Provisions on Several Issues Concerning the Application of the «PRC Enterprise Bankruptcy Law» (3)

The case acceptance fee and enforcement application fee previously unpaid by the debtor may be discharged as bankruptcy claims.

Article 2: After the acceptance of a bankruptcy petition and subject to the adoption of a resolution by the creditors' meeting or, before the holding of the first creditors' meeting, subject to the permission of the people's court, the administrator or the debtor in possession may take out loans so that the debtor can continue operations. Where a creditor that provided such a loan claims priority over ordinary bankruptcy claims for repayment with reference to Item (4) of Article 42 of the EBL, the people's court shall uphold such claim, unless it claims priority over claims secured with specific property of the debtor for repayment, in which case the people's court shall reject such claim.

The administrator or the debtor in possession may create security in the form of a mortgage for the aforementioned loan, and if the mortgaged item was already mortgaged in the favor of another creditor before the acceptance of the bankruptcy petition and the creditor requests repayment in the sequence set forth in Article 199 of the Property Law, the people's court shall uphold such request.

Article 3: If, after a bankruptcy petition is accepted, a creditor files, as a bankruptcy claim, the late payment fine arising from an amount owed by the debtor, including late interest payable in double by the debtor for failure to perform an effective legal document or a late payment fine on labor insurance premiums, the people's court shall not confirm the same.

Article 4: Where it is ruled that the guarantor is to enter a bankruptcy procedure, a creditor has the right to file its guarantee claim against the guarantor.

Where the master claim has not matured, the guarantee claim shall be deemed to mature upon acceptance of the guarantor's bankruptcy petition. If a guarantor under a general guarantee claims the exercise of beneficium excussionis, the people's court shall reject such claim, but the amount allocated to the creditor in the general guarantor's bankruptcy procedure shall be set aside, and once the guarantee liability bearable by the general guarantor is determined, the amount shall be distributed to the creditor in proportion to its bankruptcy discharge percentage.

Where it is determined that a guarantor is required to bear guarantee liability, the guarantor's administrator may, in respect of the actual repayment amount bearable by the guarantor, exercise the right to claim against the principal debtor or other debtor.

Article 5: Where it is ruled that both the debtor and the guarantor are to enter bankruptcy procedures, the creditors shall have the right to file their claims against the debtor and the guarantor respectively.

Where a creditor files all of its claims against both the debtor and guarantor, the amount of its claim against the other party will not be adjusted after it has received repayment from the bankruptcy procedure against the first party, provided that the amount received by it does not exceed the total amount of its claims. Once the guarantor has performed its guarantee liability, it shall cease to have the right to claim.

Article 6: An administrator shall, in accordance with Article 57 of the EBL, record and keep a register of the claims filed, recording in detail the names, entities and agents of the persons filing the claims, the amounts of the filed claims, details of any security, evidence, contact information, etc., and assemble a filed claim register.

An administrator shall, in accordance with Article 57 of the EBL, review information such as the nature and amount of the claims, property with which they are secured, and that concerning whether the period of limitation of actions has expired and whether the period for enforcement has expired, prepare a claim list and submit the same to the creditors' meeting for verification.

The claim list, filed claim register and claim filing documentation shall be kept by the administrator during the bankruptcy period, and the creditors, debtor, staff and workers of the debtor, and other materially interested parties shall have the right to review the same.

Article 7: An administrator shall confirm claims that have been determined in effective legal documents.

If the administrator deems a claim determined in an effective legal document on the basis of which a creditor files a claim to be in error, or if it has evidence showing that the creditor and debtor fabricated the claim/debt in bad faith through a legal action, arbitration or notarial document from a notary office granting enforcement, it shall, after petitioning the people's court that rendered the judgment, ruling or written mediation statement or the people's court at the next higher level to revoke the effective legal document through an adjudication supervision procedure in accordance with the law, or petitioning the people's court that accepted the bankruptcy petition to vacate or refuse to enforce the arbitration award, or to refuse to enforce the notarized claim document, determine the claim anew.

Article 8: If the debtor or a creditor disputes a claim recorded on the claim list, it shall explain its reason and the legal basis therefor. If the disputing party remains dissatisfied after an explanation or adjustment by the administrator, or if the administrator fails to give an explanation or make the adjustment, the disputing party shall institute a claim confirmation suit in the people's court within 15 days after conclusion of the verification by the creditors' meeting. If, prior to the acceptance of the bankruptcy petition, the parties had entered into an arbitration clause or arbitration agreement, an application to the designated arbitration institution shall be made for confirmation of the claim/debt relationship.

Article 9: If the debtor institutes a legal action in the people's court in respect of its objection to a claim recorded on the claim list, it shall name the creditor of the disputed claim as the defendant. If a creditor disputes the claim of another recorded on the claim list, it shall name the creditor whose claim it disputes as the defendant. If a creditor disputes its own claim recorded on the claim list, it shall name the debtor as the defendant.

