Viewpoint... Discussion on the balance of interests between the two sides of the debt in the personal bankruptcy system.

Published:

2021-11-12

Introduction On November 8, 2021, the Shenzhen Intermediate People's Court delivered a personal bankruptcy liquidation ruling (2021) Yue 03 Breaking No. 417 (11) to Hu, the country's first legal sense of the "natural person bankrupt" appeared. For personal bankruptcy, some people may have questions, this "Laolai" for a long time not to return the property, to promote the personal bankruptcy system, is not to protect these "Laolai" reasonable legal not to pay back the money? In this paper, the author from how to better balance the interests of the debtor and creditors to explore the personal bankruptcy system, in order to give readers some inspiration. Text The background of the development of the 1. personal bankruptcy system. In 2007, when China's bankruptcy law was introduced, it did not set up a personal bankruptcy system, because the banking system, legal framework and other supporting facilities were not sound enough, and the time for the establishment of a personal bankruptcy system was not mature enough. On June 15, 2017, the Supreme People's Court responded to Pan Dingxin's proposal to establish and implement a personal bankruptcy system: "The establishment and implementation of a personal bankruptcy system will help individuals or families in serious financial difficulties to pass personal bankruptcy procedures in accordance with the law., Exempt certain debts, so that they can re-achieve normal production and life through hard work. Thus, the personal bankruptcy regime has a more important protective effect on individuals or families in serious financial distress." "However, the personal bankruptcy system involves many factors such as the establishment and improvement of the personal credit system and the further development of the commercialization or marketization of commercial banks. At the same time, the implementation of the personal bankruptcy system requires legislation by the National People's Congress or its Standing Committee. We believe that with the development and improvement of the socialist market economic system with Chinese characteristics, the National People's Congress or its Standing Committee will formulate the the People's Republic of China bankruptcy law in due course on the basis of summing up the experience in the implementation of the individual enterprise bankruptcy law. The Supreme People's Court will actively cooperate with the relevant state departments to promote the implementation of the personal bankruptcy system." In July 2019, the Supreme People's Court, the National Development and Reform Commission, the People's Bank of China and other 13 units jointly issued the "Accelerating the Improvement of the Market Exit System Reform Plan" clearly proposed to promote the establishment of a natural person bankruptcy system step by step. In February 2019, the Supreme Court announced the Opinions on Deepening Implementation Reform and Improving the Long-term Mechanism for Solving Implementation Difficulties-People's Courts' Implementation Work Outline (2019-2023), which shows that the people's courts will carry out pilot projects with functions equivalent to the personal bankruptcy system. jobs. In August 2019, the General Office of the State Council issued a document requesting the study of the establishment of a personal bankruptcy system, with particular attention to the issue of joint and several liability of natural persons related to corporate bankruptcy. On June 2, 2020, the standing Committee of the Shenzhen Municipal people's Congress issued a document on the public solicitation of opinions on the regulations on personal Bankruptcy in Shenzhen Special Economic Zone (draft for soliciting opinions). The legal work Committee of the standing Committee of the Shenzhen Municipal people's Congress revised and improved the regulations on personal Bankruptcy in Shenzhen Special Economic Zone (draft for soliciting opinions) according to the deliberation opinions. On August 31, 2020, the Standing Committee of the Shenzhen Municipal People's Congress issued the Regulations on Personal Bankruptcy of the Shenzhen Special Economic Zone, which will come into force on March 1, 2021. On December 1, 2020, the Intermediate People's Court of Dongying City, Shandong Province, as the pilot court of the personal bankruptcy system determined by the Shandong Provincial High Court, issued the Implementation Opinions on the Liquidation of Personal Debt (Trial). On December 2, 2020, the Higher People's Court of Zhejiang Province issued the Notice of Guidance (Trial) on the Centralized Liquidation of Personal Debts (Class Personal Bankruptcy) in Zhejiang Courts, providing working guidance for the full exploration of the personal bankruptcy system in the centralized liquidation of personal debts. The 2. personal bankruptcy system is not an umbrella for "old scoundrels". The personal bankruptcy system can not be the umbrella of "Lao Lai", and not all individual