On the selection system of bankruptcy administrator
Published:
2010-02-02
Abstract: In the whole insolvency proceedings, the insolvency representative is a crucial participant. The selection of the insolvency representative is important for the fair distribution of the estate, the effective balance of the interests of the parties in the insolvency proceedings and the smooth conduct of the insolvency proceedings. The introduction of the bankruptcy administrator system is a major breakthrough in China's bankruptcy legislation, but there are some defects in the design of its selection system, which needs further discussion and improvement of legislation.
Based on the legislative status quo of the selection system of bankruptcy administrator in China, this paper analyzes the legislation and practice of the characteristics of bankruptcy administrator, the way of selection, the qualification of selection and the time of selection, and summarizes the legislative breakthrough and existing problems in these aspects, and finally puts forward the corresponding amendment plan.
Key words:bankruptcy system; selection of bankruptcy administrator; perfection
1. insolvency administrator system
The bankruptcy administrator refers to the specialized agency established after the people's court accepts the bankruptcy case, takes over the debtor's enterprise in an all-round way and is responsible for the custody, liquidation, valuation, disposal and distribution of its property. On the one hand, it is the receiver, pursuer and custodian of the bankruptcy property, on the other hand, it is also the trustee, operator and liquidator of the bankrupt enterprise.[1]In bankruptcy proceedings, a large number of professional and technical legal and accounting affairs are mixed, which are far from the human and material resources of the court, and the court, as an independent judicial organ, has the nature of public law, but the management, price change, distribution and other work of bankruptcy property is a matter of private law, and it is not appropriate for the court to deal with it. In addition, the insolvency and creditors' meetings are not suitable for insolvency because of their limited capacity for civil rights and conduct. For their own interests, their behavior is also difficult to be completely fair and reasonable. Thus, it is necessary to establish an insolvency representative as a specialized agency responsible for insolvency, which plays an indispensable role in insolvency proceedings.[2]
The insolvency administrator is independent. The insolvency representative is a party to the insolvency legal relationship with an independent subject status in the insolvency proceedings, and it can independently assume legal responsibility in the insolvency proceedings. In reality, the bankruptcy administrator dereliction of duty, private bribery and other phenomena continue to appear, from the law to put an end to this phenomenon, it is required that the bankruptcy administrator is an independent subject at the same time, must also have their own independent property, and can take responsibility for the external. The insolvency representative must also be able to deal independently with insolvency matters on its own terms. Only in this way, the bankruptcy administrator is responsible for his own actions. Once the bankruptcy administrator has committed an act that harms the legitimate rights and interests of creditors or other interested parties, the court can investigate its legal responsibility in a timely manner according to its authority or the application of the parties.[3]
The insolvency administrator is neutral. Bankruptcy proceedings involve a wide range of stakeholders, including creditors, bankrupts, employees and the State. In the case of the insolvency estate, there is a serious exclusion between the interests of the parties, often in a state of opposition. The purpose of the insolvency regime is to protect the legitimate rights and interests of creditors, the bankrupt and all other interested parties in the insolvency proceedings, and to ensure that this objective is achieved, it is necessary to require the insolvency representative to remain neutral in the execution of insolvency matters in the insolvency proceedings. The neutrality of the administrator's ability to deal with bankruptcy affairs from an objective and fair position in bankruptcy proceedings means that the interests of the insolvency administrator are not related, that is, the interests of the insolvency administrator are not affected by the changes in the interests of various legal subjects in the bankruptcy proceedings; the second means that the authority of the insolvency administrator to deal with bankruptcy affairs cannot be based on the authorization of the court or a specific subject, but only on the provisions of the law, the responsibility of the administrator is to be responsible to the law, not to the court or other parties.[4]
insolvency administratorCharacteristics of independence and neutralityIt is required that it must have the right to reject the election decision under certain conditions, but the conditions for the exercise of such rejection should be quite strict, otherwise there may be a situation where the insolvency representative picks up the weight of the insolvency case. The independence and neutrality of the insolvency administrator also determines that it should not be subject to excessive interference by public power, and although the identity of the insolvency administrator needs to be confirmed by the court, excessive intervention in the selection of the insolvency administrator may make the insolvency administrator inherently deficient and unable to withstand the test of the market economy. If the power of election of the insolvency representative is absolutely in the hands of one party, it is inevitable that there will be a situation of favoring one party, which is not allowed by the legislative objective of the balance of interests of the insolvency law. Therefore, in the process of designing the selection mechanism, it is necessary to reflect the mutual supervision of rights and powers, establish an effective supervision mechanism, and ensure that all parties involved in the bankruptcy procedure have corresponding relief mechanisms and interest appeal channels.[5]
