Jin Peng
Lecturer of Shanghai Lixin Institute of Accounting and Finance, Doctor of Laws
Fu Weifen
Cadre of Shanghai Municipal High People's Court
Objectives
First, the question is raised
2. The bottom clause applies by analogy
3. Classification and application of types of pre-reform specifications and guidelines
conclusion
After an enterprise enters the pre-reorganization procedure, although there is a practical need to lift the property preservation and suspend the enforcement procedure, the current laws and judicial interpretations have not yet made direct and clear provisions on this, and although the Civil Procedure Law and its judicial interpretations have a catch-all clause, they cannot be applied to the pre-reorganization procedure. The absence of provisions in the law for the application of the discharge of property preservation or the suspension of enforcement proceedings in pre-reorganization does not mean that there are legal loopholes, and it is not appropriate to apply the relevant provisions of the bankruptcy law as a legal basis by analogy. Depending on whether the court should lift the property preservation and suspension of enforcement procedures in the pre-reorganization procedure, the norms or guidelines of the local court on pre-reorganization can be divided into two categories: rigid and flexible. Rigid norms or guidelines clearly stipulate that the court should lift the property preservation and suspension of enforcement procedures in the pre-reorganization procedure; the flexible norms or guidelines give the parties room for settlement and negotiation, and use the settlement or enforcement of the settlement as the basis for the release of property preservation and the suspension of enforcement. If the legislation law is used as a yardstick, flexible norms or guidelines are preferable, and rigid norms or guidelines may violate the relevant provisions of the legislation law. When applying rigid norms or guidelines, before the property preservation is lifted and enforcement is suspended, the parties can be urged to reach a settlement or enforcement settlement, give full play to the coordination ability of the court and the effect of the linkage between the government and the court, take the market-oriented pre-reorganization system as the path, and truly treat the norms or guidelines as "guidelines" rather than laws, which will not only help the court to make a more solid legal basis for the rulings, but also reduce the risk of the relevant provisions of the norms and guidelines violating article 8 of the Legislation Law.
The pre-reorganization procedure refers to a rescue mechanism in which the debtor and the creditor formulate the reorganization plan through out-of-court consultation before applying for reorganization, and after obtaining the consent of the majority of creditors, use the reorganization procedure to make the reorganization plan effective as binding all creditors and realize the debtor's revival at an early date. According to this mechanism and procedure, the debtor and the creditor have already formulated a future reorganization plan through prior consultation before the reorganization procedure, and once the reorganization procedure is entered, the court only needs to approve the reorganization plan, and the debtor can enter the implementation stage of the reorganization plan. The pre-reorganization system has the functions of saving the cost of reorganization, ensuring a more realistic presentation of enterprise value, improving the quality of the reorganization process, and carrying out enterprise rescue as soon as possible.
Debtors who wish to protect themselves through the pre-reorganization system, if the reorganization reasons are already in place, they are often entangled in litigation, and the ensuing property preservation and enforcement may become the last straw to crush the debtor. Professor Hu Liling pointed out that the debtor has a reason for reorganization, which is one of the criteria for initiating the pre-reorganization procedure. The definition of the reasons for reorganization in the Mainland Enterprise Bankruptcy Law is broad enough that the reasons for pre-reorganization do not need to be relaxed, and can be directly based on the current reasons for reorganization. Debtors who already have a cause for reorganization also have a need to use reorganization procedures to resolve property preservation and enforcement risks. For example, in the pre-reorganization case of Wenzhou Gilda Shoes Co., Ltd., the debtor was sued by a number of banks due to the guarantee problem, resulting in the bank account and fixed assets being seized and frozen by the court, if the court continues to enforce, it will lead to the normal production and operation of the Gilda Company, so that the interests of creditors will not be maximized, and the reorganization work will not be carried out.
In addition, the pre-reorganization system can overcome the shortcomings of the bankruptcy reorganization system and the out-of-court reorganization system, and is a hybrid rescue procedure with both non-judicial and judicial rescue content. For out-of-court restructuring, the debtor is still at risk of property seizure or enforcement. If the pre-reorganization procedure is to play a role that is not available in the reorganization outside the court, it is necessary to face and solve the property preservation and enforcement problems in the pre-reorganization procedure.
