Company Litigation Study... Company Litigation Judgment Rules for the Application of Company Liquidation Disputes.

Company liquidation refers to the act of clearing up the company's claims and debts, disposing of the company's remaining property and terminating the company's legal personality in accordance with the procedures prescribed by law in the event that the company is facing dissolution. Applying for company liquidation refers to that after the company is dissolved, the directors, shareholders and actual controllers of the company fail to perform their duties and fail to form a liquidation group for liquidation within the time limit specified in the company law, or deliberately delay the liquidation although the liquidation group is established, or there are other illegal liquidation behaviors that may seriously damage the interests of shareholders and creditors of the company, The shareholders or creditors of the company shall apply to the people's court for compulsory liquidation of the company. This paper will analyze the application company liquidation disputes from the aspects of legal provisions, litigation overview, dispute issues and adjudication rules.

Article 183 Where a company is dissolved due to the provisions of items (I), (II), (IV) and (V) of Article 180 of this Law, a liquidation group shall be established within 15 days from the date of occurrence of the reasons for dissolution and liquidation shall begin. The liquidation group of a limited liability company shall be composed of shareholders, and the liquidation group of a joint stock limited company shall be composed of directors or persons determined by the general meeting of shareholders. If a liquidation group is not established within the time limit, the creditor may apply to the people's court to designate relevant personnel to form a liquidation group to carry out liquidation. The people's court shall accept the application and promptly organize a liquidation group to carry out liquidation.

Article 184 during the liquidation period, the liquidation group shall exercise the following functions and powers: (1) clean up the company's property, prepare the balance sheet and property list respectively; (II) notify and announce the creditors; (III) handle the outstanding business of the company related to liquidation; (IV) and pay the taxes owed and the taxes generated in the process of liquidation; (V) clean up the creditor's rights and debts; (VI) and deal with the remaining property of the company after paying off debts; (VII) participate in civil litigation activities on behalf of the company.

Article 185 The liquidation group shall notify the creditors within 10 days from the date of its establishment, and make a public announcement in the newspaper within 60 days. Creditors shall, within 30 days from the date of receipt of the notice, or within 45 days from the date of announcement if they fail to receive the notice, declare their claims to the liquidation group.

When filing a claim, a creditor shall explain the relevant matters of the claim and provide supporting materials. The liquidation group shall register the claims. During the declaration of claims, the liquidation group shall not pay off the creditors.

Article 186 After liquidating the company's property and preparing the balance sheet and property inventory, the liquidation team shall formulate a liquidation plan and submit it to the shareholders' meeting, the general meeting of shareholders or the people's court for confirmation. The remaining property of the company after paying the liquidation expenses, the wages of the employees, the social insurance expenses and the statutory compensation, paying the taxes owed and paying off the debts of the company shall be distributed by the limited liability company according to the proportion of the capital contribution of the shareholders, and the limited liability company shall be distributed according to the proportion of the shares held by the shareholders. During the liquidation period, the company shall survive, but shall not carry out business activities unrelated to liquidation. The property of the company shall not be distributed to the shareholders until it has been paid off in accordance with the provisions of the preceding paragraph.

Article 187 If the liquidation team finds that the company's property is insufficient to pay off its debts after liquidating the company's property, preparing the balance sheet and property inventory, it shall apply to the people's court for bankruptcy according to law. After the company is declared bankrupt by the people's court, the liquidation group shall transfer the liquidation affairs to the people's court.

Article 188 After the liquidation of a company is completed, the liquidation group shall prepare a liquidation report, which shall be submitted to the shareholders' meeting, the shareholders' general meeting or the people's court for confirmation, and shall be submitted to the company registration authority to apply for cancellation of the company's registration and announce the termination of the company.

Article 189 The members of the liquidation group shall be devoted to their duties and perform their liquidation obligations in accordance with the law. Members of the liquidation group shall not take advantage of their functions and powers to accept bribes or other illegal income, and shall not embezzle the property of the company. If a member of the liquidation group causes losses to the company or its creditors intentionally or through gross negligence, he shall be liable for compensation.

