease of the debtor’s property,increasing the amount of other creditors’ payment,etc.In the face of these differences,we should return to the legislative purpose and institutional value of the individual discharge avoidance exception rule in order to accurately interpret its elements,one is to promote the balance of interests of all parties,including the balance of interests between debtors and creditors,the balance of creditors’ interests and social public interests,and the other is to improve the bankruptcy avoidance system and make it more fair.This article believes that "benefiting the debtor’s property" should be interpreted as "preserving the value of the debtor’s property",which includes the appreciation of tangible pecuniary interests and intangible interests,and the preservation of value mainly refers to avoiding the decrease of the debtor’s property.Article 32 can only achieve the goal of balancing the interests of debtors and creditors,and in order to achieve the goal of bankruptcy law to protect the public interest,Article32 and the relevant individual discharge avoidance rules of the Interpretation(II)of the Enterprise Bankruptcy Law need to be interpreted and applied in conjunction.According to the jurisprudence of the individual discharge exception and the legislation of our bankruptcy law,the exceptions to avoidance in China can be divided into those that satisfy the "benefit to the debtor’s estate" exception and those that do not satisfy this element but are still exempt from avoidance.The second part elaborates on the exceptions that meet the "benefit" requirement.The first is the simultaneous transaction rule,where no credit is granted and the new value provided by the creditor fills the loss of the debtor’s property and therefore does not reduce the debtor’s property and should not be avoided.There are three objective elements to this rule,namely,the transaction is of equal value,the transaction occurs or can be deemed to occur at the same time,and the satisfaction of both parties is a prerequisite for each other.Secondly,the rule of posterior new value,although the creditor obtains individual satisfaction,it does not need to bear the consequences of individual satisfaction revocation to the extent of the consideration paid afterwards.Unlike the rule of simultaneous transactions,a time difference is allowed between the satisfaction of the two parties,and if payment is made by check or bill of exchange,the point of delivery of the instrument is recognized as the point of satisfaction of the debtor to the creditor.The new value provided by the creditor must be equal to or higher than the amount of the debtor’s individual settlement,and the "net result rule" should be adopted in the calculation of the offset amount.The third exception is the conventional transaction,which provides intangible economic value to the debtor and protects the creditor in good faith,and is therefore exempt from avoidance.The elements are that the transaction occurs within the debtor’s regular business scope and follows the transaction practice,and the time of liquidation,the liquidation of long-term debt does not necessarily constitute the regular transaction exception.The first item of Article 16 of the Interpretation of Enterprise Bankruptcy Law(II)can be interpreted as the regular transaction exception rule by extension.There are overlapping applications of the three exception rules,but each has its own independent value and can be used cumulatively or applied separately.The third part is concerned with exceptions based on other special objectives.Article 15 of the Interpretation(II)of the Enterprise Bankruptcy Law,"individual liquidation of creditors by the debtor through litigation,arbitration and enforcement proceedings"(referred to as judicial liquidation)is an exception to the rule of avoidance based on judicial policy,which is mostly opposed in theory.In this paper,we believe that we should correct the provision that judicial liquidation is irrevocable,interpret the first sentence of Article 15 strictly,and apply the proviso of the Article("except for malicious collusion")leniently,so as to reduce the negative impact of Article 15 on the system of individual liquidation revocation.The second clause of Article 16 of the Interpretation(II)of the Enterprise Bankruptcy Law,"the debtor shall pay labor compensation and compensation for personal injury",is an exception to the avoidance rule based on the protection of social public interests,reflecting the tilted protection of the bankruptcy law for vulnerable groups.However,this subparagraph puts labor claims and personal injury claims in the first place in the order of discharge,which will create contradictions in the order of bankruptcy discharge,especially with the contradictions of secured property rights.Therefore,the application of the avoidance exception for labor claims should be limited,while personal injury claims should be allowed to receive a higher priority because of their "non-adjustability" and "involuntariness".