With regard to the suspension of property preservation and enforcement proceedings in pre-reorganization proceedings, there is a saying in the academic community that the suspension of property preservation and enforcement proceedings is only effective in formal insolvency proceedings. However, the explanatory study of existing laws, judicial interpretations, and norms or guidelines of local courts on the pre-reorganization system has not yet been fully carried out. From the perspective of hermeneutics, there are several questions that deserve further exploration:
First, in the practice of pre-reorganization, can article 166 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China (hereinafter referred to as the Interpretation of the Civil Procedure Law) and article 256 of the Civil Procedure Law (hereinafter referred to as the Civil Procedure Law) on the lifting of property preservation and suspension of enforcement procedures be used as the basis for the court to lift property preservation and suspend enforcement procedures? Second, is it possible to apply by analogy the provisions of article 19 of the Enterprise Bankruptcy Law (hereinafter referred to as the Bankruptcy Law) to lift property preservation and suspension of enforcement proceedings in pre-reorganization proceedings? Third, in the norms or guidelines for the trial of bankruptcy cases formulated by local courts, there are different types of provisions on the lifting of property preservation and the suspension of enforcement procedures. If the Legislation Law is used as a yardstick and a red line, how should these norms and guidelines be evaluated and applied?
On the basis of the prior research, from the perspective of hermeneutic theory and with the help of legal methodology as the main analysis tool, this paper analyzes the application of property preservation and suspension of enforcement procedures in the pre-reorganization procedure, with a view to contributing to the theoretical research and practical application related to the pre-reorganization system.
Interpretation and application of the Bottom Clause
In the pre-reorganization procedure, whether or should the court release property preservation is not clearly stipulated in the current laws and regulations. Article 166 of the Civil Procedure Law's interpretation stipulates that "after ruling on the adoption of preservation measures, the people's court shall make a ruling to lift the preservation in any of the following circumstances: (1) the preservation is wrong; (2) the applicant withdraws the application for preservation; (3) the applicant's lawsuit or litigation claim is rejected by an effective judgment; (4) other circumstances in which the people's court finds that the preservation should be lifted." Where a preservation measure implemented by means of registration is lifted, a notice of assistance in enforcement shall be issued to the registration organ." In addition to the Interpretation of the Civil Procedure Law, Article 19 of the Enterprise Bankruptcy Law and Article 6 of the Interpretation (II) of the Bankruptcy Law stipulate that after the court accepts the bankruptcy application, the court shall discharge the property preservation measures taken against the debtor. However, in practice, the "acceptance" here does not mean that the court accepted the materials of the bankruptcy application, but refers to the court's decision to accept the bankruptcy application. Only after entering bankruptcy proceedings can the court lift property preservation measures in accordance with the Enterprise Bankruptcy Law and Judicial Interpretation (II) of the Bankruptcy Law.
With regard to the issue of property preservation and lifting in the pre-reorganization procedure, if there is no direct provision in the current laws and judicial interpretations, can we find the basis for the court to lift the property preservation within the framework of the current laws and judicial interpretations? Paragraph 1 to item 3 of article 166 of the Interpretation of the Civil Procedure Law cannot be directly applied in the pre-reorganization procedure, and although paragraph 1 and item 4 of paragraph 1 stipulate "other circumstances in which the people's court deems that the preservation should be lifted", can this provision be directly applied to the pre-reorganization? In this regard, the Understanding and Application of the Judicial Interpretation of the Civil Procedure Law of the Supreme People's Court (Part I) compiled by the Supreme People's Court lists the types of application of this bottom clause: First, the applicant did not file a lawsuit with the court or apply for arbitration within the statutory time limit. Second, the applicant has applied for withdrawal of the lawsuit in the course of the litigation and has been granted by the court's ruling. Third, preservation measures generally must not be taken against assets related to the case acquired in good faith by outsiders, and if they are taken, they shall be lifted. Fourth, the parties agree to settle. Fifth, the court confirms that the respondent's application for reconsideration is valid, makes a ruling, and revokes the original preservation ruling. The lifting of property preservation in the pre-reorganization procedure is not included in the five circumstances listed by the Supreme People's Court. Therefore, in the pre-reorganization procedure, there is no clear basis under the current legal system for whether the court should discharge the property preservation of the debtor (the respondent), although article 166, paragraph 1, item 4 of the Interpretation of the Civil Procedure Law provides for a bottom-up clause that "the people's court believes that the preservation should be lifted", but this bottom-up clause does not cover the circumstances of the pre-reorganization.