If there are multiple parties that dispute the same claim and the other parties disputing the claim apply to participate in the legal action, they shall be named as co-plaintiffs.

Article 10: A creditor has the right to review the debtor's financial and business information and documentation required to participate in the bankruptcy procedure, such as the debtor property status report, creditors' meeting resolutions, creditors' committee resolutions, administrator supervision reports, etc. If the administrator refuses to provide the same without legitimate reason, the creditor may request that the people's court render a decision, and the people's court shall render its decision within five days.

If the aforementioned information and documentation involves trade secrets, the creditor shall bear a confidentiality obligation in accordance with the law or execute a confidentiality agreement; if state secrets are involved, the matter shall be handled in accordance with relevant laws.

Article 11: In addition to voting in person, votes on resolutions of the creditors' meeting may be taken by the administrator first informing the creditors of the relevant matters to be resolved, followed by a vote conducted by telecommunications equipment, online or other such remote method. Where such a remote voting method is used to conduct a vote, the administrator shall inform the creditors that took part in the vote of the outcome of such vote by mail, e-mail, announcement, etc. within three days after the creditors' meeting is held.

Where a vote by class is held on a draft restructuring plan in accordance with Article 82 of the EBL, those creditors or shareholders whose rights and interests will be adjusted or affected by the draft restructuring plan shall have the right to participate in the vote. With reference to Article 83 of the EBL, those creditors or shareholders whose rights and interests will not be adjusted or affected shall not participate in the vote on the draft restructuring plan.

Article 12: Where any of the following circumstances applies to a resolution of the creditors' meeting, prejudicing the interests of a creditor, and the creditor petitions for revocation thereof, the people's court shall uphold such petition:

(1)  the creditors' meeting was held in a manner that violates the statutory procedure;

(2)  the vote at the creditors' meeting was conducted in a manner that violates the statutory procedure;

(3)  the content of the resolution of the creditors' meeting violates the law; or

(4)  the resolution of the creditors' meeting falls outside the purview of the creditors' meeting.

The people's court may rule to revoke all or part of the matters on which the resolution was adopted, and order the creditors' meeting to adopt a new resolution in accordance with the law.

To petition for the revocation of a resolution of the creditors' meeting, the creditor shall submit a written application. Where a remote voting method, such as by telecommunications equipment or online voting, was used to conduct the vote, the creditor's time limit for petitioning for revocation shall commence to count from the date on which the creditor received the notice.

Article 13: The creditors' meeting may, in accordance with Item (4) of the first paragraph of Article 68 of the EBL, entrust the creditors' committee with the exercise of the functions and power of the creditors' meeting set forth in Items (2), (3) and (5) of the first paragraph of Article 61 of the EBL. The creditors' meeting may not give blanket authorization, entrusting the creditors' committee to exercise all of its functions and powers.

Article 14: The matters on which the creditors' committee renders a decision shall require adoption by a majority of all the members, and the same shall be written up in a record of the meeting. Where members of the creditors' committee have a difference of opinion on the resolutions adopted on the matters considered, the same shall be indicated in the record.

In exercising its functions and powers, the creditors' committee shall submit to the scrutiny of the creditors' meeting, report on its work to the creditors' meeting by appropriate means in a timely manner and submit to the guidance of the people's court.

Article 15: Where the administrator is to dispose of material property of the debtor as specified in Article 69 of the EBL, it shall first prepare a property administration plan or a plan to sell the property and submit it to the creditors' meeting for a vote. If the vote fails at the creditors' meeting, the administrator may not dispose of the property.

Before proceeding with the disposal, the administrator shall submit a written report to the creditors' committee or the people's court 10 days in advance in accordance with Article 69 of the EBL. The creditors' committee may, in accordance with the second paragraph of Article 68 of the EBL, require the administrator to give an explanation of the disposal or provide relevant documentary evidence.

If the creditors' committee deems that the disposal by the administrator does not comply with the property administration plan or plan to sell the property adopted by the creditors' meeting, it shall have the right to require the administrator to rectify the same. If the administrator refuses to do so, the creditors' committee may request that the people's court render a decision.

If the people's court deems that the disposal by the administrator does not comply with the property administration plan or plan to sell the property adopted by the creditors meeting, it shall order the administrator to halt the disposal. The administrator shall rectify the matter, or submit the same anew to the creditors meeting for a vote, and proceed after the same is adopted.

Article 16: These Provisions shall be effective as of March 28, 2019.

In the event of conflict between these Provisions and judicial interpretations on enterprise bankruptcy issued by this court before the implementation hereof, such judicial interpretations shall cease to apply from the date of implementation hereof.