Author: Chu Mingfeng's lawyer team
Mingyuan Rongxin (Suzhou) Management Service Co., Ltd
Editor's Note
The author summarizes the summary of the adjudication and the title of the article according to the adjudication viewpoint of the case cited in this article, and the conclusion of the precedent in this article is because there are special case circumstances, and the issues that should be determined differently in different circumstances are detailed in the author's practical analysis section.
Referee Overview
When the transfer investor of a sole proprietorship enterprise changes, the agreement between the new and old investors on the assumption of the external debts of the enterprise cannot be opposed to the creditors of the enterprise, and the new and old investors should jointly pay off their other personal assets when the assets of the sole proprietorship enterprise are insufficient to pay off the debts, and the new and old investors may claim rights separately in accordance with the transfer agreement.
Summary of the case
1. From January 12, 2008 to May 9, 2008, Zhou Zhiwei, then an investor, borrowed RMB2,445,400 from Yin Zhaolong on behalf of the lower Dragon Coal Mine (a sole proprietorship).
2. On September 17, 2008, Zhou Zhiwei transferred the lower Long Coal Mine to Liang Hongxing, and changed the registration on September 24, 2008.
3. On December 20, 2008, Liang Hongxing transferred the lower Long Coal Mine to Zhou Ronghua and changed the registration on December 26, 2008.
4. It was also ascertained that when Liang Hongxing and Zhou Ronghua were transferred to the Lower Dragon Coal Mine, they were aware of and recognized the fact that Zhou Zhiwei was representing the Lower Dragon Coal Mine and Yin Zhaolong.
5. Yin Zhaolong now sued the lower Long Coal Mine for repayment, demanding that Zhou Zhiwei, Liang Hongxing and Zhou Ronghua bear supplementary liability.
The focus of the controversy
Should both the new and old investors during the existence period of the lower Dragon Coal Mine debt bear the liability for the repayment of the debt?
The court held
First of all, for Yin Zhaolong, it is the Lower Dragon Coal Mine with whom the creditor-debtor relationship arises, not Zhou Zhiwei personally, and the agreement between Zhou Ronghua and Liang Hongxing on the assumption of the previous debts of the coal mine when he was transferring the Lower Dragon Coal Mine cannot be opposed to the creditor Yin Zhaolong, and Zhou Ronghua shall bear the liability for the repayment of the debts of the Lower Dragon Coal Mine in accordance with the provisions of Article 31 of the Sole Proprietorship Enterprise Law.
Second, when Zhou Ronghua was transferred to the Lower Dragon Coal Mine, he was aware of and approved of the transfer agreement signed by Zhou Zhiwei and Yin Zhaolong on behalf of the Lower Dragon Coal Mine. According to the facts ascertained in this case, Yin Zhaolong contracted to operate the Lower Dragon Coal Mine from December 6, 2007 to July 14, 2009, during which Time Zhou Zhiwei, Liang Hongxing and Zhou Ronghua were successively investors in the Lower Dragon Coal Mine. In order to fully protect the interests of creditors, and in light of the actual circumstances of this case, the judgment in this case ordered all investors in the Lower Dragon Coal Mine, namely Zhou Ronghua, Zhou Zhiwei and Liang Hongxing, to pay off their personal property when the property of the Lower Dragon Coal Mine was insufficient to pay off their debts, and at the same time made it clear that the creditor's rights and debts disputes between the investors of the Lower Dragon Coal Mine could be resolved separately in accordance with the agreement between them, and there was no impropriety. The application of xialong coal mine and Zhou Ronghua that the debts incurred by xialong coal mine during the operation of Zhou Zhiwei should not be borne by xialong coal mine and Zhou Ronghua cannot be established.
Case index
(2015) Min Shen Zi No. 243
Relevant laws
Law of the People's Republic of China on Sole Proprietorships
Article 2 "Sole proprietorship enterprise" as used in this Law refers to a business entity established within the territory of China in accordance with this Law, invested by a natural person, whose property is owned by the investor, and whose personal property bears unlimited liability for the debts of the enterprise.
Article 31 Where the assets of a sole proprietorship enterprise are insufficient to pay off its debts, the investor shall pay off its other personal assets.
Taiwan's Civil Law
Article 305 A person who bears the assets and liabilities of another person in respect of his property or business shall have the effect of assuming the debt as a result of the notice or announcement of the creditor's acceptance.
In the case of the preceding paragraph, the debtor shall be jointly and severally liable to the bearer within two years from the time of notification or announcement of the debtor's claims that are due.
Commercial Law of the Republic of Korea
Article 42 When the business assignee continues to use the business name of the transferor, the transferee shall be liable for the repayment of the claims of the third party arising from the business of the transferor;
The provisions of the preceding paragraph shall not apply when the transferee promptly carries out the registration of the transferor's debts after the transfer is transferred. When the transferor and the assignee promptly notify the third party of their intentions, the same is true for the third party who is notified.