In the pre-reorganization procedure, whether the court should suspend the implementation of the reorganization is not clearly stipulated in the current law and judicial interpretation. Article 256 of the Civil Procedure Law stipulates that "the people's court shall suspend enforcement in any of the following circumstances: (1) the applicant indicates that enforcement can be postponed; (2) where an outsider raises a truly justifiable objection to the subject matter of enforcement; (3) where a citizen who is a party dies and needs to wait for the heirs to inherit rights or undertake obligations; (4) the legal person or other organization as a party is terminated and the bearer of rights and obligations has not yet been determined; (5) other circumstances in which the people's court considers that enforcement should be suspended." Article 102 of the Provisions of the Supreme People's Court on Several Issues Concerning the Enforcement Work of the People's Courts (for Trial Implementation) (hereinafter referred to as the Enforcement Provisions) enumerates the catch-all clause "other circumstances that the court deems should be suspended", including: "(1) the people's court has accepted the bankruptcy application with the person subject to enforcement as the debtor; (2) the person subject to enforcement does not have property to enforce; (3) the subject matter of enforcement is the subject matter of the dispute in the case being heard by other courts or arbitration institutions. It is necessary to wait for the completion of the trial of the case to determine the ownership; (4) where one party applies for enforcement of the arbitral award and the other party applies for the revocation of the arbitral award; (5) where the person applying for enforcement of the arbitral award submits a request for non-enforcement to the people's court in accordance with the provisions of article 217, paragraph 2, of the Civil Procedure Law, and provides appropriate security. Therefore, judging from the Civil Procedure Law and its relevant judicial interpretations alone, it is also impossible to find a basis for suspending enforcement in the pre-reorganization procedure.
In summary, the supreme court is the formulator of the interpretation and enforcement provisions of the Civil Procedure Law, and its interpretation of the interpretation and enforcement provisions of the Civil Procedure Law is the main basis for accurately applying the provisions on the suspension of enforcement procedures and the provisions on the lifting of property preservation. Although Article 166 of the Interpretation of the Civil Procedure Law provides for the exclusion of property preservation, and the Civil Procedure Law also sets up a bottom clause in Article 256 to suspend the enforcement procedure, the Supreme People's Court did not include the application in the pre-reorganization procedure within the scope of application of the above two bottom clauses. If the bottom clause is used as a channel for the suspension of property preservation and enforcement procedures in the pre-reorganization procedure, it may violate the normative intention of the Supreme People's Court to establish a bottom clause in the interpretation and enforcement provisions of the Civil Procedure Law.
The premise and application of analogy
In contrast, article 19 of the Enterprise Bankruptcy Law, article 515 of the Interpretation of the Civil Procedure Law and article 102 of the Enforcement Provisions do have clear provisions in the bankruptcy reorganization procedure, all of which require the court to suspend enforcement against the person subject to enforcement who has entered the bankruptcy procedure. However, the above laws and judicial interpretations clearly stipulate that the applicable scenario is only in bankruptcy proceedings. Regardless of how pre-reorganization is defined, pre-reorganization proceedings are only a special regime that precedes insolvency proceedings, which is why they are called "pre-" reorganizations. That is to say, the provisions of article 19 of the Insolvency Law cannot be applied to the pre-reorganization procedure, and the pre-reorganization itself cannot have the effect of suspending enforcement. If the legislation does not provide for the discharge of property preservation and the suspension of enforcement in pre-reorganization proceedings, can the court make a decision on the discharge of property preservation and suspension of enforcement in individual cases by analogy applying article 19 of the Insolvency Code at the time of application by the debtor? In this regard, we need to analyze the premise of analogy application from the perspective of legal methodology.