Article 7 A company shall, in accordance with the provisions of Article 70 of the Civil Code and Article 183 of the Company Law, set up a liquidation group within 15 days from the date of the occurrence of the cause of dissolution and begin to liquidate itself.

Under any of the following circumstances, if a creditor, shareholder, director or other interested party applies to the people's court to designate a liquidation group to carry out liquidation, the people's court shall accept the application:

If the (I) company fails to form a liquidation group within the time limit for dissolution;

(II) deliberately delaying the liquidation despite the establishment of a liquidation group;

(III) illegal liquidation may seriously harm the interests of creditors or shareholders.

Article 8 When the people's court accepts a company liquidation case, it shall promptly appoint relevant personnel to form a liquidation team. The members of the liquidation group may be selected from the following persons or institutions:

(I) the shareholders, directors, supervisors and senior managers of the Company;

Law firms, accounting firms, bankruptcy liquidation firms and other social intermediaries established by the (II) in accordance with the law;

Persons who have relevant professional knowledge and have obtained professional qualifications in social intermediary agencies such as law firms, accounting firms, and bankruptcy liquidation firms established in accordance with the (III).

Article 9 If the members of the liquidation group designated by the people's court are in any of the following circumstances, the people's court may replace the members of the liquidation group upon the application of creditors, shareholders, directors or other interested parties of the company, or ex officio:

(I) acts in violation of laws or administrative regulations;

(II) loss of ability to practice or capacity for civil conduct;

(III) acts that seriously harm the interests of the company or creditors.

Article 10 Before the liquidation of a company according to law is completed and the cancellation of registration is completed, the civil proceedings of the company concerned shall be conducted in the name of the company.

If a company establishes a liquidation group, the person in charge of the liquidation group shall participate in the litigation on behalf of the company; if the liquidation group has not been established, the original legal representative shall participate in the litigation on behalf of the company.

Article 11 In the liquidation of a company, the liquidation group shall, in accordance with the provisions of Article 185 of the Company Law, notify all known creditors in writing of the dissolution and liquidation of the company, and make an announcement in an influential newspaper throughout the country or at the provincial level where the company is registered according to the size and geographical scope of business of the company.

If the liquidation group fails to perform the obligation of notice and announcement in accordance with the provisions of the preceding paragraph, resulting in the creditor's failure to declare the creditor's claim in time and not being paid, and the creditor claims that the members of the liquidation group shall be liable for the losses caused thereby, the people's court shall support it in accordance with the law.

Article 12 When a company is liquidated, if the creditors have objections to the claims approved by the liquidation group, they may request the liquidation group to re-approve them. If the liquidation group does not re-approve the claims, or the creditors still have objections to the re-approved claims, and the creditors file a lawsuit with the company as the defendant to the people's court for confirmation, the people's court shall accept it.

Article 13 If a creditor fails to declare its claims within the prescribed time limit and makes a supplementary declaration before the end of the company's liquidation procedure, the liquidation group shall register it.

The termination of the liquidation procedure of the company means that the liquidation report has been confirmed by the shareholders' meeting, the general meeting of shareholders or the people's court.

Article 14 Creditors may pay off their claims in accordance with the law in the company's undistributed property. If the company's undistributed property cannot be paid off in full, and the creditor claims that the shareholder shall pay off the property it has acquired in the distribution of the remaining property, the people's court shall support it; except where the creditor fails to declare the claim within the prescribed time limit due to a major fault.

If a creditor or liquidation group files an application for bankruptcy liquidation with the people's court on the grounds that the company has not yet distributed the property and the property already acquired by the shareholders in the distribution of the remaining property cannot be fully paid off the claims of the supplementary declaration, the people's court shall not accept it.

Article 15 Where a company is liquidated on its own, the liquidation plan shall be submitted to the shareholders' meeting or the general meeting of shareholders for resolution and confirmation; where the people's court organizes liquidation, the liquidation plan shall be submitted to the people's court for confirmation. The liquidation group shall not implement the liquidation plan without confirmation.

If the implementation of an unconfirmed liquidation plan causes losses to the company or creditors, and the company, shareholders, directors, other interested parties of the company or creditors claim that the members of the liquidation group shall be liable for compensation, the people's court shall support it in accordance with the law.