2. insolvency administrator selection system
According to the Enterprise Bankruptcy Law and the Provisions on the Appointment of Administrators, the current system for the selection of insolvency administrators in China can be summarized as follows:
1. The Higher People's Court or the intermediate people's court determined by it shall prepare a roster of managers of social intermediaries and a roster of individual managers, respectively. The court that compiles the roster shall form a special review committee to decide on the list of social intermediaries and individuals included in the roster, and publicize and file them. (Articles 2, 10 to 12 of the Provisions on Designation of Administrators)
2. The people's court shall appoint an administrator from the roster of administrators when hearing an enterprise bankruptcy case. (Article 22 of the Enterprise Bankruptcy Law and Articles 1 and 15 of the Provisions on Designation of Administrators)
3. The people's court shall, in general, publicly designate the administrator by random means such as waiting, drawing lots and lottery numbers in accordance with the list listed in the list of administrators, or by means of competition, the administrator shall be determined by a special evaluation committee. (Articles 20 and 21 of the Provisions on Designation of Administrators)
4. If the creditors' meeting considers that the administrator is incompetent, the creditors' meeting may make a resolution and submit a written application to the court for replacement, and the court shall examine the reasons for the application and decide to accept or reject it. Article 22, paragraph 2, of the Enterprise Bankruptcy Law, and Articles 31 and 32 of the Provisions on Designation of Administrators)
Countries around the world are currentlyTime of commencement of insolvency proceedingsThe provisions of the law are broadly divided into two situations:(1) the civil law countries represented by France and Germany implement the doctrine of the commencement of bankruptcy proceedings, before the court declares bankruptcy, the bankruptcy proceedings have not begun, the debtor's civil subject status has not changed, its property is still at its disposal, until the court declares bankruptcy, only to appoint a bankruptcy representative, responsible for the management of the bankruptcy property;(2) The common law countries represented by the United Kingdom and the United States implement the doctrine of the commencement of bankruptcy proceedings. Before the court accepts the bankruptcy case and before the bankruptcy declaration, in order to prevent the debtor from improperly disposing of the property, the debtor can no longer manage and dispose of the property. Instead, a temporary property manager is established. The temporary property manager manages the debtor's property in an all-round way until the bankruptcy is declared, the elected insolvency representative takes over the administration from the interim administrator, disposes of the estate and distributes it.
Since China's bankruptcy law in the beginning of the bankruptcy procedure is the common law system of bankruptcy proceedings to accept the beginning of the doctrine, it should be in China's bankruptcy proceedings to learn from and recognize.temporary property manager system. After the debtor is declared bankrupt, the court considers it necessary to directly convert the temporary property administrator into the bankruptcy administrator, so that on the one hand, the property management activities in the bankruptcy proceedings have continuity, on the other hand, it also avoids the bankruptcy declaration to the bankruptcy administrator before the election of the bankruptcy administrator. Of course, if the court considers that the interim administrator is no longer suitable to be elected as the insolvency administrator, it may elect a separate insolvency administrator. The establishment of a temporary property administrator system in China's bankruptcy proceedings can be connected with the bankruptcy administrator system established after the bankruptcy declaration, so that the debtor's property is placed under the management and control of the special administrator from the beginning of the bankruptcy proceedings, effectively and effectively preserve the debtor's property, and protect the interests of creditors to the greatest extent.[6]
At present, our country adopts the method of selecting and appointing the bankruptcy administrator by the court. The court decides who to appoint as the insolvency administrator in the insolvency proceedings, and the creditors' meeting generally may not intervene. However, if the creditors' meeting is not satisfied with the bankruptcy administrator appointed by the court, it may raise an objection to the court. The biggest advantage of this approach is that it is efficient and the insolvency administrator can be produced in a timely manner, but its main disadvantage is that the principle of protection of creditors' interests is not reflected.