The premise of the analogy is that there are "loopholes" in the law. Legal loopholes exist only when the law lacks appropriate rules for specific types of cases within its scope of regulation, in other words, when the law remains "silent" about it. Loopholes do not exist if legislators deliberately fail to address certain matters, i.e. when they maintain "meaningful silence.". If the law is interpreted from the possible semantic range, the law "against the plan" omits a provision, "and the legal order as a whole needs this provision" before the loophole can be established. In other words, loopholes exist only when, within the possible semantics, the legal system violates the incompleteness of the plan. The so-called "violation of planning" needs to be deduced from the current effective legal order, which needs to come from the purposeful overall observation of the current law, and cannot come from the desire for future law.
From a methodological point of view, the law does not stipulate the lifting of property preservation in the pre-reorganization procedure, nor does it stipulate the suspension of the enforcement procedure, and we should review and examine the legislator's intentions, goals and normative ideas as far as whether there are legal loopholes. But who exactly are the "legislators"? What is the "will of the legislator"? It's a question that must be answered. Larenz pointed out that the "will of the legislator" is the normative idea of the civil servants in the ministries responsible for drafting bills, or the ideas of the members of Parliament who propose bills or participate in the formation of the legal text" Since we do not have a legislative justification for analysis, if we want to explore how "legislators" determine the "act of establishing a guarantee", this article selects the following two legal interpretations that some members of the Research Office of the Legislative Affairs Commission of the University of China participated in as the object of analysis. Among them, the "Interpretation and Application of the Provisions of the Enterprise Bankruptcy Law of the People's Republic of China" edited by Wu Gaosheng pointed out that "the bankruptcy estate should be distributed to all creditors." Therefore, in order to protect the interests of creditors, after the people's court accepts the bankruptcy application, the preservation measures should be lifted and the enforcement measures should be suspended." Another interpretation is the Interpretation of the Enterprise Bankruptcy Law of the People's Republic of China edited by An Jian, which states the reasons for the lifting of property preservation in bankruptcy proceedings: "Judging from the relevant provisions of the Civil Procedure Law, the purpose of the preservation measures for the debtor's property is to ensure the enforcement of the judgment, that is, to ensure the realization of individual liquidations, which is inconsistent with the general fair settlement purpose to be achieved by the bankruptcy law. Therefore, after the people's court accepts the bankruptcy application, the preservation measures concerning the debtor's property should be suspended. The interpretation, in explaining the reasons for the suspension of enforcement proceedings, also states: "Consistent with the purpose of property preservation measures, the purpose of enforcement proceedings is also to achieve individual settlements, which is inconsistent with the purpose of a general and fair settlement to be achieved by an insolvency law." Therefore, after the people's court accepts the bankruptcy application, the enforcement procedure concerning the debtor's property shall be suspended. "Both interpretations clearly point out that the suspension of the property preservation and enforcement proceedings provided for in article 19 is to ensure a general and fair settlement in the insolvency proceedings. If the intention of the legislator is inferred from this perspective, it can be held that the special provisions for the termination of property preservation and the suspension of enforcement proceedings made for bankruptcy proceedings are intentional by the legislator, and the reason why special provisions are made in the enterprise bankruptcy law is to reflect the characteristics of the general and fair settlement of the bankruptcy procedure and distinguish it from the non-bankruptcy procedure. Therefore, the legislator's "intentional" decision on this provision cannot be regarded as a legal loophole. From another point of view, in non-insolvency proceedings, property preservation cannot be lifted, enforcement proceedings cannot be suspended, and there is no so-called "violation of planning" in the current effective legal order.
