Encounter bankruptcy. The role of notarization in debt restructuring and bankruptcy proceedings.
Published:
2020-09-09
Article 2 of the "the People's Republic of China Notarization Law" stipulates that notarization is an activity of a notary institution to prove the authenticity and legality of civil legal acts, legally significant facts and documents in accordance with legal procedures based on the application of natural persons, legal persons or other organizations. So, what role can notarization play in the rescue of a distressed enterprise, or in bankruptcy proceedings?
Our currently applicable "the People's Republic of China Enterprise Bankruptcy Law" came into effect on June 1, 2007. The three major procedures of liquidation, reorganization and reconciliation determined by the law are essentially the rescue and liquidation of distressed enterprises (including zombie enterprises). And distressed enterprises are usually in a state of insolvency, income is difficult to cover expenditure, debt and litigation, in a state of serious breach of trust, difficult to find good resources to continue their lives. However, in addition to the real zombie enterprises, many of the enterprises in distress from "illness" to "recovery", often only one breath away, usually through out-of-court restructuring and bankruptcy procedures to rescue. In the out-of-court reorganization stage, notarization can perform the following four functions:
1. notarization custody function. Most creditors of distressed enterprises have no trust in distressed enterprises. At this time of the crisis enterprise, whether it is debt restructuring or subsequent to the bankruptcy proceedings, often the most taboo at this time of the crisis enterprise individual settlement or inflated debt. Therefore, at this time, it is very important to keep the seal of the enterprise in a suitable way, as well as to have important debt documents, accounting books, asset documents, etc. for asset inventory and debt liquidation.
2. payment channel function. Distressed enterprises often have the same problem, that is, accounts and assets are seized in multiple rounds. In the process of revitalizing a distressed business, many times it is necessary to release some of the assets in exchange for cash flow to revive. But there has long been no trust between distressed enterprises and creditors. At this time, the notary institution can act as Alipay, that is, the transfer of property transfer funds and other funds to the notary account, and agreed to pay the conditions, by the notary institution to pay to such as suppliers, construction parties and other creditors, to avoid creditors and dangerous enterprises stalemate, follow-up funds can not enter the situation.
3. involved in settlement talks. The revitalization of distressed enterprises often requires a package of solutions, so in the process of revitalization, it is necessary to consult and negotiate with a large number of creditors after overall consideration. In this process, notarization can be deeply involved, draw up an agreement, and notarize.
4. a connecting tool for conversion to insolvency proceedings in the event of a failed out-of-court reorganization. The enterprise's own out-of-court debt restructuring, or pre-restructuring, is more flexible, but it also has the disadvantage of lacking coercion. Therefore, there are already cases to explore the method of notarization to give the relevant agreement enforcement effect. In the event of debt restructuring or failure of reorganization, the notary may issue an enforcement certificate in due course, so that the debt is initially locked and transferred to insolvency proceedings in a timely manner by way of execution to insolvency.
If the out-of-court reorganization fails, the distressed enterprise will have to enter bankruptcy proceedings, at which point the scope for notarization to play a role will be broader, as follows:
In the stage of the selection of the bankruptcy administrator, the 1. can supervise and notarize the whole process of selecting the bankruptcy administrator in the form of on-site supervision and notarization, so as to improve the credibility and avoid the objection of creditors, debtors or other candidates.
2., in the stage of declaration of claims, the notary office can carry out relevant work by means of notarization service to improve work efficiency. At the same time, the process of creditor's declaration can also be notarized and fixed to prove the openness and transparency of creditor's declaration. The behavior and process of creditor's transfer of creditor's rights can be notarized to ensure the authenticity, legality and effectiveness of the transfer of creditor's rights. Notary institutions can also assist the court and the bankruptcy administrator in sorting out and making materials for creditor's rights declaration at this stage. And declaration, entrustment and other types of notarization.
At the stage of the creditors' meeting, the 3. can conduct on-site supervision and notarization of the entire creditors' meeting, which can effectively ensure the legality and rationality of the procedures of the creditors' meeting, and lay a solid foundation for the smooth progress of the bankruptcy procedure; at the same time, it can also notarize the evidence preservation of the early voting behavior of the creditors according to the judicial interpretation of the bankruptcy law.
In the stages of asset inventory, official seal, contract, account book storage, evaluation and audit, the 4. can provide corresponding notarization suggestions and provide corresponding preservation evidence notarization and consulting services.
5., in the collection and reporting stage of external claims, notary institutions can assist in the collection of claims, consultation, issuance of execution certificates and other matters by participating in the notarization of the service of the claim collection letter.
In the stage of property distribution, the 6. provides deposit notarization for the distribution of creditor's rights and debts, and the deposit notarization can be used simultaneously with the account number of the bankruptcy administrator according to the needs, so as to protect the interests of creditors.
In general, due to its evidentiary effect, enforcement effect, and the effect of the establishment of legal acts, notarization has a lot to do in bankruptcy, a debt settlement procedure completed under the supervision and command of the court, and it will also be a bankruptcy administrator. The work of the company provides many conveniences, which is conducive to the rescue and clean-up of distressed enterprises, and the continuous optimization and improvement of the business environment.
Introduction
Zhongcheng Qingtai Law firm has a team specializing in bankruptcy-related business, bringing together more than 60 practicing lawyers and experts with rich theoretical and practical experience in bankruptcy reorganization, mergers and acquisitions, commercial litigation, financial investment, enterprise listing, audit evaluation and other fields. A large number of bankruptcy liquidation, reorganization and reconciliation cases have been handled. In addition, it also uses investor consultants and creditor representatives to rescue and clean up crisis enterprises, and provides regional debt crisis resolution advice and plans for many local governments.
The professional services provided by Zhongcheng Qingtai in the field of bankruptcy mainly include: creditors (creditor committee), debtors and administrator consultants; Debt (non-bankruptcy) reorganization; Pre-reorganization; Bankruptcy reorganization, bankruptcy settlement, dissolution and liquidation; Bankrupt enterprise investment and acquisition; Financial asset acquisition and path planning; Mutual insurance enterprise credit crisis resolution; Regional enterprise debt crisis resolution; Accepting the entrustment of troubled enterprises, conduct a mapping of its debt restructuring affairs and propose solutions.
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