Since the basic function of insolvency law is to protect the interests of creditors, and the supervision of the insolvency representative by the creditors' meeting is the key to protect the interests of creditors, it is inconsistent with the requirements of the basic function of insolvency law if the appointment of the insolvency representative creditors' meeting cannot be effectively supervised. Therefore, in order to ensure the smooth progress of the bankruptcy proceedings and protect the interests of all creditors, after the court selects the administrator, if there are legitimate reasons, it may apply to the court for the replacement of the administrator by the vote of a certain proportion of the total amount of voting claims.[7]
3. the positive role of the current insolvency administrator selection system
The Enterprise Bankruptcy Law implements a court-led administrator selection model. The court has the power to decide on the selection of the insolvency representative, and creditors may object to the court and request the court to change the insolvency representative if they believe that the insolvency representative elected by the court has a material interest in themselves or other creditors. As to whether to replace the insolvency representative, the court has the final decision.
The theoretical basis for the implementation of the court-led selection method in China lies in: bankruptcy procedure is a judicial procedure led by the court to clean up creditor's rights and debts, bankruptcy has a general nature of enforcement, and the state elects bankruptcy administrator to protect private rights, which should highlight the court's dominant position in bankruptcy procedure; bankruptcy administrator has a special legal status, not the agent of all creditors, nor the agent of the bankrupt debtor, therefore, the insolvency administrator should not be elected by the creditors' meeting. The greatest advantage of this selection method is that it is efficient, can produce the insolvency representative in a timely manner, and can ensure that the insolvency representative equally protects the interests of all parties, and helps to maintain the neutrality of the insolvency representative. Although the selection mode of the creditors' meeting can protect the interests of creditors, it is inefficient to operate, it is difficult for creditors to reach an agreement on the selection of the bankruptcy administrator, and it often costs a lot of time, resulting in the inefficiency and uneconomical of the entire bankruptcy procedure. The court selection mode has strict procedural requirements and mandatory time requirements, which makes the entire bankruptcy procedure run efficiently and economically.
One of the legislative intentions of the Enterprise Bankruptcy Law is to transform China's bankruptcy cases from "administrative bankruptcy" to "market bankruptcy. In 1986, China began to have a trial "bankruptcy law", began bankruptcy practice, but at that time the bankruptcy procedure was completely led by the government, the main body of the bankruptcy procedure is also the authority of state-owned enterprises. The promulgation and implementation of the new Enterprise Bankruptcy Law has greatly expanded the market subject applicable to the bankruptcy procedure, because before China's bankruptcy practice only administrative bankruptcy, lack of market-type bankruptcy precedent and experience, want to make the market-type bankruptcy run smoothly in a short period of time is very difficult. If the newly introduced bankruptcy administrator system leaves the intervention and support of public power, it is difficult to develop to a mature level.
The current insolvency administrator selection mechanism ensures the effective operation of the insolvency administrator system to a certain extent, which enables the court to master the process of insolvency proceedings. The bankruptcy administrator is the main line of the whole bankruptcy procedure, and the court controls the selection of the bankruptcy administrator, which is tantamount to controlling the whole bankruptcy procedure. In the initial stage of market bankruptcy, such a selection system design has positive significance in preventing the risk of manager practice, cultivating the manager market and balancing the interests of all parties.
The design of the court-led administrator selection model in the Enterprise Bankruptcy Law is more in line with the public psychology and is conducive to the promotion of the implementation of the new law. The general public generally has an impulse of trust in public power that is difficult to suppress. In the early stage of the implementation of the Enterprise Bankruptcy Law, it is necessary for the public power to intervene and supervise the bankruptcy procedure. In insolvency proceedings, there are widespread conflicts of interest between creditors and between debtors and creditors. All parties have reasonable interest demands from their respective positions, and this kind of conflict is sometimes difficult to digest through the market itself. At this time, if there is timely and appropriate intervention of public power, it can play a good role in balancing interests. On the issue of the selection of insolvency representatives with sharp conflicts of interest, when it is difficult for the parties to reach an effective agreement, the insolvency proceedings will be stalled and deadlocked, and the court-led selection model provides a solution to such a deadlock.[8]
Deficiencies of the current system for selecting insolvency administrators in 4.