debtors can apply for bankruptcy. The standard of debtors in the personal bankruptcy system is "honest and unfortunate debtors". The relevant local laws and regulations and local judicial interpretation documents have made specific provisions for the "honest and unfortunate debtor. Article 2 of the regulations of the Shenzhen Special Economic Zone on personal Bankruptcy stipulates: "if a natural person who has lived in the Shenzhen Special Economic Zone and has participated in Shenzhen social insurance for three consecutive years, if he or she loses the ability to pay off debts or has insufficient assets to pay off all debts due to production, operation and living consumption, bankruptcy liquidation, reorganization or reconciliation may be carried out in accordance with these regulations." Article 9 stipulates that "when the debtor is unable to pay off the debts due, creditors who individually or jointly hold more than 500,000 yuan of due claims against the debtor may apply to the people's court for bankruptcy liquidation of the debtor." The Notice on the Work Guidance (Trial) of Zhejiang Court on Centralized Settlement of Personal Debts (Class Personal Bankruptcy) stipulates that "natural persons with Zhejiang household registration, living in Zhejiang Province and participating in social insurance or paying personal income tax in Zhejiang Province for three consecutive years cannot pay off their due debts, and their assets are insufficient to pay off all debts or obviously lack solvency. They may apply for centralized liquidation of personal debts in accordance with these guidelines. Individual industrial and commercial households may refer to these guidelines for debt centralized liquidation." Article 3 of the Opinions on the Implementation of Personal Debt Liquidation (Trial) issued by the Intermediate People's Court of Dongying City, Shandong Province, stipulates that "a natural person who lives in the jurisdiction of Dongying City, whose assets are insufficient to pay off all debts or who obviously lacks solvency, and who meets one of the following conditions, may carry out debt liquidation in accordance with this opinion: (1) A natural person who has entered bankruptcy proceedings or has gone bankrupt and provided guarantee liability for the liabilities for the corporate; (II) natural persons who are unable to pay off their due debts due to difficulties in production and business activities and cannot be executed by the compulsory execution procedures of the people's court; (III) other natural persons whose personal debts are deemed necessary by the people's court. The above-mentioned debtors shall be in good faith from beginning to end in the proceedings of trial, arbitration, enforcement and personal debt liquidation, and there shall be no acts of evading debts in the name of personal debt liquidation, and there shall be no other acts of dishonesty that may affect their ability to perform. The spouse of the above-mentioned debtor may also apply for debt liquidation in accordance with this Opinion." Article 5 stipulates: "In addition to the circumstances specified in Article 3 of this opinion, the debtor shall also meet the following conditions: (1) Both the debtor and his spouse have made a comprehensive and truthful property declaration; (II) the debtor's spouse agrees to accept the people's court The investigation of its property situation, including the investigation of its bank flow for a certain number of years as appropriate; the adult immediate family members or other family members of the applicant for personal debt liquidation may agree to cooperate with the property investigation when necessary; the (III) debtor undertakes in writing not to carry out the high consumption and non necessary consumption behaviors prohibited by Article 3 of the provisions of the Supreme People's Court on restricting the high consumption and related consumption of the person subject to execution; The debts applied for liquidation by the (IV) debtor are not labor debts." As the review body of personal bankruptcy, the court must abide by the principle of prudence and strictness, and set strict application conditions from the beginning, so as to cut off some people's ideas of opportunity and prevent debtors from using the personal bankruptcy system for illegal purposes. For example, the Intermediate People's Court of Guangdong Province is hearing the case of (2021) Yue 03 Po Shen No. 217 (6). The court reviewed that Li and his ex-wife formed a joint debt. After the divorce, Li borrowed excessively in his own name, returned the joint debt of the husband and wife, and applied for personal bankruptcy liquidation for the new debt. The court ruled that it would not accept the application. 