Research on Personal Bankruptcy Legal System -- Also Discussing the Construction of Personal Bankruptcy System in China

Author: Wen Xiufeng
Publisher:
Publishing Date: 2006-05-01
Features: This book employs research methods such as legal history, comparative law, legal theory, and legal sociology to focus on special and challenging issues in the legal system of personal bankruptcy procedures. It also combines specific circumstances in China to explore theoretical and practical connections, proposing legislative recommendations with the aim of preparing a theoretical foundation for establishing China's personal bankruptcy system. The main body of the paper is divided into seven chapters, covering the following content:
Chapter 1: Introduction. This chapter introduces the basic theoretical issues related to bankruptcy systems and personal bankruptcy systems, conducting a comparative study of personal bankruptcy legislation in some countries and China. The first section reviews the historical process of the emergence and evolution of bankruptcy systems, analyzes the definition and legal characteristics of bankruptcy, and introduces the new development trends of bankruptcy law in the contemporary era, laying the groundwork for discussing personal bankruptcy systems. The second section delves into the core topic of this book, first redefining the term "personal bankruptcy" and clarifying the subtle differences between the concepts of "individual" and "natural person" in procedural and substantive law. It advocates replacing "natural person bankruptcy" with "personal bankruptcy" and excluding the bankruptcy of non-corporate entities from the concept of personal bankruptcy. Subsequently, it defines the specific content of "personal bankruptcy" and, through comparisons with other systems, gains an understanding of the legal characteristics and institutional value of personal bankruptcy. The third section introduces the development and legislative examples of personal bankruptcy systems in major countries, combined with a brief review of the history of bankruptcy legislation in China and the current situation where China's bankruptcy law does not apply to individuals.
Chapter 2: Forward-looking Research on Establishing a Personal Bankruptcy System in China. This chapter argues for the construction of China's personal bankruptcy system, discussing its necessity and feasibility, and preliminarily designs the concepts and principles that should be established. The first section employs an empirical approach, taking the significant changes in China after establishing the market economy system as the backdrop, arguing for the necessity of establishing a personal bankruptcy system from the perspectives of encouraging individual entrepreneurship, meeting the growing demand for consumer credit, and the need for legal alignment in the global economy. The second section concludes that establishing a personal bankruptcy system in China is feasible, citing China's rapid economic development, the increasing legal awareness of citizens, the preliminary establishment of a credit system, and the improvement of the social security system. The third section traces the development trajectory of bankruptcy law, proposing that China's personal bankruptcy system should not blindly copy the so-called "debt relief concept" of contemporary Western countries but should instead be constructed based on China's national conditions, with the fundamental goals of safeguarding creditor interests and fostering a credit economy. At the same time, principles such as fairness, efficiency, creditor autonomy, procuratorial supervision, and international alignment should be established as the basic principles guiding the design of specific procedures and institutions.
Chapter 3: The Initiation of Personal Bankruptcy Procedures. This chapter studies key issues such as the subjects, causes of bankruptcy, and initiation of personal bankruptcy procedures, combining the characteristics of personal bankruptcy with the provisions of China's current bankruptcy law and the draft of a new bankruptcy law, aiming to provide reference solutions for constructing China's personal bankruptcy procedures. The first section discusses bankruptcy capacity as the entry point, classifying different subjects of personal bankruptcy, which essentially also classifies different types of personal bankruptcy, and recommends that China's legislation introduce inheritance bankruptcy systems and punitive bankruptcy systems for bankrupt legal persons and corporate leaders. The second section discusses different causes of bankruptcy such as insolvency, cessation of payment, and debt excess in general terms, proposing different causes of bankruptcy for different types of personal bankruptcy. The third section discusses the issues related to the initiation of personal bankruptcy procedures, including competent authorities, jurisdiction, applications, and acceptance, and proposes corresponding legislative recommendations.
Chapter 4: The Handling of Personal Bankruptcy—Settlement and Liquidation. Settlement, reorganization, and liquidation are the three major procedural systems for handling bankruptcy cases, each involving numerous and complex procedural and substantive issues. Moreover, they have interconvertible relationships and are considered the core content of bankruptcy law research. However, since this book focuses on personal bankruptcy, it does not discuss all issues in a general manner but instead centers on personal bankruptcy. First, it excludes the reorganization system, which is generally not applicable to individuals, and second, it studies and discusses unique issues in the operation of settlement and liquidation procedures for personal bankruptcy, proposing corresponding legislative recommendations. The first section analyzes the characteristics of the debtor's assets in personal bankruptcy, proposing the establishment of an administrator system to take over the debtor's assets after the bankruptcy procedure is accepted but before the bankruptcy declaration. At the same time, from the perspective of upholding fairness, it discusses the issue of creditor awareness in personal bankruptcy, proposing that the debtor's integrity should be strengthened, and that systems such as discharge and bankruptcy crimes should be used to encourage debtors to voluntarily and comprehensively submit debt schedules, ensuring creditor awareness and participation in bankruptcy procedures. This section also discusses the issue of insiders' claims and their restrictions. The second section discusses the settlement system in personal bankruptcy, first elaborating on the particularly important significance of settlement in personal bankruptcy, then comparing in detail the specific provisions of settlement in some countries and regions, and finally proposing a construction plan for China's personal bankruptcy settlement procedure, advocating for a radical separation of settlement and liquidation in China, where parties can choose whether to apply settlement or liquidation. The third section discusses special issues in the liquidation procedure under personal bankruptcy: first, it lists the circumstances under which the court should declare personal bankruptcy, the obstacles to declaring personal bankruptcy, and the effects of a personal bankruptcy declaration on the debtor, drawing on the legislation of other countries and regions. Second, it proposes the unique issue of free assets in personal bankruptcy, emphasizing the need to distinguish between bankruptcy assets and free assets. Third, it discusses the exercise of revocation rights, redemption rights, offsetting rights, and preferential rights under personal bankruptcy, as well as the issues that different types of personal bankruptcy should pay attention to in liquidation. Finally, it compares the differences in the termination of the trustee's duties between personal bankruptcy and economic entity bankruptcy.