Insolvency is essentially the way in which the debtor's property is generally enforced and distributed fairly to each creditor when it is insolvent.[9]The legislative objective and basic function of bankruptcy law is to protect the interests of creditors, and the implementation of bankruptcy protection for creditors is the initial motivation for the bankruptcy system, although legislators in various countries have begun to realize that the interests of other interested parties in bankruptcy proceedings should also be protected, but the concept of the priority of the interests of creditors has not been fundamentally shaken. Insolvency distribution is undoubtedly still based on the premise that the interests of creditors absolutely take precedence over other interests.
China's Enterprise Bankruptcy Law lists the protection of creditors' equal compensation as one of the important objectives, but in the specific selection system, the interests of creditors have not been paid sufficient attention. The Enterprise Insolvency Law provides that a single insolvency creditor cannot exercise the right of objection to a court-appointed administrator, but must be made by way of a resolution at a meeting of creditors, and that the resulting resolution must be "adopted by a majority of the voting creditors present at the meeting and represent more than 1/2 of the total amount of unsecured claims"[10]. Even if the insolvency representative meets the conditions for replacement, the creditor has the responsibility to prove that the administrator meets the statutory conditions.
China's Enterprise Bankruptcy Law stipulates that creditors of bankruptcy expenses and creditors of common debts enjoy priority, and employees and the government also enjoy certain priority, ordinary creditors actually become the last remaining claimants, their rights and interests are the least guaranteed. In such cases, the appointment of insolvency administrators should be allocated more to these creditors so that their interests can be adequately protected.
When an enterprise goes bankrupt, the creditor actually becomes the claimant of the residual value of the estate. As the claimant of the residual value of the estate, creditors not only ultimately enjoy the proceeds of bankruptcy, but also ultimately bear the costs and risks of bankruptcy, so they are more motivated to maximize the value of bankruptcy than the court or other interested parties. Moreover, bankruptcy liquidation often involves a number of legal, accounting, financial management and other highly specialized matters, creditors are generally the subject of commercial activities, they are more capable of making judgments and decisions on this. The Enterprise Bankruptcy Law gives the court the final decision-making power over the selection of the insolvency representative and related matters, while creditors have only a right to make suggestions without any guarantee. Decision makers and residual value claimants are inconsistent and cannot guarantee the maximization of bankruptcy benefits.
China's Enterprise Bankruptcy Law stipulates that the people's court shall appoint a bankruptcy administrator to take over the bankrupt enterprise while accepting the bankruptcy case. However, at this time, the debtor has not been declared bankrupt and has not completely lost the right to manage and dispose of its property, so the law may infringe on the enterprise's right to operate autonomously. Before the court declares the debtor bankrupt, the purpose of selecting the bankruptcy representative to take over the property of the enterprise shall be to preserve the property of the debtor and prevent the debtor from disposing of the property of the enterprise without permission, which would have adverse consequences for creditors. However, Article 18 of the Enterprise Bankruptcy Law stipulates: "After the people's court accepts the bankruptcy application, the administrator shall have the right to decide to terminate or continue to perform the contract that was established before the bankruptcy application was accepted and the debtor and the other party have not completed the performance, and notify the other party." It can be seen that before the court declares the enterprise bankrupt, the bankruptcy law gives the bankruptcy representative the power not only to preserve the debtor's property, but also to manage and dispose of the debtor's property. This allows the insolvency representative to dispose of the debtor's property prior to insolvency, which undoubtedly deprives the enterprise of its autonomy. The solution to this problem is to introduce the temporary property administrator system of the common law system, which distinguishes the powers of the temporary property administrator from the insolvency administrator.[11]
The Enterprise Bankruptcy Law provides that the preparation and management of the insolvency representative's roster is carried out by the court, but the legal provisions on the criteria for the preparation of the roster are very general and vague, resulting in greater discretion of the court in this regard, which may result in a monopoly of the insolvency representative's market, which is created by the court. There are not many social intermediaries and individuals who can enter the bankruptcy administrator's roster, and the remuneration of the administrators of various bankruptcy cases varies greatly, thus leaving a lot of room for the court to operate in the dark. In the absence of an independent and autonomous legal professional class and a mechanism for restricting the operation of power in our country, the current mechanism for the selection of bankruptcy administrators is difficult to prevent judicial corruption.[12]
5. the amendment of the selection system of bankruptcy administrator in China
The bankruptcy law should give creditors the substantive right to replace the administrator on the issue of selection, and adopt the "two-track" legislative model combining the selection of the court and the selection of the creditors' meeting, that is, the court and the creditors' meeting jointly select the bankruptcy administrator, which can not only effectively restrain judicial corruption, but also fully reflect the autonomy of creditors.
