Law of China on Enterprise Bankruptcy (For Trial Implementation) |
From:湖南省政府网 | Date Add in:2019-07-23 10:44:00 [A A] |
CHAPTER I GENERAL PROVISIONS Article 1. This Law is formulated in order to suit the development of the planned socialist commodity economy and the needs of the reform of the economic structure, to promote the autonomous operation of enterprises owned by the whole people, to strengthen the economic responsibility system and democratic management, to improve the state of operations, to increase economic efficiency and to protect the lawful rights and interests of creditors and debtors. Article 2. This Law applies to enterprises owned by the whole people. Article 3. Enterprises which, owing to poor operations and management that result in serious losses, are unable to repay debts that are due shall be declared bankrupt in accordance with the provisions of this Law. Article 4. The state through various means shall appropriately arrange for the reemployment of the staff and workers of bankrupt enterprises, and shall guarantee their basic living needs prior to reemployment; specific measures shall be separately stipulated by the State Council. Article 5. Bankruptcy cases shall be under the jurisdiction of the people's courts in the location of the debtor. Article 6. Where this Law has not stipulated the procedures for bankruptcy cases, the legal provisions for civil procedures shall apply. CHAPTER II THE SUBMISSION AND ACCEPTANCE OF BANKRUPTCY APPLICATIONS Article 8. The debtor, upon the agreement of its superior departments in charge, may apply for the declaration of bankruptcy. Article 9. After the people's court has accepted a bankruptcy case, it shall notify the debtor within ten days and make a public announcement. Within ten days after receiving the detailed list of debts delivered by the debtor, the people's court shall notify known creditors. The public announcement and notice shall stipulate the date of the first convening of the creditors' meeting. Article 10. Where creditors have made the bankruptcy application, the debtor shall, within 15 days after receiving the notice of the people's court, deliver to the people's court the relevant materials described in the second paragraph of Article 8 of this Law. Article 11. After the people's court has accepted a bankruptcy case, other civil enforcement proceedings against the property of the debtor must be suspended. Article 12. After the people's court has accepted a bankruptcy case, payment by the debtor to only some of the creditors is null and void, with the exception of payments required for the normal production and operations of the debtor. CHAPTER III CREDITORS' MEETINGS Article 13. All creditors are members of the creditors' meeting. Members of the creditors' meeting enjoy the right to vote, provided, however, that creditors with claims secured with property which have not abandoned their priority right to be repaid are excepted. Guarantors of the debtor, after having repaid debts on behalf of the debtor, may be deemed creditors, and enjoy the right to vote. Article 14. The first creditors' meeting is called by the people's court, and shall be convened within 15 days after the expiration of the period for reporting claims. Subsequent creditors' meetings are convened at such times as the people's court or the chairman of the meeting deems them necessary, and may also be convened on the request of the liquidation committee or of creditors whose claims comprise more than one fourth of the total amount of claims not secured with property. Article 15. The functions and powers of the creditors' meeting are: Article 16. Resolutions of the creditors meeting are adopted by a majority of creditors with the right to vote present at the meeting; the amount of their claims must comprise more than half of the total amount of claims that are not secured with property, however, with respect to a resolution adopting a draft settlement agreement, such amount must comprise more than two thirds of the total amount of claims not secured with property. CHAPTER IV SETTLEMENT AND REORGANIZATION Article 17. With respect to enterprises for which the creditors apply for bankruptcy, the superior departments in charge of the enterprise that is the subject of the bankruptcy application may, within three months after the people's court has accepted the case, apply to carry out reorganization of the enterprise; the period of reorganization shall not exceed two years. Article 18. After an application for reorganization is submitted, the enterprise shall propose a draft settlement agreement to the creditors' meeting. Article 19. After the enterprise and creditors' meeting have reached a settlement agreement which has been recognized by the people's court, the people's court shall make a public announcement and suspend the bankruptcy proceedings. The settlement agreement shall have legal effect from the date of the public announcement. Article 20. The reorganization of the enterprise shall be supervised by its superior departments in charge. Article 21. During the period of reorganization, an enterprise in any of the following circumstances shall, upon judgment of the people's court, terminate reorganization and declare its bankruptcy: Article 22. With respect to an enterprise that has undergone reorganization and is able to repay debts in accordance with the settlement agreement, the people's court shall terminate the bankruptcy proceedings for such enterprise, and also make a public announcement thereof. CHAPTER V BANKRUPTCY DECLARATIONS AND BANKRUPTCY LIQUIDATIONS Article 23. In any of the following circumstances, after the judgment of the people's court, an enterprise shall be declared bankrupt: Article 24. The people's court shall, within 15 days after the date the enterprise is declared bankrupt, establish a liquidation team to take over the bankrupt enterprise. The liquidation team shall be responsible for the keeping, putting into order, appraisal, disposition and distribution of the bankruptcy property. The liquidation team may carry out necessary civil actions in accordance with law. Article 25. No unit or individual may illegally dispose of the property, account books, documents, materials, seals, etc. of a bankrupt enterprise. Article 26. The liquidation team may decide to terminate or to continue to perform the contracts that have not yet been performed by the bankrupt enterprise. Article 27. Before the legal representative of the bankrupt enterprise has handled the procedures for transfer to the liquidation team, he shall be responsible for the keeping of the property, account books, documents, materials, seals, etc. of such enterprise. Article 28. Bankruptcy property comprises the following property: Article 29. Property in the bankrupt enterprise that belongs to other persons shall be retrieved by the persons with the right to such property through the means of the liquidation team. Article 31. Claims that are not due when bankruptcy is declared shall be deemed to be claims that have already become due, provided, however, that the interest that is not yet due shall be deducted. Article 32. With respect to claims secured with property that are established before bankruptcy is declared, the creditors enjoy the right to receive repayment with priority with respect to such security. Article 33. Creditors which owe debts to the bankrupt enterprise may offset them before the bankruptcy liquidation. Article 34. Priority shall be given to saving the following bankruptcy expenses from the bankruptcy property: Article 35. During the period from six months before the people's court accepts the bankruptcy cases until the date that bankruptcy is declared, the following actions of a bankrupt enterprise are null and void: Article 36. Complete sets of equipment in the bankruptcy property shall be sold as a whole, and that which cannot be sold as a whole may be sold in parts. Article 37. The distribution plan for the bankruptcy property shall be proposed by the liquidation team, adopted by the creditors meeting and submitted to the people's court for judgment before implementation. Article 38. Upon the completion of the distribution of the bankruptcy property, the liquidation team shall apply to the people's court for the conclusion of the bankruptcy proceedings. After the termination of bankruptcy proceedings, claims that have not been repaid shall no longer be repaid. Article 39. After the conclusion of the bankruptcy proceedings,the liquidation team shall handle the procedures for the cancellation of registration at the original registration authorities of the bankrupt enterprise. Article 40. With respect to bankrupt enterprises that are discovered within one year after the date of the conclusion of the bankruptcy proceedings to have committed any of the acts listed in Article 35 of this Law, the people's court shall recover the property and order repayment in accordance with Article 37 of this Law. Article 42. After an enterprise is declared bankrupt, the government supervisory departments and audit departments are responsible for pinpointing the responsibility for the bankruptcy of the enterprise. CHAPTER VI BANKRUPTCY DECLARATIONS AND BANKRUPTCY LIQUIDATIONS Article 43. This Law is to be implemented on a trial basis three full months after the Law on Industrial Enterprises with Ownership by the Whole People comes into effect, and the specific plans and steps for the trial implementation shall be stipulated by the State Council.
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