Article 16 Where a people's court organizes liquidation, the liquidation group shall complete the liquidation within six months from the date of its establishment.

If the liquidation cannot be completed within six months due to special circumstances, the liquidation group shall apply to the people's court for an extension.

Article 17 If the liquidation group appointed by the people's court finds that the company's property is insufficient to pay off its debts when it cleans up the company's property and prepares the balance sheet and property list, it may negotiate with the creditors to make the relevant debt settlement plan.

If the debt settlement plan is confirmed by all creditors and does not harm the interests of other interested parties, the people's court may approve it in accordance with the application of the liquidation group. After paying off the debts in accordance with the liquidation plan, the liquidation group shall apply to the people's court for a ruling to terminate the liquidation procedure.

If the creditor does not confirm the debt settlement plan or the people's court does not approve it, the liquidation group shall apply to the people's court for bankruptcy according to law.

Article 18 If the shareholders of a limited liability company, the directors and the controlling shareholders of a joint stock limited company fail to set up a liquidation group to start liquidation within the statutory time limit, resulting in the devaluation, loss, damage or loss of the company's property, and the creditors claim that they are liable for compensation for the company's debts within the scope of the losses caused, the people's court shall support it in accordance with the law.

If the shareholders of a limited liability company, the directors and the controlling shareholders of a limited liability company are negligent in performing their obligations, resulting in the loss of the company's main property, account books, important documents, etc., and cannot be liquidated, and the creditors claim that they are jointly and severally liable for the company's debts, the people's court shall support it in accordance with the law.

If the above-mentioned situation is caused by the actual controller, and the creditor claims that the actual controller shall bear the corresponding civil liability for the company's debts, the people's court shall support it in accordance with the law.

Article 19: After the company is dissolved, the shareholders of a limited liability company, the directors and controlling shareholders of a joint stock limited company, and the actual controller of the company maliciously dispose of the company's property and cause losses to creditors, or use false liquidation reports without liquidation according to law. If the company registration authority is deceived to cancel the registration of the legal person, the people's court shall support it in accordance with the law.

Article 20 When a company is dissolved, it shall apply for cancellation of registration after the liquidation is completed according to law. The people's court shall support the claim that the shareholders of the limited liability company, the directors and controlling shareholders of the limited liability company, the directors and controlling shareholders of the limited liability company, and the actual controller of the company shall bear the responsibility for the settlement of the company's debts.

If the company goes through the cancellation registration without liquidation according to law, the shareholders or a third party promises to be liable for the company's debts when the company registration authority goes through the cancellation registration, and the creditors claim that they bear the corresponding civil liability for the company's debts, the people's court shall support it in accordance with the law.

Article 21 Where the shareholders of a limited liability company, the directors and controlling shareholders of a joint stock limited company, and the actual controllers of the company who shall be liable in accordance with the provisions of Article 18 and the first paragraph of Article 20 of these regulations are two or more, if one or more of them claim that other persons share the responsibility according to the size of the fault after assuming civil liability in accordance with the law, the people's court shall support it in accordance with the law.

Article 22 When a company is dissolved, any capital contribution that has not been paid by the shareholders shall be treated as liquidation property. The outstanding contributions of shareholders, including the outstanding contributions due and payable, as well as the contributions that have not yet expired in instalments in accordance with the provisions of Articles 26 and 80 of the Company Law.

When the company's property is not sufficient to pay off the debts, the people's court shall support the creditor's claim that the shareholders who have not paid their capital contributions, as well as other shareholders or promoters at the time of the establishment of the company, shall bear joint and several liability for the debts of the company within the scope of the unpaid capital contributions.

Article 23 If a member of a liquidation group violates laws, administrative regulations or the articles of association of the company while engaging in liquidation affairs and causes losses to the company or creditors, and the company or creditors claim that it is liable for compensation, the people's court shall support it in accordance with the law.

If a shareholder of a limited liability company or a shareholder of a joint stock limited company who individually or collectively holds more than 1% shares of the company for more than 180 consecutive days, in accordance with the provisions of the third paragraph of Article 151 of the Company Law, if a member of the liquidation group has any act mentioned in the preceding paragraph, the people's court shall accept the case.

