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Accelerating the Trial of Bankruptcy Cases

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Notice on Printing and Distributing the "Opinions of the Higher People's Court of
Beijing Municipality on Accelerating the Trial of Bankruptcy Cases"

Municipal First Intermediate People's Court;

District people's courts:

The “Opinions of the Higher People's Court of Beijing Municipality on Accelerating the Trial of Bankruptcy Cases" has been passed by the Judicial Committee of the Municipal Higher People's Court and is hereby issued, which shall be enforced. Any problem in the implementation shall be reported to the Second Civil Court of Municipal Higher People's Court.
                       
Higher People's Court of Beijing Municipality
April 4, 2018

Opinions of the Higher People's Court of Beijing Municipality on Accelerating the Trial of Bankruptcy Cases

To practically shorten the trial term of bankruptcy cases, standardize the speedy trial of bankruptcy cases, improve the quality and effectiveness of bankruptcy case trials, protect the legitimate rights and interests of bankruptcy participants such as creditors and debtors, and give full play to the bankruptcy system in optimizing resource allocation and achieving market clearance, these Opinions are issued according to the " Enterprise Bankruptcy Law of the People's Republic of China" (hereinafter referred to as the "Enterprise Bankruptcy Law"), the "Civil Procedure Law of the People's Republic of China" and related judicial interpretations, combined with the reality of bankruptcy trials in this City after being discussed and approved by the Judicial Committee of the Court.

I. Basic principles
1. (Division of Complexity and Simplicity) The People’s Court may separate the complicated cases from the simple ones in the trial of bankruptcy case. Speedy trial is applicable to simple bankruptcy case with clear debtor-creditor relationship and distinct debtor’s property information. Speedy trial shall be preferential for the fortuneless bankruptcy case review transferred by the Enforcement Department.

2. (Efficiency Principle) For bankruptcy cases to which speedy trial apply, emphasis shall be placed on improving trial efficiency, minimizing the time required for proceedings, combining the bankruptcy issues, simplifying the bankruptcy process, and completing bankruptcy proceedings in a timely and efficient manner.

3. (Right Guarantee) For bankruptcy cases to which speedy trial apply, the procedural rights or substantive rights that must be enjoyed by the bankrupt participants shall not be reduced or impaired.

II. Applicable conditions
4. (Positive Conditions) Speedy trial may apply to the bankruptcy case with a clear debtor-creditor relationship and distinct debtor’s property information in the one of following circumstances in accordance with the Part IV of these Opinions:
(1) Where both the debtor’s assets and the number of creditors are small;
(2) Where the bankruptcy property may not be sufficient to cover all bankruptcy expenses;
(3) Where the debtor has no or little property, and the account book and important documents are lost or the personnel are unaccounted;
(4) Where the debtor’s property is prone to price change or does not require price change;
(5) Where debtor’s assets and liabilities have been confirmed after compulsory liquidation;
(6) Other circumstances where speedy trial is suitable.

5. (Negative Conditions) In principle, speedy trial does not apply to bankruptcy case in one of the following circumstances:
(1) Bankruptcy reorganization cases;
(2) Bankruptcy cases involving large numbers of people and complicated situations in which it is difficult to settle employees;
(3) The debtor’s assets are in a complex status or difficult to be realized;
(4) The debtor-creditor relationship is complex and audit may be required;
(5) There are pending lawsuits and arbitration disputes, or derivative actions may occur after acceptance, which may affect the speedy conclusion of the case;
(6) Other circumstances where speedy trial is not suitable.

6. (Scope) Speedy trial is suitable to post-acceptance of bankruptcy case.

III. Starting proceeding

7. (Consultation) The People's Court may seek for opinions from the bankruptcy participants in terms of the issues to which speedy trial is suitable during the acceptance and review stage of bankruptcy petition.

8. (Proceeding Startup) After the People's Court has adjudicated to accept the bankruptcy petition and if the collegiate bench considers that the speedy trial can be applied, bankruptcy participant shall be promptly notified of relevant issues after completion of internal review and approval procedure.

9. (Proceeding Conversion) The bankruptcy cases that have already been heard in accordance with the general procedure may be tried with reference to these Opinions for some issues after consulting with the bankruptcy participants.

Trial shall be still subject to the general procedure if the bankruptcy participants object to the application of the speedy trial on solid ground, or the cause to which speedy trial is inappropriate to be continued appears in the hearing process.

10. (Trial Level and Trial Organization) The people's courts at all levels that accept bankruptcy petitions may apply a speedy trial to eligible bankruptcy cases.
A bankruptcy case to which speedy trial is suitable in a basic people’s court may be heard by a single judge. A bankruptcy case to which speedy trial is suitable in an intermediate people's court shall be heard by collegiate bench including the judge.

IV. Speedy trial

11. (Trial of Designated Administrator) The People's Court shall, in principle, use a random method to hear the bankruptcy case for which speedy trial is decided to be applied, and shall appoint the administrator while the bankruptcy petition is adjudicated to be accepted.
 
After corporate compulsory liquidation is transferred to the bankruptcy proceeding and if the original liquidation group is composed of or involves in intermediary agencies or individuals in the list of the Beijing municipal administrators, the People's Court may, in accordance with the Enterprise Bankruptcy Law and its judicial interpretation, designate such an intermediary agency or individual as the administrator of the bankruptcy case, or may recruit the intermediary agency as a member of the liquidation group for the bankruptcy case unless it is not appropriate for such an intermediary agency or individual to have a stake in the case and is not suitable to serve as a administrator or a member of the administrators.
 