After the bankruptcy case is accepted, the court shall appoint a temporary administrator, and at the first meeting of creditors, the meeting of creditors may confirm that the temporary administrator is the official administrator or another election. Where the resolution of the creditors' meeting does not violate the law and affect the interests of other interested parties, the court shall not refuse. In order to enable creditors to effectively supervise the selection of the administrator, the formal requirements for creditors to exercise the right of objection should also be relaxed, and individual creditors should be given the right to object to the selection of the administrator. If creditors believe that the administrator appointed by the court cannot fulfill the duty of care for good management and cannot fulfill the duty of safeguarding the legitimate rights and interests of creditors, they can apply to the court for replacement in their own name.
(II) introductionTemporary property managerSystem
China's bankruptcy law from the law is the common law system of bankruptcy proceedings to accept the beginning of the doctrine, should be in the bankruptcy law to learn from and recognize the temporary property administrator system. After the court accepts the bankruptcy application, the court appoints a temporary property administrator to take over and occupy the debtor's property, so as to prevent the debtor from disposing of the bankruptcy property without permission and causing irreparable losses to creditors. The temporary property administrator is responsible to the court and reports on its work, and is supervised by the court and the creditors' meeting. After the debtor is declared bankrupt, the court or the creditors' meeting deems it necessary to directly convert the temporary estate administrator into the bankruptcy administrator. Of course, if the court or the creditors' meeting considers that the interim estate administrator is no more suitable to be elected as the insolvency administrator, a separate insolvency administrator may be elected. This would, on the one hand, provide continuity in the administration of property in insolvency proceedings and, on the other hand, avoid infringing on the debtor's right to operate autonomously prior to being declared insolvent, while fully reflecting the autonomy of creditors.
The management system of the candidate list of the insolvency administrator is the most sound in the United Kingdom, which is worthy of our reference. According to the British "Bankruptcy Law" in 1986, there are two ways to obtain qualifications: ① you need to apply for an individual business license from the Ministry of Industry and Commerce; ② join a professional organization recognized by the government. By applying to the Ministry of Commerce and Industry to obtain a personal business license, the examination matters include whether the applicant has the necessary education, training or experience, whether he has been criminally punished for fraud, threats, etc., and whether he has violated the provisions of British or foreign bankruptcy laws in his past work. A person who is qualified to practice through membership in a government-recognized professional body must have the relevant educational level required by the seven designated professional authorizing bodies (including the Institute of Accountants, the Institute of Insolvency Administrators and the Law Society) and have passed a professional examination.
Taking into account the reality of our country, it is more feasible to first by the government to bring in a unified assessment and quasi-person system, and increase the supervision of the bankruptcy administrator. With bankruptcy becoming a normal in the operation of the market economy, as well as the continuous standardization and marketization of the bankruptcy management system, with the permission of the government, many professionals engaged in bankruptcy management business unite to form a self-disciplined professional group, and begin to form a unified professional class, The management of the quasi-person qualification of the bankruptcy administrator can slowly transition to the mode of joint management by the government and the self-regulatory organization.[13]
References
[1] Wang Weiguo. The essence of bankruptcy law [M]. Beijing: Law Press, 2007.
[2] Li Yongjun. The legal regime of insolvency [M]. Beijing: China Legal Publishing House, 2000.
[3] Li Fei. Contemporary Foreign Bankruptcy Law [M]. Beijing: China Legal Publishing House, 2006.
[4] Han Changyin. Bankruptcy Law [M]. Beijing: China University of Political Science and Law Press, 2007.