Chapter 5: The Free Asset System in Personal Bankruptcy. The free asset system is an important institution unique to personal bankruptcy, and this chapter discusses it in detail. The first section primarily discusses the basic theoretical issues of the meaning, characteristics, and significance of free assets. The second section discusses the scope of free assets, pointing out that the determination of the scope of free assets should center on ensuring the basic living needs of the bankrupt person, with basic living needs referenced to local living standards. However, without harming the fundamental interests of creditors, it should also consider the bankrupt person's future reintegration. It then conducts a comparative study of the provisions on the scope of free assets in some countries and regions. Finally, it proposes legislative recommendations for establishing China's free asset system, advocating for an enumerationist approach to the scope of free assets and categorizing them based on different natures, with different treatments for different natures. Unconditional reservation for basic living needs and compliance with creditor distribution interests for assets that aid reintegration or have specific spiritual value for the bankrupt person. Free assets should also be subject to limits. The third section first discusses the procedural aspects of exercising free asset rights, including the subjects, the submission of applications, the raising of objections, and how courts should rule on free asset applications. It then discusses the disputes in the exercise of free asset rights, proposing that free assets can be used to pay off debts but should not affect the rights of dependents; that judicial security rights on free assets are invalid, while contractual security rights and statutory security rights are valid, but the bankrupt person should have certain revocation rights; and that the conversion of other assets into free assets before bankruptcy is generally considered valid.
Chapter 6: The Discharge System in Personal Bankruptcy. Legal persons or other organizations are generally terminated after bankruptcy, making the issue of discharge irrelevant. Therefore, the discharge system is also a unique institution in personal bankruptcy. The first section is an overview of the discharge system. It reviews the historical development of bankruptcy law from non-discharge to discharge, pointing out that the essence of discharge is not a right but a special privilege, and that attention should be paid to the balance between discharge privileges and creditors' repayment interests, with a comparative study of legislative examples of discharge systems. The second section introduces the various conditions and restrictions set by countries to achieve this balance, including circumstances under which bankrupt persons are not permitted discharge, debts that cannot be discharged, and the revocation of discharge rulings under specific circumstances after they are made. The third section starts from China's current legislation, pointing out that there is no necessary connection between escaping debt and the discharge system, then reviews the specific provisions of the draft of China's new bankruptcy law regarding the discharge system, and proposes specific legislative recommendations for modifying the draft.
Chapter 7: The Loss of Rights and Restoration of Rights System in Personal Bankruptcy. The loss of rights and restoration of rights system reflects the unique institutional value of personal bankruptcy and is one of the important balancing mechanisms that ensure the sustainability of the personal bankruptcy system. The first section discusses the bankruptcy loss of rights system, tracing the historical evolution of punishing debtors and pointing out the historical significance of the loss of rights system replacing the doctrine of bankruptcy criminality. It then discusses the characteristics and institutional value of the loss of rights system and compares the specific provisions of bankruptcy laws and other laws in some countries and regions regarding the loss of rights. The second section discusses the bankruptcy restoration of rights system, pointing out that the restoration of rights system is a modern institution established to resolve the conflict between the loss of rights and human rights. However, the value of the restoration of rights system lies not only in protecting human rights but also in better fulfilling the punitive role of the loss of rights system on bankrupt persons. This section also compares the different conditions for restoration of rights under the two methods of automatic restoration and application for restoration, and discusses the procedures for restoration. The third section proposes specific ideas for constructing China's bankruptcy loss of rights and restoration of rights system based on the current legal provisions regarding the loss of rights.
In the conclusion, the author believes that personal bankruptcy is the origin of bankruptcy systems, and the institutional value and philosophy it embodies cannot be replaced by other execution systems. General bankruptcy is the trend of the development of bankruptcy law worldwide, and the conditions for China to implement personal bankruptcy have already matured. The author firmly believes that the comprehensive establishment of a personal bankruptcy system in China is only a matter of time, and China's personal bankruptcy system should be constructed based on its national conditions.