Supreme Law Issues Judicial Interpretation Of Enterprise Bankruptcy Law

Provisions of the Supreme People's Court on certain issues applicable to the law of the People's Republic of China on bankruptcy of enterprises (1)

(adopted by the 1527th session of the judicial committee of the Supreme People's Court on August 29, 2011)

In order to correctly apply the "enterprise bankruptcy law of the People's Republic of China", in conjunction with the trial practice, the following provisions are laid down for the people's court to accept the law applicable to enterprise bankruptcy cases according to law.

Article 1 if a debtor can not repay his due debts and has one of the following circumstances, the people's court shall determine that he has the reasons for bankruptcy:

(1) assets are not sufficient to discharge all debts;

(two) there is a clear lack of solvency.

The parties concerned claim that the debtor is not entitled to the joint liability of the debtor's debts without losing their solvency.

Second when the following situations exist simultaneously, the people's court shall hold that the debtor can not repay the debts due:

(1) the relationship between creditor and debt is established in accordance with the law.

(two) the time limit for debt performance has expired.

(three) the debtor has not fully paid off debts.

If the third debtors' balance sheets, or audit reports and assets appraisal reports show that their assets are not enough to cover all debts, the people's court shall recognize that the debtor's assets are not sufficient to repay all debts, but the contrary evidence is sufficient to prove that the debtor's assets are sufficient.

Although the fourth debtors' book assets are larger than liabilities, the people's court shall recognize that the assets of the debtors are obviously lacking in solvency:

(1) unable to pay debts due to serious shortage of funds or property realisation.

(two) the whereabouts of the legal representative are unknown and no other person is responsible for managing the property and unable to pay the debts.

(three) compulsory execution by the people's court is unable to repay debts.

(four) long-term losses and difficulties in operating losses, and unable to repay debts.

(five) other circumstances that cause the debtor to lose his solvency.

The fifth enterprise legal person has been dissolved but has not been liquidated or finished in a reasonable period of time, the creditor applies for the debtor's bankruptcy liquidation, the people's court shall accept it except the debtor's proof within the time limit for the legal objection to prove that the debtor has not been bankrupt.

If sixth creditors apply for bankruptcy of the debtor, they shall submit the relevant evidence that the debtor can not repay the debts due.

If the debtor's application for creditors does not raise objection to the people's court within the statutory time limit, or if the objection is not established, the people's court shall adjudication and accept the bankruptcy application according to law.

After accepting an application for bankruptcy, the people's court shall order the debtor to submit relevant materials such as description of his property, debt list, creditor's rights list and financial accounting report according to law. If the debtor refuses to submit, the people's court may impose fines on the obligor's direct responsible personnel.

When the Seventh People's court receives an application for bankruptcy, it shall give the applicant a written receipt for the receipt of the application and the attached evidence.

After receiving the bankruptcy petition, the people's court shall examine the applicant's main qualification, the principal qualification of the debtor and the reasons for bankruptcy, as well as the relevant materials and evidence in time, and make a ruling according to the provisions of the tenth law of the enterprise bankruptcy law.

If the people's court considers that the applicant shall supplement or correct relevant materials, it shall inform the applicant within five days from the date of receipt of the bankruptcy petition.

The period when the party complements and supplements the relevant materials shall not be included in the tenth provision of the enterprise bankruptcy law.

The cost of litigation in eighth bankruptcy cases shall be appropriated from the debtor's property in accordance with the forty-third provision of the enterprise bankruptcy law.

If the relevant party disagrees with the bankruptcy petition on the grounds that the applicant fails to pay the litigation fee in advance, the people's court shall not support it.

The ninth applicant applies for bankruptcy petition to the people's court, and if the people's court fails to accept his application or fails to carry out the seventh article of this regulation, the applicant may apply for bankruptcy application to the people's court at the next higher level.

Upon receiving the bankruptcy petition, the people's court at the next higher level shall order the lower court to examine the matter according to law and make a ruling on whether to accept it in time. If the lower court still fails to make a ruling, the people's court at the next higher level may make a ruling.

If the people's court at the next higher level decides to accept the bankruptcy petition, it may at the same time direct the lower level people's court to hear the case.