[5] Li Shuguang, Song Xiaoming. Guidelines for the design and operation of the the People's Republic of China Enterprise Bankruptcy Law [M]. Beijing: People's Court Press, 2006.
[6] Li Yanping. On the selection system of bankruptcy administrator in China and its legal perfection [D]. Master Thesis, University of International Business and Economics, 2007.
[7] Li Qingwei. On the selection mechanism of bankruptcy administrator and its legal perfection [D]. Master Thesis, East China University of Political Science and Law, 2008.
[8] Li Xiang. On the construction of the system of the professionalization of the bankruptcy administrator in China [D]. Master Thesis, Southwestern University of Finance and Economics, 2007.
[9] Zhang Xiangdong. On the legal status and professionalization of the insolvency administrator [D]. Master Thesis of Soochow University, 2007.
[10]Hong Yan. On the legislative perfection of the bankruptcy administrator system in China [EB/OL].http://article.chinalawinfo.com/Article_Detail.asp?ArticleId=41025.
[11] Baidu Encyclopedia. Bankruptcy Administrator [EB/OL].http://baike.baidu.com/view/1033196.htm.
[12] Jia Yifan. On the selection system of bankruptcy administrator in China's new bankruptcy law-and a review of the Supreme Court's Provisions on the Appointment of Administrators for the Trial of Enterprise Bankruptcy Cases [EB/OL].http://www.civillaw.com.cn/article/default.asp?id=33801.
[13] Cao Shouye. Selection of insolvency representatives [J]. Legal Daily, 2006-11-28.
[14] Huang Xisheng. A Study on the Legal Status and Professionalization of the Bankruptcy Administrator -- Based on the Target Value of the Bankruptcy Legal System [J].Zhejiang Academic Journal,2004，(05).
[15] Deng Hui. Re-discussion of the selection of insolvency administrators [J]. China Business Law Annual, 2007,(00).
[16] Zhou Min. Legal analysis of the scope of selection of insolvency representatives [J]. Chinese businessmen, 2007,(10).
[17] Shen Guiming. On the Legislative Errors in the Selection of Bankruptcy Administrators in China and Their Correction [J]. Journal of Zhengzhou University (Philosophy and Social Sciences), 2000,(06).
(This article won the first prize of Jinan excellent paper)
[1]Cao Shouye, "The Selection of Bankruptcy Administrators", published in Legal Daily, November 28, 2006, 10th edition.
[3] Huang Xisheng: 《Research on the legal status and professionalization of the bankruptcy administrator--Based on the target value of the insolvency legal system, in 《Zhejiang Academic Journal》，2004 Issue 05.
[4]Huang Xisheng: Research on the Legal Status of Bankruptcy Administrators and Their Professionalism--Based on the target value of the insolvency legal system, in 《Zhejiang Academic Journal》，2004 Issue 05.
[5]Li Qingwei, "On the Selection Mechanism of Bankruptcy Administrators and Its Legal Perfection", Master's Thesis of East China University of Political Science and Law, completed on April 24, 2008.
[6]Baidu Encyclopedia: "Bankruptcy Administrator", http://baike.baidu.com/view/1033196.htm 。
[7]Baidu Encyclopedia: "Bankruptcy Administrator", http://baike.baidu.com/view/1033196.htm 。
[8]Li Qingwei: "On the Selection Mechanism of Bankruptcy Administrators and Its Legal Perfection", Master's Degree Thesis of East China University of Political Science and Law, completed on April 24, 2008
[9]Shen Guiming: "On the Legislative Mistakes in the Selection of Bankruptcy Administrators in China and Their Corrections", in Journal of Zhengzhou University (Philosophy and Social Sciences Edition), No. 6, 2000.
[10]Article 64 of the the People's Republic of China Bankruptcy Code.
[11]Li Qingwei, "On the Selection Mechanism of Bankruptcy Administrators and Its Legal Perfection", Master's Thesis of East China University of Political Science and Law, completed on April 24, 2008.
[12]Deng Hui: "Re-discussion on the Selection of Bankruptcy Administrators", China Commercial Law Annual, No. 00, 2007.
[13]Deng Hui, "Re-discussion on the Selection of Bankruptcy Administrators", in China Commercial Law Annual, No. 00, 2007.
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