If the company has been liquidated and canceled, and the above-mentioned shareholders directly file a lawsuit in the people's court with the members of the liquidation group as the defendants and other shareholders as the third party with reference to the provisions of paragraph 3 of Article 151 of the Company Law, the people's court shall accept it.

Article 24 Cases of company dissolution and company liquidation shall be under the jurisdiction of the people's court in the place where the company is domiciled. The domicile of the company refers to the location of the company's main office. If the location of the company's office is not clear, the case shall be under the jurisdiction of the people's court in the place of its registration.

The basic people's courts shall have jurisdiction over the dissolution litigation cases and company liquidation cases of companies approved and registered by the company registration authorities of counties, county-level cities or districts; the intermediate people's courts shall have jurisdiction over the dissolution litigation cases and company liquidation cases of companies approved and registered by the company registration authorities at or above the prefecture-level cities.

Article 69 A legal person shall be dissolved under any of the following circumstances:

(I) the period of existence stipulated in the articles of association of the legal person expires or other reasons for dissolution stipulated in the articles of association of the legal person occur;

The authority of the (II) legal person is dissolved by resolution;

The (III) needs to be dissolved due to the merger or division of the legal person;

The business license and registration certificate of a (IV) legal person are revoked according to law, and the legal person is ordered to close down or be revoked;

(V) other circumstances prescribed by law.

Article 70 Where a legal person is dissolved, except in the case of merger or division, the liquidation obligor shall promptly form a liquidation group for liquidation.

Members of the executive or decision-making bodies such as directors and directors of a legal person are the liquidation obligors. Where laws and administrative regulations provide otherwise, such provisions shall prevail.

If the liquidation obligor fails to perform the liquidation obligation in time and causes damage, it shall bear civil liability; the competent authority or the interested party may apply to the people's court to designate relevant personnel to form a liquidation team to carry out liquidation.

Article 14 If the respondent fails to provide evidence to the contrary after the applicant has provided the respondent's intentional delay in liquidation in its own liquidation, or if there are other evidentiary materials that may seriously harm the interests of creditors or shareholders, the people's court shall accept the application for compulsory liquidation filed by the applicant. If a creditor applies for compulsory liquidation, the main property, account books, important documents, etc. of the respondent are lost, or the whereabouts of the respondent's personnel are unknown, resulting in the inability to liquidate, the people's court shall not reject it on this ground.

Article 15 If, after accepting an application for compulsory liquidation, the people's court, upon examination, finds that the application for compulsory liquidation does not conform to the provisions of the law, it may rule to reject the application for compulsory liquidation.

Applicant:Shareholders/creditors/directors/other interested parties

Respondent:Company

Jurisdiction:Under the jurisdiction of the people's court of the company's domicile

Litigation request:Designate a liquidation group to carry out compulsory liquidation of the respondent XX company according to law.

Case 1:Guangzhou Kelin Electrical Equipment Co., Ltd. filed an appeal to the Guangdong Higher People's Court against the Zhuhai Intermediate People's Court (2016) Yue 04 Minsu No. 5 Civil Ruling for a company liquidation dispute with the Zhuhai Branch of Jiangmen Hydropower Company. The Guangdong Higher People's Court made (2017) Yueqing No. 6 Civil Ruling.

Case 2:Shao refused to accept the civil ruling (2013) Dafa Minqing (Yu) No. 1 made by the Intermediate people's Court of Daxinganling District of Heilongjiang Province in the case of a company liquidation dispute with Daxinganling Duoxing Wood Industry Co., Ltd., and appealed to the Heilongjiang Provincial higher people's Court. Heilongjiang Provincial higher people's Court made (2015) Heigao Limin final word No. 43 civil ruling.

Referee rules:

1. If a creditor applies for compulsory liquidation of a company, it must meet three conditions: one is that the applicant has legal claims against the company; the other is that the company is a qualified subject that can be forced liquidation, and belongs to a company established in accordance with the Company Law or the Civil Code. "Legal person" stipulated; third, the company's situation complies with the compulsory liquidation reasons stipulated by the law.