Because, derived from a purposeful holistic view of existing law, one of the main purposes of an insolvency law is to ensure a generalized collective payment procedure. In the future, we may solve the problem of property preservation and enforcement in pre-reorganization by way of legislation, but if it is only a desire for future law, and there is no basis in the current law, there is no "illegal planning".
In summary, the absence of provisions for the lifting of property preservation and suspension of enforcement in the pre-reorganization procedure is not a loophole in the law, and the provisions of article 19 of the Enterprise Bankruptcy Law cannot be applied by analogy.
From the perspective of comparative law, in the united states, the pre-reorganization in the United States is to constrain the initiation and enforcement of the enforcement act through the consultation of the parties, and the US bankruptcy law only provides in principle and generalization on the pre-reorganization, and the court only plays a coordinating, guiding, rather than leading and intervening role in this process. Under the English pre-reorganization model, although the degree of court involvement is low, the unanimous consent of the main creditors is still required in principle for the enforcement of the stay. Although Article 223 of the Law on Debtor Reorganization and Bankruptcy Liquidation stipulates the relevant rules for the pre-reorganization procedure in the Republic of Korea, these rules mainly address the formulation and proposal of the reorganization plan formulated by the parties based on consultation before the reorganization case is formally accepted, and do not provide for the suspension of property preservation and enforcement procedures. As well as the judicial practice of the mainland, due to the lack of legal norms, in the face of the actual need to lift property preservation and suspend enforcement, some local courts have provided for the lifting of property preservation and suspension of enforcement in the norms and guidelines related to pre-reorganization, and this article selects 10 relevant norms and guidelines of 10 courts on pre-reorganization, some of which clearly stipulate the system of lifting property preservation and suspension of enforcement in the pre-reorganization procedure, and some norms and guidelines are not clearly stipulated. Some court provisions are more "rigid", clearly stipulating that the court should lift the preservation or suspension of enforcement procedures; some court provisions are more "flexible" and do not stipulate that the court should exclude the preservation or suspension of enforcement procedures, giving the parties room to negotiate, as shown in the following table:
Table 1
The models of court norms, guidelines or norms listed in the table above are not uniform. Both the Shenzhen Intermediate People's Court and the Chengdu Intermediate People's Court clearly stipulate that in the pre-reorganization procedure, the enforcement procedure should be suspended, which can be described as a representative of the "rigid" provisions.
Another type of provision, compared with the "rigid" provisions, places more emphasis on promoting enforcement departments to promote the suspension or suspension of enforcement through the method of discussion, which is different from the practice of the Shenzhen Intermediate People's Court and the Chengdu Intermediate People's Court, and the Sichuan Tianfu New District People's Court's pre-reorganization case trial guidelines are representative of this "flexible" provision. In the provisions of the First Intermediate People's Court of Beijing Municipality, the Intermediate People's Court of Guangzhou Municipality, the Intermediate People's Court of Zibo City and the Intermediate People's Court of Beihai City, the provisions of the Property Preservation and Enforcement Procedure only stipulate that the administrator "shall" apply to the court or notify the suspension or termination, and do not stipulate whether the court "shall" suspend and terminate. Therefore, the provisions of the above three courts are still classified as flexible in essence.
Professor Han Changyin pointed out that if the court advances the effect of suspension of enforcement to the pre-reorganization procedure, the following drawbacks will occur: First, the excessive interference of judicial public power will make it difficult for the two parties to "negotiate" to be equal, it is difficult to exist independent consultation, and transaction costs will increase accordingly. Second, it may become a tool for debtors to evade debts. To recognize the validity of the suspension of enforcement in the pre-reorganization procedure would be tantamount to a disguised extension of the period of suspension of enforcement. Professor Wang Xinxin believes that pre-reorganization, as an out-of-court reorganization between the parties, does not have the legal effect of suspending the enforcement of the debtor's property, lifting its property preservation measures, stopping the calculation of interest on creditors' rights, and suspending litigation, which may only have after the bankruptcy proceedings have been initiated, except where creditors and other creditors have agreed to accept relevant constraints through consultation.
