Interpretation No. 3 [2019] of the Supreme People's Court

(Adopted at the 1,762th session of the Judicial Committee of the Supreme People's Court on February 25, 2019, came into force on March 28, 2019)

For the purposes of correctly applying the Enterprise Bankruptcy Law of the People's Republic of China, in light of judicial practice, these Provisions are developed on the application of law by people's courts in the trial of enterprise bankruptcy cases on the exercise of rights by creditors.

Article 1　Where the people's court renders a ruling to accept the bankruptcy application, the company's forced liquidation expenses, assessment fee, announcement fee, custody fee, and other execution expenses incurred in unfinished execution procedures that have not been paid by the debtor previously may be repaid with the debtor's property at any time by reference to the provisions of the Enterprise Bankruptcy Law on bankruptcy expenses.
The case acceptance fee and execution application fee that have not been paid by the debtor may be repaid as bankruptcy claims.

Article 2　After the bankruptcy application is accepted, when passed by the resolution of the creditors' meeting, or approved by the people's court before the first meeting of creditors, the administrator or the self-managed debtor can borrow money for the debtor to continue its operation. If the creditor providing the loan claims repayment superior to ordinary bankruptcy claims by reference to the provision of subparagraph (4) of Article 42 of the Enterprise Bankruptcy Law, the people's court shall support the claim, but if it claims repayment superior to the claim on which the debtor enjoys guarantee on a specific property, the people's court shall not support the claim.

The manager or the self-managed debtor may set mortgage guarantee for the aforementioned loan. If the mortgaged property has been mortgaged to any other creditor before the bankruptcy application is accepted, and the creditor claims repayment in the order prescribed in Article 199 of the Property Law, the people's court shall support the claim.

Article 3　After a bankruptcy application is accepted, if the creditor declares as bankruptcy claims the late fee for the debtor's outstanding payment, including the delay interest or overdue fine of labor insurance funds which shall be doubled due to the creditor's failure to execute an effective legal document, the people's court shall not confirm it.

Article 4　Where a ruling is rendered that the guarantor enters bankruptcy proceedings, the creditor has the right to declare his or her security claim against the guarantor.

Where the main debt is not due, it shall be guaranteed that the creditor's right is due when the guarantor's application for bankruptcy is accepted. If the guarantor under the arrangements of ordinary guarantee claims the exercise of the right of plea for preference claims, the people's court shall not support the claim, but the distributed amount of the creditor in the general guarantor's bankruptcy proceedings shall be deposited and distributed according to the bankruptcy discharge rate after the guaranty obligation that shall be fulfilled by the general guarantor is determined.

Where it is determined that the guarantor shall fulfill the guaranty obligation, the guarantor's administrator may exercise the right to claim repayment from the main debtor or other debtor in respect of the amount of payment actually borne by the guarantor.

Article 5　Where a ruling is rendered that the debtor or the guarantor enters bankruptcy proceedings, the creditor has the right to claim the creditor's right separately against the debtor and the guarantor.

Where the creditor claims all creditor's rights against the debtor or the guarantor, after obtaining repayment from one party's bankruptcy proceedings, the amount of claim against the other party shall not be adjusted, but the amount of repayment to the creditor shall not exceed the total amount of claim. The guarantor shall no longer enjoy the right to claim repayment after fulfilling the guaranty obligation.
　　

Article 6　The administrator shall register and create archives on the declared claim in accordance with the provision of Article 57 of the Enterprise Bankruptcy Law, and record in details the declarer's name, entity, agent, declared claim amount, guarantee information, evidence, contact information, and other matters, and form the claim declaration registration archives.

The administrator shall, in accordance with the provision of Article 57 of the Enterprise Bankruptcy Law, examine the nature and amount of creditor's rights, the secured property, whether it exceeds the period of statute of limitations, whether it exceeds the period of enforcement, and other circumstances, and prepare the checklist of creditor's rights and submit it to the creditors' meeting for inspection.

The checklist of creditor's rights, the claim declaration registration archives and claim declaration materials shall be kept by the administrator during the bankruptcy period, and the creditor, the debtor, the debtor's employees and other parties of interest have the right to consult them.

Article 7　The creditor's right determined in an effective legal instrument shall be confirmed by the administrator.

Where the administrator is of the opinion that the claim determined in the legal instrument based on which the creditor declares the creditor's right is erroneous, or if there is evidence proving that the creditor and the debtor maliciously fabricate the creditor's right or debt in the form of lawsuit, arbitration or notarization documents with enforceability legally granted by a notary office, it shall, through trial supervision procedures in accordance with the law, apply to the people's court that renders the judgment, ruling, or mediation agreement or the people's court at the next higher level to revoke the valid legal instrument, or determine the creditor's right once again after applying to the people's court accepting the bankruptcy application to revoke or not execute the arbitral award, or not execute the notarized documents on creditor's rights.
　　

Article 8　Where the debtor or the creditor has any objection to the creditor's right recorded in the checklist of creditor's rights, the reasons and legal basis shall be explained. If the party filing the objection is still dissatisfied after the manager makes an interpretation or adjustment, or the administrator fails to make an interpretation or adjustment, the party filing the objection shall file a lawsuit for the confirmation of the creditor's right within 15 days after the end of inspection of the creditors' meeting. If the parties have arbitration clauses or an arbitration agreement before the bankruptcy application is accepted, they shall apply to the selected arbitral institution for confirming the creditor-debtor relationship.