12. (Administrator Intervention) The court which accepts the bankruptcy petition shall immediately direct and supervise the administrator to carry out investigations and takeovers of the debtor and examination of the creditor's right after adjudicating the acceptance of the bankruptcy petition. The administrator shall also promptly record case information on the administrator work platform of the National Enterprise Bankruptcy Reorganization Case Information Network, and regularly disclose the work progress.

13. (Uniform Query for Property) After adjudicating the acceptance of the bankruptcy petition, the accepting court shall apply to the Enforcement Department of Higher People's Court of Beijing Municipality through the executive agency for uniform query relating to debtor’s property to shorten the period of property investigation by the administrator.
 
If the case is transferred to bankruptcy review and the results of the property investigation by the executing court may be used, reinvestigation is not required.
14. (Simplification of Account Opening) The administrator may not open a bank account after a preliminary investigation of a case in which no debtor’s property has been discovered.

15. (Acceptance Notice Period) Within seven days from the date when adjudicating the acceptance of bankruptcy petition, the accepting court shall notify the known creditors and publish an announcement on the judge work platform of the National Enterprise Bankruptcy Reorganization Case Information Network. In addition to the contents that must be stated according to Article 14 of the Enterprise Bankruptcy Law, the announcement shall also present the content of case to which speedy trial is suitable.
 
16. (Term for Creditor's Rights Declaration) The term for the creditor to declare the creditor's rights is 30 days, counted from the date of issuance of the announcement of bankruptcy petition acceptance.

17. (Time of the First Creditors' Meeting) The First Creditors’ Meeting shall be convened by the court and held within five days from the expiration of the Term of Creditor's Rights Declaration.

18. (Simplification of Creditors' Meeting) For the bankruptcy cases to which speedy trial is suitable, Creditor Committee will not be established in principle. Creditors' Meeting will be held no more than twice usually and can be done in writing, data messages, net meeting and other effective manners.

19. (Confirmation of Creditor's Rights) In general, the People's Court shall, within five days after the First Creditors’ Meeting, adjudicate to confirm the unanimous creditors’ rights.

20. (Convening Term) The administrator shall notify the known creditors of convening the Creditors’ Meeting five days in advance. Any creditor who can not attend the meeting due to objective reasons may apply to the administrator for a delay with giving reasons.
 
21. (Term of Bankruptcy Declaration) For a case in which the debtor is eligible to declare the bankruptcy, the administrator shall generally request the People's Court to declare the debtor bankrupt within fifteen days from the date of the First Creditors' Meeting. Where the People's Court rules that the debtor is eligible for bankruptcy declaration after review subject to the petition submitted by the administrator, it shall decide to declare that the debtor was bankrupt within five days from the date of receipt of the petition, serve the adjudication to the debtor and the administrator within three days from the date of the adjudication, notify the known creditors within five days from the date of the adjudication and issue an announcement.

22. (Limit on the Number of Reconciliation) In general, the bankruptcy cases to which speedy trial is suitable can be reconciled only once, otherwise speedy trial shall not be continued.

23. (Simplification of Announcement) The announcement of a bankruptcy case to which speedy trial is suitable shall be published on the National Enterprise Bankruptcy Reorganization Case Information Network.

24. (Continuation of the Effectiveness of Enforcement Actions) Where the effectiveness of assessment, appraisal, audit, auction and other actions that have already been completed in the enforcement procedure can be extended to the bankruptcy proceedings, the relevant procedures will not need to be repeated.

25. (Distribution and Disposal) In principle, the distribution of property shall take place in the form of currency distribution. The bankruptcy trial court and the administrator shall explain and direct the Creditors’ Meeting to make decisions on the disposal of bankruptcy assets through internet auctions or distribution in a non-monetary manner, so as to enhance the benefit in disposal of bankruptcy assets.

26. (One-time Distribution) Bankruptcy assets shall be subject to principle of one-time distribution. After the bankruptcy proceedings are terminated, the creditor may apply to the bankruptcy acceptance court for additional distribution in accordance with Article 123 of the Enterprise Bankruptcy Law.

27. (Termination of Bankruptcy Proceedings) Where the bankrupt has no property available for distribution, the administrator shall request the People's Court to adjudicate the termination of the bankruptcy proceedings. The People's Court shall give an adjudication on whether to terminate the bankruptcy proceedings within five days from receiving the request from the administrator with respect to termination of bankruptcy proceedings.

28. (Application for Cancellation of Registration) The administrator shall, within five days from the termination of the bankruptcy proceedings, go to the bankrupt's original registration authority to handle cancellation of registration with the adjudication of the court in terms of termination of bankruptcy proceedings.
29. (Permit on Disbursement for Insufficient Expenses) If the debtor’s property is insufficient to cover bankruptcy expenses, the administrator shall request the People’s Court to declare the debtor’s bankrupt and terminate the bankruptcy proceedings. However, if the creditor, the administrator, the debtor’s investor or other interested parties are willing to advance for the debtor, the bankruptcy proceedings may continue.

30. (Trial Term) In general, the bankruptcy cases that are subject to speedy trial shall be concluded within six months from date of adjudication relating to acceptance, and those without any property, account book, instrument, unaccounted enterprise personnel shall be concluded within three months from the date of adjudication relating to acceptance. If the case can not be concluded within the prescribed time limit due to the special circumstances, application for an extension of Trial Term may be submitted once.

V. Supplementary Provisions

31. (Reference Application of Compulsory Liquidation Case) The compulsory liquidation case with clear debtor-creditor relationship and distinct corporate property information may be heard with reference to the application of these Opinions.

32. (Implementation Time) These Opinions shall come into effect on April 4, 2018.

Source: eBeijing.gov.cn
Date: 2018-04-30