Enterprise Bankruptcy Law of China Ⅱ

Chapter II

Application and Acceptance

Section 1 Application

Article 7 Where a debtor is under the circumstances as specified in Article 2 of this Law, he may make an application to the people's court for reorganization, compromise or bankruptcy liquidation.

Where the debtor cannot pay off his debts due, the creditor may make an application to the people's court for the debtor's reorganization or bankruptcy liquidation.

Where an enterprise legal person has been dissolved but has not started or completed liquidation and he does not have enough assets to pay off his debts, the person responsible for liquidation according to law shall make an application to the people's court for bankruptcy liquidation.

Article 8 For applying to a people's court for bankruptcy, an Application for Bankruptcy and the related evidence shall be submitted to it.

The following matters shall clearly be stated in the Application for Bankruptcy:

（1） a basic introduction to the applicant and the defending party of the application;

（2） purposes of application;

（3） facts and grounds of the application; and

（4） other matters that the people's court deems necessary to state.

Where a debtor makes an application, he shall submit to the people's court statements on his financial position, a complete list of his debts, a complete list of his claims, the related financial statements, a plan for employee arrangements and payment of his employees' wages and social insurance premiums.

Article 9 Before the people's court accepts an application for bankruptcy, the applicant may request for withdrawal of the application.

Section 2 Acceptance

Article 10 Where a creditor makes an application for bankruptcy, the people's court shall, within five days from the date it receives the application, notify the debtor concerned. Where the debtor has objections to the application, he shall put forward his objections to the people's court within seven days from the date he receives notification from the people's court. The people's court shall decide whether or not to accept the case within 10 days at the expiration of the period for raising objections.@@page@@

Except for the circumstances as specified in the preceding paragraph, the people's court shall decide whether or not to accept an application for bankruptcy within 15 days from the date it receives the application.

Under special circumstances where the time limit for deciding whether to accept a case, as specified in the preceding two paragraphs, needs to be extended, it may be extended for another 15 days upon approval by the people's court at the next higher level.

Article 11 Where the people's court decides to accept an application for bankruptcy, it shall serve such decision on the applicant within five days from the date it makes the decision.

Where the application is made by a creditor, the people's court shall serve its decision on the debtor within five days from the date it makes the decision. The debtor shall, within 15 days from the date the decision is served, submit to the people's court statements on his financial position, a complete list of his debts, a complete list of his claims, the related financial statements and payment of his employees' wages and social insurance premiums.

Article 12 Where the people's court decides not to accept an application for bankruptcy, it shall serve the decision on the applicant within five days from the date it makes the decision and explain the reasons why. Where the applicant is dissatisfied with the decision, he may, within 10 days from the date the decision is served, file an appeal with the people's court at the next higher level.

Where during the period from acceptance of an application for bankruptcy to declaration of bankruptcy, the people's court finds through examination that the debtor is not under the circumstances as specified in Article 2 of this Law, it may decide to reject the application. Where the applicant is dissatisfied with the decision, he may, within 10 days from the date the decision is served, file an appeal with the people's court at the next higher level.

Article 13 When the people's court decides to accept an application for bankruptcy, it shall designate an administrator at the same time.

Article 14 The people's court shall, within 25 days from the date it decides to accept an application for bankruptcy, it shall notify the creditors already known and announce its decision.

The following matters shall clearly be stated in the notification and announcement:

（1） titles or names of the applicant and the defending party of the application;

（2） the time when the people's court accepts the application for bankruptcy;

（3） period, place and points for attention with respect to declaration of claims;@@page@@

（4） title or name of the administrator and the office address;

（5） demand made by the administrator upon the debtors or property holders of the debtor for paying off the debts or delivering the property;

（6） the time and place for the first creditors' meeting to be held; and

（7） other matters that the people's court deems it necessary to notify of and announce.

Article 15 During the period from the date when the decision made by the people's court to accept an application for bankruptcy is served on the debtor to the date when the procedure for bankruptcy is concluded, the persons related to the debtor shall fulfill the following obligations:

（1） properly preserving the property, seals, account books, documents, etc. which are in their possession and under their management;

（2） proceeding with the work according to the requirements of the people's court and the administrator, and truthfully answering their inquiries;

（3） attending the creditors' meetings as non-voting participants and truthfully answering the creditors' inquiries;

（4） remaining at their domiciles, unless otherwise permitted by the people's court; and

（5） not taking up any post as director, supervisor or senior manager in any other enterprise.

The persons related to the debtor mentioned in the preceding paragraph include the legal representative of an enterprise, which may, upon decision by the people's court, also include the financial managers and business managers of the enterprise.

Article 16 After the people's court accepts an application for bankruptcy, payment of debts made by the debtor to individual creditors shall be invalid.

Article 17 After the people's court accepts an application for bankruptcy, the debtors or property holders of the debtor shall pay off the debts or deliver the property to the administrator.

Where the debtors or property holders of the debtor intentionally pay off the debts or deliver the property to the debtor in violation of the provisions of the preceding paragraph, thus causing losses to creditors, they shall not be freed from the obligation of paying off the debts or delivering the property.

Article 18 After the people's court accepts an application for bankruptcy, the administrator shall have the right to decide to rescind or continue to perform a contract that is concluded before the acceptance yet remains to be fulfilled by both the debtor and the other party and shall notify the other party of his decision. Where the administrator fails to notify the other party within two months from the date when the bankruptcy application is accepted or to give any reply to the exhortation made by the other party with 30 days from the date the exhortation is made, the contract shall be deemed to be rescinded.@@page@@

Where the administrator decides that performance of the contract be continued, the other party shall comply; however, the other party shall have the right to request the administrator to provide guaranty. Where the administrator refuses to do so, the contract shall be deemed to be rescinded.

Article 19 After the people's court accepts an application for bankruptcy, the measures for preserving the property of the debtor shall be lifted and the procedure for execution shall be suspended.

Article 20 After the people's court accepts an application for bankruptcy, any civil action or arbitration involving the debtor that has been started but has not yet been concluded shall be suspended; however, the action or arbitration can proceed after an administrator takes over the debtor's property.

Article 21 After the people's court accepts an application for bankruptcy, a civil action against the debtor can only be filed with the said people's court.