It is worth noting that article 8 of the Legislation Law stipulates that the litigation and arbitration system must be formulated in the form of law, so before the law does not provide for the suspension of the property preservation and enforcement procedures in the pre-reorganization procedure, if the above norms and guidelines are directly applied as "laws", the problem of violating the Legislation Law may arise. If we think from this perspective, in the norms and guidelines listed in Table 1, it is more advisable to lift the property preservation and suspension of enforcement procedures through a "flexible" manner on the basis of consultation and agreement between the parties.
Because, the suspension of property preservation and enforcement procedures based on consultation or consultation can find a legal basis in the current legal system, and the risk of violating the legislation law can be avoided by regulating and guiding the formulation of legislation. Professor Han Changyin proposed that the "right of action contract" can be reached on the basis of independent consultation between the participants in the pre-reorganization, so as to provide a legal basis for the court to suspend enforcement and lift property preservation. The theory of "right-of-action contract" can be found under the current system of laws and judicial interpretations. For example, article 166 of the Interpretation of the Civil Procedure Law contains a bottom-up provision for the lifting of property preservation, namely: "Other circumstances in which the people's court finds that the preservation should be lifted." The Understanding and Application of the Judicial Interpretation of the Civil Procedure Law of the Supreme People's Court (Part I), compiled by the Supreme People's Court, specifically explains the application of the bottom clause, including: "Where both parties agree to settle. "The Wenzhou Intermediate People's Court adopted an enforcement settlement to resolve the issue of suspension of enforcement in the pre-reorganization case of Wenzhou Gilda Shoes Co., Ltd. If the parties reach a settlement, then the lifting of property preservation can be carried out in accordance with Article 166 of the Interpretation of the Civil Procedure Law, and the court has a law to rely on when making a ruling. In the same way, through consultation and consultation, it is also possible to reach an enforcement settlement between the parties, and the effect of suspension of enforcement can also be achieved in accordance with the provisions of article 230 of the Civil Procedure Law on the enforcement of the settlement and the provisions of article 256 on the suspension of enforcement, and this method is still within the system and framework of the current law.
In summary, if the court assists the parties in reaching a settlement or enforcement settlement in litigation, and then solves the problem of property preservation and suspension of enforcement on this basis, and truly treats "norms and guidelines" as "guidelines" rather than laws, it can ensure that when there is no legal basis, the content of norms and guidelines will not cross the boundaries delimited by article 8 of the Legislation Law.
First of all, in the provisions of the Civil Procedure Law, the Enterprise Bankruptcy Law and relevant judicial interpretations, there is no direct basis for lifting property preservation and suspending enforcement procedures in the pre-reorganization procedure. Secondly, from the perspective of jurisprudence methodology, it is not possible to apply by analogy the provisions of article 19 of the Bankruptcy Law on the lifting of property preservation and suspension of enforcement. Third, from the perspective of the Legislation Law, if it is directly stipulated in the norms and guidelines that the court should lift the interim measures and suspend enforcement, it may violate the provisions of Article 8 of the Legislation Law.
This article suggests that, under the premise that the law does not clearly stipulate, it is not appropriate for norms and guidelines to break through the Legislation Law, and directly stipulate that the court should rule to lift property preservation and suspend enforcement procedures. In the face of the need for property preservation and enforcement in pre-reorganization proceedings, it is recommended that the court adopt a flexible model that gives the parties room for settlement and negotiation. On this basis, give full play to the coordination ability of the court and the effect of the linkage between the government and the court, take the market-oriented pre-reorganization system as the path, and take the settlement or enforcement of the settlement as the legal basis for the lifting of property preservation and the suspension of enforcement. For courts that have clearly stipulated in the norms and guidelines that preservation and suspension of enforcement should be lifted, before applying this rigid norm or guideline, it is recommended to adopt the model of settlement and enforcement of settlement first, and apply the "norms and guidelines" as "guidelines" rather than legal norms, which can not only ensure that the rulings made by the courts have a solid legal basis, but also ensure that the content of the norms and guidelines does not cross the boundaries delineated by article 8 of the Legislation Law.