Article 9　　Where the debtor has any objection to the creditor's right recorded in the checklist of creditor's rights and files a lawsuit with the people's court, the creditor against which the objection is filed shall be listed as the defendant. If the creditor has any objection to the creditor's right recorded in the checklist of creditor's rights, the creditor against which the objection is filed shall be listed as the defendant.

If the creditor has any objection to the creditor's right indicated in the checklist of creditor's rights, the debtor shall be listed as the defendant.

Article 10　A single creditor has the right to consult the debtor's property status report, resolution of the creditors' meeting, resolution of the creditors' committee, the administrator's supervision report, and the debtor's financial and operational information necessary to participate in bankruptcy proceedings. If the administrator fails to provide the case without proper reasons, the creditor may request the people's court to make a decision; the people's court shall make a decision within five days.

Where the aforesaid information and materials involve any trade secret, the creditor shall legally assume the obligation of keeping information confidential or sign a confidentiality agreement; and if any state secret is involved, it shall be handled in accordance with the relevant legal provisions.

Article 11　In addition that the resolution of the creditors' meeting may be voted on site, the administrator may inform the creditor of relevant matters in the resolution in advance, and vote through off-site means such as communication and online voting. In the case of voting through off-site means, the administrator shall, within three days after the creditors' meeting is convened, inform the creditors attending the voting in such forms as letter, e-mail and announcement.

When the draft of the reorganization plan is voted by group in accordance with the provision of Article 82 of the Enterprise Bankruptcy Law, the creditor or shareholder whose equities are adjusted or affected by the draft of the reorganization plan has the right to vote. The creditors or shareholders whose equities are not adjusted or affected shall not participate in the voting on the draft of the reorganization plan by reference to the provision of Article 83 of the Enterprise Bankruptcy Law.

Article 12　Where a resolution of the creditors' meeting falls under any of the following circumstances, which damages the interests of any creditor, and the creditor applies for revocation, the people's court shall support the application:

(1)　The convening of the creditors' meeting violates statutory procedures.

(2)　The voting at the creditors' meeting violates statutory procedures.

(3)　The content of the resolution of the creditors' meeting is illegal.

(4)　The resolution of the creditors' meeting exceeds the scope of functions and powers of the creditors' meeting.

The people's court may render a ruling to revoke the resolution on all or partial matters and order the creditors' meeting to make a new resolution in accordance with the law.

Where the creditor applies for revoking the resolution of the creditors' meeting, it shall submit a written application. If the creditors' meeting votes through off-site methods such as communication and online voting, the time limit for the creditor to apply for revocation shall be calculated from the date when the creditor receives the notice.

Article 13　The creditors' meeting may entrust the creditors' committee to exercise functions and powers of the creditors' meeting set forth in subparagraphs (2), (3) and (5) of paragraph 1 of Article 61 of the Enterprise Bankruptcy Law in accordance with the provision of subparagraph (4), paragraph 1 of Article 68 of the Enterprise Bankruptcy Law. The creditors' meeting shall not conduct a general authorization and entrust the exercise of all functions and powers of the creditors' meeting.

Article 14The matters deliberated in the decision of the creditors' committee shall be adopted by a majority of all members, and minutes of proceedings shall be made. If a member of the creditors' committee has different opinions on the resolution of the matters deliberated, it shall be indicated in the record.

The creditors' committee which exercises functions and powers shall accept the supervision of the creditors' meeting, report work to the creditors' meeting in an appropriate form, and accept the guidance of the people's court.

Article 15　Where the administrator disposes of the debtor's major property prescribed in Article 69 of the Enterprise Bankruptcy Law, it shall make a property management or price change plan in advance and submit it to the creditors' meeting for voting. If the plan is not adopted through voting at the creditors' meeting, the administrator shall not dispose of the property.

Before the administrator takes the disciplinary action, it shall report to the creditors' committee or the people's court in writing 10 days in advance in accordance with the provision of Article 69 of the Enterprise Bankruptcy Law. The creditors' committee may, in accordance with the provision of paragraph 2 of Article 68 of the Enterprise Bankruptcy Law, require the administrator to give a corresponding explanation or provide the basis of relevant documents on the disciplinary action.

Where the creditors' committee is of the opinion that the disciplinary action taken by the administrator fails to comply with the property management or price change plan adopted by the creditors' meeting, it has the right to request the administrator to take corrective action. If the administrator refuses to take corrective action, the creditors' committee may request the people's court to make a decision.

Where the people's court is of the opinion that the disciplinary action taken by the administrator fails to comply with the property management or price change plan adopted by the creditors' meeting, it shall order the administrator to cease the disciplinary action. The administrator shall take corrective action or submit it to the creditors' meeting for implementation after re-voting and adoption.

Article 16　These Provisions shall come into force on March 28, 2019

In the case of any discrepancy between these Provisions and judicial interpretations issued by this Court on the bankruptcy of enterprises, they shall no longer be applicable from the date when these Provisions come into force.