Enterprise Bankruptcy Law of the People's Republic of China

　　Order of the President of the People's Republic of China [2006] No. 54

　　August 27, 2006

　　The Enterprise Bankruptcy Law of the People's Republic of China which was adopted at the 23rd Session of the Standing Committee of the 10th National People's Congress on August 27, 2006 is hereby promulgated and becomes effective as of June 1, 2007.

　　Hu Jintao, President of the People's Republic of China

　　Appendix: Enterprise Bankruptcy Law of the People's Republic of China

　　(Adopted at the 23rd Session of the Standing Committee of the 10th National People's Congress on August 27, 2006)

　　Contents
　　Chapter I General Provisions
　　Chapter II Application and Acceptance
　　Section 1 Application
　　Section 2 Acceptance
　　Chapter III Administrator
　　Chapter IV Debtor's Property
　　Chapter V Expenses for Bankruptcy Proceedings and Debts of Common Benefits
　　Chapter VI Declaration of Credits
　　Chapter VII Creditors' Meeting
　　Section 1 General Provisions
　　Section 2 Creditors' Committee
　　Chapter VIII Reorganization
　　Section 1 Application for and Period of Reorganization
　　Section 2 Preparation and Approval of Reorganization Plan
　　Section 3 Execution of Reorganization Plan
　　Chapter IX Composition
　　Chapter X Bankruptcy Liquidation
　　Section 1 Declaration of Bankruptcy
　　Section 2 Appraisal and Distribution
　　Section 3 Termination of Bankruptcy Proceedings
　　Chapter XI Legal Liability
　　Chapter XII Supplementary Provisions

　　Chapter I General Provisions

　　Article 1 This Law is enacted in order to regulate the bankruptcy proceedings of enterprises, fairly liquidate credits and debts, protect the legitimate rights and interests of creditors and debtors and maintain the order of socialist market economy.

　　Article 2 Where an enterprise legal person is unable to pay off its debts due and its assets are not sufficient to pay off all its debts or such legal person is obviously insolvent, its debts shall be liquidated in accordance with this Law.
　　Where an enterprise legal person is under the circumstances as specified in the preceding paragraph or he has apparently forfeited the ability to pay off his debts, he may undergo reorganization according to the provisions of this Law.
　　

　　Article 3 A bankruptcy case is under the jurisdiction of the People's Court at the place of the debtor's domicile.
　　

　　Article 4 Where this Law is silent as to the procedures for trial of bankruptcy cases, the relevant provisions of the Civil Procedure Law apply.
　　

　　Article 5 The bankruptcy proceedings initiated according to this Law shall be effective with respect to the debtor's property outside the territory of the People's Republic of China.
　　With regard to a legally effective ruling or decision on a bankruptcy case made by a foreign country, if such ruling or decision involves the property of a debtor within the territory of the People's Republic of China, and an application or a petition for the recognition and execution thereof is filed with the People's Court, the People's Court shall, according to international treaties concluded or participated by the People's Republic of China or the principle of reciprocity, review the ruling or decision, and shall decide to recognize or execute the ruling or decision when believing that such recognition or execution does not violate the fundamental principles of the law of the People's Republic of China, impair the state sovereignty, security and social public interests or impair the legitimate rights and interests of the debtors within the People's Republic of China.
　　

　　Article 6 The People's Court shall safeguard the lawful rights and interests of the employees of the bankrupt enterprises in accordance with law and accord the operation and management personnel of the bankrupt enterprises with legal liability.
　　

　　Chapter II Application and Acceptance

　　Section 1 Application

　　Article 7 In any of the circumstances set forth in Article 2 of this Law, the debtor may file an application for reorganization, composition or bankruptcy liquidation procedures with the People's Court.
　　Where a debtor is unable to pay off the debts due, its creditor may file an application for reorganization or bankruptcy liquidation of the debtors with the People's Court.
　　When an enterprise legal person has been dissolved but not been liquidated or has not completed its liquidation, if its assets are not sufficient to pay off its debts, the person responsible for liquidation legally shall apply for bankruptcy liquidation to the People's Court.
　　