3. personal bankruptcy system will guard the creditor's "money bag" (I) creditors should hold on to property interests from the source For the creditors of financial institutions, they have a sound financial lending system and set up a model threshold for lenders. Information on the debtor's assets can be queried, or the debtor can be required to provide the appropriate mortgage security, and in the event of a situation where the lender is unable to return it, the financial institution can rely on the assets secured by the mortgage to be paid in priority. For creditors of companies, enterprises or natural persons, it is necessary to keep in mind the risk awareness when lending, whether there is a risk of not getting back the creditor's rights. Although due diligence cannot be fully done, risk prevention should also be done when lending. The first is to clarify the asset status of the debtor (lender) and whether it has the ability to repay. Second, it is best to require the debtor to provide corresponding guarantees or guarantees, especially large loans must be very cautious. Third, the general loan between natural persons, it is important to write down the contents of the loan agreement, the debtor's relevant information, the payment of the account and other information. If necessary, a lawyer may be asked to conduct due diligence on the debtor or to review the loan agreement. (II) in the personal bankruptcy system, how to protect the interests of creditors? Although the personal bankruptcy system provides an opportunity for those "honest and unfortunate debtors" to be reborn, creditors cede part of the property interests and give debtors a chance to re-develop and survive. For creditors, it is also an opportunity to help realize the collective settlement of creditors, put an end to individual settlement, and ensure that mortgage claims have the right of priority payment, and ordinary creditors can pay off in proportion. For creditors, the existing provisions are as follows: Article 16 of the Regulations of the Shenzhen Special Economic Zone on Personal Bankruptcy stipulates: "Within 15 days from the date on which the people's court discloses the bankruptcy application, creditors may, individually or jointly, recommend to the people's court the candidate for the bankruptcy administrator (hereinafter referred to as the administrator)." Article 17 stipulates that "if the people's court agrees to the candidate of the administrator recommend by the creditors, it shall make a decision to appoint the administrator at the same time when it decides to accept the bankruptcy application. The expenses of the administrator for the performance of his duties shall be paid in advance by the person who recommended him. If several creditors recommend different candidates for the administrator, the people's court may appoint one or more administrators from among them." The notice of Zhejiang court on the work guidance of centralized liquidation of personal debts (similar personal bankruptcy) (for Trial Implementation) stipulates that "in the centralized liquidation of personal debts, social intermediary institutions and their practicing lawyers, practicing certified public accountants, or public administrators of government departments may be appointed to act as managers of centralized liquidation of personal debts. It is also possible for creditors and debtors to jointly negotiate the selection of administrators among the institutions listed on the roster and their practicing lawyers, practicing certified public accountants, or public officials in government departments." Therefore, creditors in the personal bankruptcy stage, carefully choose the recommend manager is also a very important thing. In addition, creditors should actively exercise their rights at the stage of personal bankruptcy or when the people's court accepts an application for liquidation of personal debts. Mainly reflected in the following aspects: (1) Timely declaration of claims; (2) Participation in creditors' meetings; (3) the exercise of the right to vote of creditors; (4) Supervision of the work of the administrator. The author summarizes Although there are a large number of individuals who are "insolvent and unable to pay off personal debts", the corresponding number of creditors is even larger, and the history of market economy in China is still short, social integrity is not ideal, and there are many phenomena of fraud and debt evasion. therefore, when appropriately protecting "honest and unfortunate debtors", more efforts should be made to protect "kind and unfortunate creditors". Personal bankruptcy system only close to the national conditions and balance the interests of both sides of the debt, in order to achieve the release of private or personal economy from the economic point of view to speed up the improvement of the market subject exit system reform, from the judicial point of view to solve a large number of "zombie cases" can not be implemented to improve the judicial efficiency of the establishment of the purpose. Finally, the author quotes a sentence from Liao Huihui scholar: "In the pilot implementation of the personal bankruptcy system, the protection of the interests of creditors should be increased, the interests of debtors should be appropriately protected, and the fraud of the personal bankruptcy system should be prevented."

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