2. If a creditor applies for compulsory liquidation, the company's main property, account books, important documents, etc. are lost, or the whereabouts of the company's personnel are unknown, resulting in the inability to liquidate, the people's court shall not reject it on this ground.

If, after accepting the application for compulsory liquidation, the people's court finds, upon examination, that the application for compulsory liquidation does not conform to the provisions of the law, it may rule to reject the application for compulsory liquidation.

Case 1:Wang Zhengmou and Wang Moutian refused to accept the civil ruling of Qin'an County People's Court (2014) Qin Minqing (Yu) Zi No. 01 due to the case of applying for company liquidation dispute, and appealed to Tianshui Intermediate People's Court, and Tianshui Intermediate People's Court issued (2014) Tianmin Erzong Zi No. 132 Civil Ruling.

Case 2:Due to the settlement dispute with Shaanxi Dongjing Science, Industry and Trade Co., Ltd., Li refused to accept the civil ruling of Changfa Qiangqing (Yu) No. 1 of the people's Court of Chang'an District of Xi'an City, and appealed to the Xi'an Intermediate people's Court. Xi'an Intermediate people's Court made (2014) Xizhong Min Zhong Zi No. 00102 Civil ruling.

Case 3:Shao refused to accept the civil ruling (2013) Dafa Minqing (Yu) No. 1 made by the Intermediate people's Court of Daxinganling District of Heilongjiang Province in the case of a company liquidation dispute with Daxinganling Duoxing Wood Industry Co., Ltd., and appealed to the Heilongjiang Provincial higher people's Court. Heilongjiang Provincial higher people's Court made (2015) Heigao Limin final word No. 43 civil ruling.

Referee rules:

1. Shareholders have the right to apply for company liquidation only when the following conditions are met:(1) Provide valid evidence to prove that they are shareholders of the company (such as direct evidence such as capital contribution certificate, company articles of association and shareholder register) to determine that they have the subject qualification to initiate company liquidation;(2) Provide evidence that the company has been dissolved;(3) Provide evidence that the company has not been liquidated in time according to law.

2. When the shareholders provide evidence to prove that the company has a cause of dissolution in accordance with Article 180 of the the People's Republic of China Company Law and the company has been dissolved, the application for liquidation of the company falls within the scope of the people's court. Otherwise, the court will reject the shareholder's application according to law.

3. If the company fails to adduce evidence to the contrary after the shareholders provide the company's intentional delay in liquidation in its own liquidation, or if there are other evidentiary materials that may seriously harm the interests of creditors or shareholders in illegal liquidation, the people's court shall accept the application for compulsory liquidation filed by the shareholders.

Case:In the case of Huang Mouhua and Gansu Jinyu Real Estate Development Co., Ltd. applying for company liquidation, Tianshui Intermediate People's Court issued a (2016) Gan 05 Minshu No. 1 civil ruling on November 10, 2016, and Huang Mouhua's application was not accepted. After the ruling was served, Huang Mouhua filed an appeal against the decision. After accepting the decision, the Gansu Provincial Higher People's Court made (2016) Gan Min Zhong No. 498 civil ruling on December 21, 2016, which revoked the Tianshui City Intermediate People's Court (2016) Gan 05 Min Juan No. 1 civil ruling, instructing the court to file a case for acceptance. After the Tianshui City Intermediate People's Court formed a collegial panel to review the case in accordance with the law, it made a civil ruling of (2017) Gan 05 Minsu No. 1. Huang Mouhua refused to accept the civil ruling and appealed again to the Gansu Higher People's Court. The court made a civil ruling of (2018) Gan Minzong No. 72.

Referee rules:

According to the provisions of Article 20 of the Minutes of the Supreme People's Court on the Trial of Compulsory Liquidation Cases of Companies, the application fee for compulsory liquidation cases of companies is based on the total amount of compulsory liquidation property, and is calculated by half according to the standard of acceptance fee for property cases. After accepting the application for compulsory liquidation, the people's court shall give priority to the allocation from the property of the respondent. Therefore, the application fee in the case of compulsory liquidation shall be borne by the company in liquidation and paid from the liquidation property, and shall not be paid in advance by the applicant.