　　Article 8 The applicant shall submit an application form for bankruptcy and the relevant evidence to the People's Court when filing an application for bankruptcy with the People's Court.
　　The application form for bankruptcy shall contain:
　　1. The basic situations of the applicant and the party against whom an application is filed;
　　2. The purpose of the application;
　　3. The facts and reasons of the application; and
　　4. Other matters that the People's Court deems necessary to be contained.
　　Where an application is filed by the debtor, the debtor shall submit to the People's Court a description on its financial position, a detailed list of debts, a detailed list of credits, the relevant financial and accounting reports, and the staff resettlement plan, as well as the statement on the payment of the salaries and social security expenses of the employees of the bankrupt enterprise.
　　

　　Article 9 The applicant who has filed an application for bankruptcy may request to withdraw the application before the People's Court accepts the application.
　　

　　Section 2 Acceptance

　　Article 10 Where an application for bankruptcy is filed by the creditor, the People's Court shall give a notice thereof to the debtor within 5 days of the receipt of the application. In case the debtor objects to such application, such objection shall be submitted to the People's Court within 7 days of the receipt of the notice from the People's Court. The People's Court shall decide whether or not to accept the application within 10 days of the expiration of the objection term.
　　In the circumstances other than those specified in the preceding paragraph, the People's Court shall decide whether or not to accept the application within 15 days of the receipt of the application for bankruptcy.
　　In the event that the term for ruling on acceptance of the application set forth in the above-mentioned two paragraphs shall be extended in special cases, an extension of 15 days may be accorded upon the approval by the People's Court of the next-higher level.
　　

　　Article 11 Where the people's court accepts an application for bankruptcy, it shall serve the ruling on such application on the applicant within five days of the making of such ruling.
　　Where an application is filed by the creditor, the People's Court shall serve the ruling on such acceptance on the debtor within 5 days of the making of such ruling. And the debtor shall submit a description on its financial position, a detailed list of debts, a detailed list of credits and relevant financial and accounting reports, as well as the statement on the payment of the salaries and social security expenses of the employees of the bankrupt enterprise to the People's Court within 15 days after the service of such ruling.

　　Article 12 Where the People's Court has ruled not to accept an application for bankruptcy, the People's Court shall serve its ruling on the applicant within 5 days after making the ruling and explain the reasons thereof. Where an applicant refuses to accept as final the ruling made by the People's Court that the People's Court will not accept the application for bankruptcy, he can file an appeal with the People's Court of the next-higher level within 10 days of the service of the ruling.
　　In case of finding that the debtor does not fall in the circumstances set forth in Article 2 of this Law during the period from the acceptance by the People's Court of the application for bankruptcy to the declaration of bankruptcy, the People's Court may rule to reject the application by ruling, and if the applicant objects to such ruling, an appeal may be filed with the People's Court of the next-higher level within 10 days of the service of the ruling.
　　

　　Article 13 The People's Court shall designate an administrator when ruling on accepting an application for bankruptcy.

　　Article 14 The People's Court shall inform the creditors who have definite addresses of the ruling within 25 days after making the ruling if it accepts the application for bankruptcy and shall make a public announcement.
　　The notification and the public announcement shall contain:
　　1. The names of the applicant and the party against whom an application is filed;
　　2. The time of the acceptance of the application for bankruptcy;
　　3. The time limit and special points for attention of the report for the credit;
　　4. The name of the administrator and the address of the place where the administrator handles transactions;
　　5. The debtor's debtor or property holder shall pay off its debts or deliver the property to the administrator;
　　6. The date and place of the first creditors' meeting; and
　　7. Other matters that the People's Court deems necessary to be notified and announced.
　　

　　Article 15 The relevant personnel of the debtor shall bear the following obligations from the date when the ruling on acceptance by the People's Court of the application for bankruptcy is served on the debtor to the date of the termination of the bankruptcy proceedings:
　　1. Properly keeping all the property, accounting books, documents, data, seals and other Articles that are occupied, used and managed by them;
　　2. Working according to the requirements of the People's Court and the administrator and answering the inquiries truthfully;
　　3. Attending the creditors' meeting as nonvoting delegates and answering the creditors' inquiries truthfully;
　　4. Not leaving the place of domicile without the permission of the People's Court; and
　　5. Not newly serving as directors, Creditors' Committees or officers of other enterprises.
　　The relevant personnel set forth in the preceding paragraph refer to the legal representatives of enterprises; and such relevant personnel may, upon decision by the People's Court, include the financial managerial personnel and other operation managerial personnel of an enterprise.

　　Article 16 After the People's Court accepts the application for bankruptcy, it shall be invalid for the debtor to pay off debts to a specific creditor.
　　

