Dadi Sharing | Company bankruptcy, can remove records of dishonesty, lift consumption restrictions

Question: After the People's Court accepts a bankruptcy application against a debtor, should the high-consumption restriction measures imposed on the debtor be lifted?

Answer: According to Article 19 of the Enterprise Bankruptcy Law and Article 42 of the "Minutes of the National Court Bankruptcy Trial Work Conference," after the People's Court rules to accept a debtor's bankruptcy application, the enforcement procedures should be suspended, and the asset control measures against the debtor should be lifted. Based on this, Article 10, Paragraph 1, Item 5 of the "Supreme People's Court's Several Provisions on the Publication of Information on Dishonest Debtors" stipulates that: If the People's Court legally rules to suspend enforcement against a dishonest debtor due to bankruptcy proceedings, the dishonest information should be deleted within three working days. The basic consideration is that after entering bankruptcy proceedings, the debtor's enterprise is taken over by the administrator, and credit penalty measures aimed at urging the debtor's enterprise to fulfill its obligations are no longer necessary. Regarding how to handle the consumption restriction measures already taken by the executing court after the debtor's enterprise enters bankruptcy proceedings, the "Supreme People's Court's Several Provisions on Restricting High Consumption and Related Consumption of Debtors" etc. do not provide a clear answer.

We believe that after the People's Court accepts a bankruptcy application from a debtor's enterprise (the debtor's enterprise enters bankruptcy proceedings), the executing court should lift the consumption restriction measures imposed on the debtor. Its inherent logic is similar to the aforementioned deletion of dishonest information. The purpose of imposing consumption restriction measures on debtors who meet specific conditions is mainly to prevent them from improperly reducing their assets through high consumption and consumption not necessary for life or business, thereby reducing their debt repayment ability. The function of bankruptcy proceedings is to fairly settle debts and credits and equally protect the legitimate rights and interests of creditors when a corporate legal person cannot repay its due debts and its assets are insufficient to repay all debts or clearly lacks the ability to repay. According to the relevant provisions of the Enterprise Bankruptcy Law, after the debtor enters bankruptcy proceedings, the administrator takes over the enterprise and conducts asset liquidation. When the administrator disposes of the debtor's property or property rights, it should promptly report to the creditors' committee or the People's Court, and generally, there will be no improper reduction of the debtor's assets. Therefore, after the debtor's enterprise enters bankruptcy proceedings, there is no longer any need to continue to impose consumption restriction measures on it.

Consultant: Beijing Higher People's Court Enforcement Bureau Yao Fuguo

Expert: Supreme People's Court Enforcement Bureau Sun Jianguo