German Commercial Code
Article 25 A person who continues the business acquired before his death by means of the original firm name, with or without the words "succession relationship" attached to it, shall be liable for all debts set by the original owner in the course of the business. 2 If the original owner or his heirs have agreed to continue to use the trade name, the claim created in the course of business shall be deemed to have been transferred to the acquirer in the case of the debtor.
If there is another agreement, the other agreement shall be effective for the third party only if it has been registered in the commercial register and has been announced, or if it has been notified to the third party by the acquirer or the grantor.
If the firm is not continued to be used, only if there is a reason for a special burden obligation, especially if the recognition of the debt has been announced by the acquirer in the usual commercial manner, the person who acquired the business is responsible for the original business debt.
Practical analysis
According to the law, the debts of a sole proprietorship enterprise are borne by the enterprise first, and when it is insufficient to pay off the debts, the remaining part is borne by its investors for supplementary repayment. The issue discussed in this article is: If the investor of a sole proprietorship enterprise changes, should the investor before and after the transfer be subject to the supplementary repayment liability of the debt?
The spirit of the supreme court's case cited in this article is that the new investor of the transferee enterprise shall bear the liability for the repayment of the debts existing in the sole proprietorship enterprise before the transfer in accordance with article 31 of the Sole Proprietorship Enterprise Law; at the same time, from the perspective of protecting creditors, the original investor should bear joint and several liability, and the investors shall recover each other according to their transfer agreement afterwards.
For the transfer of sole proprietorships, the liability of new and old investors for the debts of the enterprise is not clearly stipulated in mainland law at present. Therefore, in this case, it is not improper for the Supreme People's Court to make the above judgment from the perspective of protecting creditors after combining the actual circumstances of the case, but the author believes that there are special circumstances in this case, such as the subsequent buyer's knowledge of the facts of the debt and the transfer without the consent of the creditor, and in practice, when "the same case and the same judgment", the difference in the facts of the case should be fully compared, and the difference in the facts of the case should not be rigid.
In practice, although there are cases where the transferor maliciously transfers the sole proprietorship enterprise to another person in order to evade debts, there are also cases where the transferee purchases the enterprise and is not aware of the huge debts owed by the original enterprise. It is clearly unfair to dogmatically trap the assignee in a huge debt burden for the purchase of a business. Therefore, it is necessary to construct a corresponding spirit of adjudication from the multiple perspectives of protecting creditors and transferees.
As the saying goes: It is the stone of the mountain that can attack jade. With reference to the provisions of the laws of the mainland, Taiwan and other countries on this situation, the author finds that most countries recognize the principle that the transferee generally bears the debts of the original enterprise, but at the same time believes that if the transferee has taken a notice or announcement to promptly express its intention not to bear the debt to the creditor when accepting the enterprise, it can be exempted from the above liability.
The author agrees with the judicial spirit of differentiating the above sub-situations, on the grounds that: 1. Bona fide assignees can be fully protected. Although the assignee should have a duty of prudence when transferring a sole proprietorship, the duty of prudence is not a sufficient condition for it to bear excessive liability, and if the assignee's prudential obligation can be alleviated by formulating relatively perfect legal rules, it can undoubtedly reduce transaction costs, promote asset circulation, and prosper the market economy; If the assignee has paid reasonable consideration when accepting the enterprise, the creditor may promptly control the consideration received by the original investor as a result of the transaction and the debtor's liability property when the enterprise is insufficient to pay off the debt, and there is no change in the property that the creditor theoretically can repay the debt before and after the transfer. If the assignee fails to pay reasonable consideration, the creditor may remedy its claim by exercising other legal systems, such as avoidance or subrogation.
In summary, the author believes that in the transfer of a sole proprietorship enterprise, if there is no explicit agreement with the creditors of the enterprise on the assumption of debts, the current transferee investor and the original investor should jointly bear joint and several supplementary liquidation liabilities within a certain period of time after the transfer of the enterprise, but if the current transferee investor has taken the form of notice or announcement to promptly inform the creditor that it is not liable and the creditor does not react in a timely manner, the existing investor of the individual enterprise will no longer bear supplementary liability for the original debt. As for issues such as the announcement authority, the method and time of the announcement, it is recommended that the legislator clarify it after conducting social research. At the same time, the author believes that the creditor's trust interest in the fact that the enterprise bears supplementary liability for the then investor when establishing a creditor's right in a sole proprietorship enterprise should be protected, and the original investor should always exist although the supplementary liability of the transferred enterprise without the consent of the creditor, and the view of the hole is for reference only.