　　Article 17 After the People's Court accepts the application for bankruptcy, the debtor's debtor or property holder shall pay off its debts or deliver the property to the administrator.
　　Where the debtor's debtor or property holder pays off its debt or delivers the property to the debtors intentionally in violation of the provisions of the preceding paragraph, hence causing losses to the creditors, the debtor or the property holder shall not be exempt from the obligations of paying off the debts or delivering the property.
　　

　　Article 18 Upon acceptance by the People's Court of the application for bankruptcy, the administrator is entitled to rescind or continue the performance of the contracts that have been concluded before the acceptance of the application for bankruptcy but the performance of which has not been completed, and notify the counterpart concerned of the same. When the administrator fails to give a notice to the counterparts concerned within 2 month of the acceptance of the application for bankruptcy or fails to reply to the counterparts concerned within 30 days of the demand of the counterpart concerned, it shall be deemed to have rescinded the relevant contracts.
　　Where the administrator decides to continue the performance of the contracts, the counterparts concerned shall keep performance of the contracts; provided that they are entitled to request the administrator to provide the guarantee for such performance, and when the administrator has not provided such guarantee, it shall be deemed to have rescinded the contracts.
　　

　　Article 19 After the People's Court accepts the application for bankruptcy, any preservation measure concerning the debtor's property shall be terminated, and the execution procedures shall suspend.
　　

　　Article 20 The civil litigation or arbitration concerning the debtor that has started but has not yet ended shall be suspended after the People's Court accepts the application for bankruptcy; and the litigation or arbitration shall proceed after the administrator takes over the debtor's property.
　　

　　Article 21 The civil litigation concerning the debtor after the People's Court accepts the application for bankruptcy may only be instituted with the People's Court that has accepted the application for bankruptcy.
　　

　　Chapter III Administrator

　　Article 22 The administrator shall be appointed by the People's Court.
　　Where the creditors' meeting finds that the administrator fails to fairly perform its functions legally or is otherwise not competent at the task, the People's Court may replace such administrator.
　　The measures for appointment of an administrator and for determination of payment of an administrator shall be provided for by the People's Court.
　　

　　Article 23 The administrator shall perform its functions according to the provisions of this Law and shall be responsible for and report his work to the People's Court. The performance of the functions by the administrator shall be supervised by the creditors' meeting and the creditors' committee.
　　The administrator shall attend the creditors' meeting as nonvoting delegate, report the performance of his functions to the creditors' meeting and answer inquiries.
　　

　　Article 24 The administrator may be a liquidation group composed of the personnel from the relevant authorities and institutions or a law firm, a certified public accountants firm or a bankruptcy liquidation firm or any other relevant social intermediary agency established legally.
　　The People's Court may, according to the actual circumstances of the creditors and upon solicitation of the opinions from the relevant social intermediary agency, appoint the personnel from such agency who have the relevant professional knowledge and obtained the professional qualifications to act as the administrator.
　　No member of the administrator may be appointed in any of the following circumstances:
　　1. If they have been criminally punished for intentional crimes;
　　2. If their professional certificates have been revoked;
　　3. If they are interested parties with this application for bankruptcy; or
　　4. If the People's Court deems it inappropriate for them to be an administrator.
　　An individual who acts as the administrator shall participate in professional liability insurance.
　　

　　Article 25 The administrator shall perform the following functions:
　　1. Taking over all of the debtor's property, seals, accounting books, documents, and other materials;
　　2. Investigating into the debtor's financial position and preparing the reports on such financial position;
　　3. Determining the internal management affaires of the debtor;
　　4. Determining the daily expenses and other necessary expenses for the debtor;
　　5. Determining whether or not to continue the business operation of the debtor before the holding of the first creditors' meeting;
　　6. Managing and disposing of the debtor's property;
　　7. Participating in a lawsuit, arbitration or other legal proceedings on behalf of the debtor;
　　8. Calling for the holding of the creditors' meeting; and
　　9. Other functions that the People's Court deems necessary to be performed by the administrator.
　　If this Law has otherwise provided for the functions of an administrator, such provisions apply.
　　

　　Article 26 Before the holding of the first creditors' meeting, the administrator shall obtain permission to act from the People's Court if the administer decides to continue or stop the business operation of the debtor or commits any of the activities as prescribed in Article 69 of this Law.
　　

　　Article 27 The administrator shall perform due diligence and faithfully execute its functions.

