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A Study on the Improvement of Zombie Enterprises’ Bankruptcy Expenses Advance Payment System

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2020, (30), pp.21-45
  • DOI : 10.31839/ibt.2020.07.30.21
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law
  • Received : June 16, 2020
  • Accepted : July 21, 2020
  • Published : July 31, 2020

LU DAIFU 1 PENG ZHIQIANG 1

1CHINA SOUTHWEST UNIVERSITY OF POLITICAL SCIENCE AND LAW

Accredited

ABSTRACT

China's development being still in an important period of strategic opportunities for optimization and upgrading of its economic structure, it is necessary to clear out “zombie enterprises” characterized by financial loss, blood-sucking and kidnapping so as to guarantee the order of competition in socialist market economy. Bankruptcy liquidation is the main method for the disposal of “zombie enterprises” as provided by law. However, the legal system of “stakeholders’ advance payment of bankruptcy expenses” has certain limitations, i.e., ineffective guarantee of bankruptcy expenses of “zombie enterprises” and unsuccessful exit from the market by a large number of “zombie enterprises”, resulting in ineffective and irrational allocation of market resources, and impediment of optimization and upgrading of economic structure. The realistic need in solving the above problems requires the establishment of a ocial special fund for the payment of bankruptcy expenses for “zombie enterprises”. At the same time, we need to strengthen procedures for budgeting and final accounting of bankruptcy expenses on the one hand; and tighten administrators’ duty of diligence and care on the other hand, so as to continue to commence or go through bankruptcy procedures for public interest of the society, fully protect the legitimate rights and interests of stakeholders in bankruptcy cases, and maintain social fairness and normal order of market competition.

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