Supreme People's Court, Several Issues on Trial of Enterprise Bankruptcy Cases Provisions

Issued: July 30 2002
Effective: September 1 2002
Applicability: These Provisions do not apply to non-legal-person enterprises (Article 4).

Main contents: The Provisions contain 106 articles, which are divided into 14 parts. The parts are: jurisdiction over enterprise bankruptcy cases, bankruptcy application and case acceptance; filing of claims; composition and reorganization of the bankrupt enterprise; declaration of bankruptcy; creditors' meeting; liquidation team; claims on bankruptcy; assets in bankruptcy; collection, disposal and realization of assets in bankruptcy; bankruptcy costs; distribution of assets in bankruptcy; termination of bankruptcy procedures; and miscellaneous provisions.
Under the Provisions, State-owned enterprises shall obtain approval from their superior department before applying for bankruptcy (Article 5). A bankruptcy application made by a creditor will not be accepted if the debtor objects to it and the people's court upholds the objection (Article 9). The applicant may appeal against a people's court's rejection of a bankruptcy application to a higher court (Article 13). If accepted, the acceptance of the bankruptcy application shall be announced in newspapers (Article 17). The court may propose a composition between the creditor and the debtor (Article 25). Where a bankruptcy application is made in respect of a State-owned enterprise by its creditor, its superior department may request, before the announcement of bankruptcy, for a reorganization of the enterprise (Article 28). A court's declaration of bankruptcy can be appealed to a higher court (Article 38). The first creditors' meeting shall be convened and presided over by the court (Article 41). If the asset distribution proposal of the liquidation team cannot be passed after two creditors' meetings, the court shall make a decision over it in accordance with the law (Article 44). The court may ex officio replace unqualified members of the liquidation team with or without the request of the creditor (Article 51). Upon completion of the distribution of assets in bankruptcy, the liquidation team shall apply to the court for termination of the bankruptcy procedures (Article 96). Following the termination, the liquidation team shall apply for cancellation of the registration of the bankrupt enterprise (Article 97).
Related legislation: PRC, State Enterprise Insolvency Law (Trial Implementation), Aug 12 1986; PRC, Civil Procedures Law (Revised), Oct 28 2007, CLP 2008 No.2 p22; PRC, Security Law, Jun 30 1995, CLP 1995 No.6 p21; PRC, Civil Law General Principles, Apr 12 1986 and Supreme People's Court, Evidence in Civil Proceedings Several Provisions, Dec 21 2001, CLP 2002 No.3 p9