　　Article 28 The administrator may engage necessary workers with the permission of the People's Court.
　　The remuneration of an administrator is to be determined by the People's Court, and in the case of any objection to the remuneration of the administrator, the creditors' meeting is entitled to submit such objection to the People's Court.

　　Article 29 An administrator shall not resign without justified reasons, and the resignation of an administrator shall be subject to the permission of the People's Court.

　　Chapter III Debtor's Property

　　Article 30 All the property that belongs to the debtor at the time when the application for bankruptcy is accepted and the property that the debtor obtains after the acceptance of the application for bankruptcy but before the termination of the bankruptcy proceedings are the property of the debtor.
　　

　　Article 31 Within one year before the People's Court accepts the application for bankruptcy, the administrator is entitled to request the People's Court to rescind the following activities concerning the debtor's property:
　　1. Transferring property free of charge;
　　2. Transferring property at obviously unreasonable low prices;
　　3. Providing property security for the debts that originally have no property security;
　　4. Paying off in advance the debt undue; or
　　5. Waiving credits.
　　

　　Article 32 Within six months before the People's Court accepts the application for bankruptcy, if the debtor is in any of the circumstances set forth in Paragraph 1 of Article 2 of this Law but still pays off debts to specific creditors, the administrator is entitled to request the People's Court to rescind the payoff unless the debtor's property benefits from such payoff.
　　

　　Article 33 The following activities concerning the property of the debtor shall be invalid:
　　1. Hiding or transferring property for avoidance of debts; and
　　2. Fabricating debts or recognizing unreal debts.
　　

　　Article 34 The administrator is entitled to recover the debtor's property that is obtained through activities prescribed in Article 31, Article 32 or Article 33 of this Law.
　　

　　Article 35 Where the investor of the bankrupt enterprise has not yet fulfilled his capital contribution obligation after the People's Court accepts the application for bankruptcy, the administrator shall request the investor to pay his capital subscribed regardless of the time limit of the payment thereof.
　　

　　Article 36 The administrator shall recover the unusual income that the directors, supervisors and senior executives of the debtor have obtained by taking advantages of their authority of office and recover the enterprise property that they appropriate in the same manner.
　　

　　Article 37 The administrator may take back the pledge property and lien property by paying off debts to or providing guarantee acceptable for the creditor after the People's Court accepts the application for bankruptcy.
　　The pay-off of debts or substitution of guarantee as provided in the preceding paragraph shall, when the value of the pledge property or lien property is lower than the amount of credit secured, be limited to the market price of such pledge or lien property.
　　

　　Article 38 After the People's Court accepts the application for bankruptcy, the owners of the property that is occupied by the debtor but does not belong to the debtor may take back the property through the administrator, unless otherwise provided for by this Law.
　　

　　Article 39 At the time of acceptance of the application for bankruptcy by the People's Court, if the seller has already dispatched the subject matter of the trading to the debtor as the buyer and the debtor has not paid off the full price, the seller may take back the subject matter in transit. However, the administrator may pay off the full price and request the seller to deliver the subject matter.
　　

　　Article 40 Where the creditor owes debts to the debtor before the acceptance of the application for bankruptcy, the creditor may request the administrator to set off such debts. However, no setoff may be made if:
　　1. The debtor's debtor obtains the credits against the debtor after the application for bankruptcy;
　　2. The creditor undertakes the debts for the debtor while knowing the fact that the debtor fails to pay off its debts due or files the application for bankruptcy, except where the creditor undertakes the debts due to the provisions of law or for reasons occurred a year before the application for bankruptcy; or
　　3. The debtor's debtor undertakes the debts for the debtor while knowing the fact that the debtor fails to pay off its debts due or files the application for bankruptcy, except where the debtor's debtor obtains the credits due to the provisions of law or for reasons occurred a year before the application for bankruptcy.
　　

　　Chapter V Expenses for Bankruptcy Proceedings and Debts of Common Benefits

　　Article 41 The following expenditures that are generated after the People's Court accepts the application for bankruptcy are expenses for bankruptcy:
　　1. Lawsuit expenses of the bankruptcy case;
　　2. Expenditures for the management, appraisal and distribution of the debtor's property; and
　　3. Expenses for the administrator to perform its functions, its remuneration and expenses for engagement of workers.
　　

　　Article 42 The following debts that are generated after the People's Court accepts the application for bankruptcy are debts of common benefits:
　　1. The debt that is generated on the ground that the administrator or the debtor requests the other party to perform the contract of which neither party completes the performance;
　　2. The debt that is generated from the voluntary service for the debtor's property;
　　3. The debt that is generated from the unjust enrichment of the debtor's property;
　　4. The labor remuneration and social insurance expenses payable due to continuing the debtor's business operation and other debts incurred thereof;
　　5. The debt that is generated from the damage to other persons caused by the administrator or the relevant persons in the performance of their duties; and
　　6. The debt that is generated from the damages to other persons caused by the property of the debtor.
　　

　　Article 43 Expenses for bankruptcy and debts of common benefit shall be paid off at any time with the debtor's property.
　　Where the debtor's property is insufficient to pay off all the expenses for bankruptcy and debts of common benefit, the expenses for bankruptcy shall be the first to be paid off.
　　Where the debtor's property is insufficient to pay off all the expenses for bankruptcy or the debts of common benefit, the expenses and debts shall be paid off in proportion.
　　Where the debtor's property is insufficient to pay off the expenses for bankruptcy, the administrator shall apply to the People's Court for terminating the bankruptcy proceedings. The People's Court shall make a ruling on terminating the bankruptcy proceedings within 15 days after receiving such application of the administrator and make a public announcement.
　　

　　Chapter VI Declaration of Credits

　　Article 44 The creditor who enjoys the credit against the debtor at the acceptance by the People's Court to the application for bankruptcy shall exercise the rights thereof according to this Law.
　　

　　Article 45 The People's Court shall confirm the time limits of the creditors to declare credits after accepting the application for bankruptcy. The time limits of declaring the credit shall not be less than 30 days at least and not exceed 3 months as of the date of the issuance of the public announcement on the application for bankruptcy by the People's Court.
　　

　　Article 46 The undue credit shall be deemed as due when the application for bankruptcy is accepted.
　　Interests shall cease to be counted into a credit with interests from the date of the acceptance of the application for bankruptcy.
　　

　　Article 47 A conditional credit or a credit with time limit, or a debt with pending litigation or arbitration may be declared by the creditors.
　　

　　Article 48 The creditors shall declare their credits to the administrator within the time limits of declaring credits regulated by the People's Court.
　　The salaries and medical and disability subsidies and pension expenses due to employees by the debtor, the basic pension insurance and basic medical insurance expenses due to the individual accounts of employees, and compensations that shall be paid to the employees as prescribed by laws and administrative laws and regulations are not required to be declared, which shall be listed and posted to the public by the administrator after investigation. In case of objection to the records on the list, the employees may require the administrator to make corrections, and if no corrections have been made by the administrator, the employees may initiate lawsuits with the People's Court.
　　

　　Article 49 The creditors shall explain in written the amount of the credit and whether there are property collateral or not and submit relevant evidence when declaring the credits. Where the credit for declaration is a joint credit, explanations thereof shall be provided.
　　

　　Article 50 Joint creditors may declare credits by one representative creditor declaring credits for all joint creditors or jointly declare credits.
　　

　　Article 51 The guarantors of a debtor or other joint debtors who have paid off the debts on behalf of the debtor shall declare credits with the current recourse right that they enjoy against the debtor.
　　The guarantors of a debtor or other joint debtors who have not paid off the debts on behalf of the debtor shall declare credits with the future recourse right that they enjoy against the debtor, except that the creditor has declared all the credits with the administrator.
　　

　　Article 52 Where the procedures prescribed in this Law have applied to the joint debtors simultaneously or successively as ruled, their creditors are entitled to declare credits in separate bankruptcy cases for all the credits respectively.
　　

　　Article 53 Where the administrator or the debtor has discharged a contract as prescribed by this law, the counterpart concerned is entitled to declare credits with the claims of liquidated damages from the discharge of the contract.
　　

　　Article 54 Where the debtor is the principal of the commissioned contract who has been ruled to apply the procedures set forth in this Law and the authorized person continues handling the commissioned affaires without knowing such fact, the authorized person is entitled to declare credits with the claims therefrom.
　　

　　Article 55 Where the debtor is the issuer of a commercial bill who has been ruled to apply the procedures set forth in this Law and the payer of such bill continue the payment or acceptance of such bill, the payer is entitled to declare credits with the claims therefrom.
　　

　　Article 56 Where the creditor does not declare his credit within the time limit of declaring credits regulated by the People's Court, he may complementarily declare his credit before the final distribution of the bankrupt property. But no complementary distribution shall be made if the property has been distributed before. The creditor of complementary declaration shall pay the costs for examining and confirming the complementary declaration.
　　Where the creditor has not declared his credit as prescribed by this Law, he shall not exercise his right in accordance with the procedures stipulated in this Law.
　　

　　Article 57 After receiving the materials for declaring credits, the administrator shall register such materials, examine whether or not the declaration of credit is real or valid and make a Credit Form.
　　The Credit Form and materials for declaring credits shall be kept by the administrator, which is available for inspection by interested parties.
　　

　　Article 58 The Credit Form made in accordance with the provisions in Article 57 of this Law shall be submitted to the first creditor's meeting for check and review.
　　Where the debtors and creditors have no objection against the credits contained in the Credit Form, the People's Court shall rule to confirm the credits.
　　Where the debtors and creditors have no objection against the credit contained in the Credit Form, lawsuits may be instituted with the People's Court that has accepted the application for bankruptcy.
　　

　　Chapter VII Creditors' Meeting

　　Section 1 General Provisions

　　Article 59 All the creditors who have declared credits according to law are members of the creditors' meeting. Members of the creditors' meeting are entitled to attend the creditors' meeting and enjoy the rights to vote.
　　The creditors whose credits have not been confirmed shall not exercise the rights to vote unless the People's Court confirms temporarily the amount of the credits in order that the creditors can attend the creditors' meeting.
　　The creditors with secured rights against the specific property of the debtor who have not abandoned their priority rights for repayment do not have the rights to vote on the resolutions prescribed in Item 7 and Item 10, Paragraph 1 of Article 61.
　　The creditors may consign their deputies to attend the creditors' meeting and exercise the rights to vote. The attending deputies shall submit the creditor's power of attorney to the People's Court or to Chairman of the creditors' meeting.
　　There shall be employees and representatives of the Trade Union of the debtor who are entitled to attend the creditors' meeting, and provide opinions on the relevant matters.
　　

　　Article 60 The creditors' meeting sets up one chairman, who will be designated by the People's Court from among the creditors with the rights to vote.
　　Chairman of the creditors' meeting shall preside over the creditors' meeting.
　　

　　Article 61 The creditors' meeting shall perform the following functions and powers:
　　1. Investigating into the credits;
　　2. Applying for replacement of the administrator by the People's Court and reviewing the expenses and remunerations of the administrator;
　　3. Supervising the administrator;
　　4. Selecting and replacing members of the creditors' committee;
　　5. Eeciding to continue or terminate the debtor's business;
　　6. Passing the reorganization plan;
　　7. Passing the composition agreement;
　　8. Passing the plan on how to manage the debtor's property;
　　9. Passing the plan on how to appraise the bankrupt property;
　　10. Passing the plan on how to distribute the bankrupt property; and
　　11. other functions and powers that the People's Court deems necessary to be exercised by the creditors' meeting.
　　The resolutions on the matters discussed by the creditors' meeting shall be kept in the minutes of the meeting.
　　

　　Article 62 The first creditors' meeting shall be convened by the People's Court, and shall be held within 15 days after the expiration of the period for declaring credits.
　　Subsequent creditors' meeting are convened at such times as the People's Court deems necessary, and may also be convened upon the proposal by the administrator, the creditors' committee, the creditors whose credits are confirmed to comprise more than one-fourth of the total amount of claims to Chairman of the creditors' meeting.
　　

　　Article 63 The administrator shall notify the known creditors 15 days in advance of the holding of the creditors' meeting.
　　

　　Article 64 Resolutions at the creditors' meeting shall be adopted by more than half of the creditors with the right to vote present at the meeting; and the amount of their credits must comprise more than half of the total amount of credits that are not secured with property unless otherwise provided for by this Law.
　　Where the resolutions at the creditors' meeting are considered to violate the provisions of law or impair some creditors' interests, the administrator or impaired creditors may, within 15 days after the creditors' meeting has made such resolutions, apply to the People's Court for withdrawing the resolutions and ordering the creditors' meeting to make new resolutions.
　　Resolutions at the creditors' meeting shall be binding on all the creditors.
　　

　　Article 65 Where the creditors' meeting fails to pass a resolution on the matters listed in Item 8 and Item 9, Paragraph 1 of Article 61 of this Law by voting, the People's Court shall make a ruling thereon.
　　Where the creditors' meeting fails to pass a resolution on the matters listed in Item 10, Paragraph 1 of Article 61 of this Law by a second voting, the People's Court shall make a ruling thereon.
　　The People's Court shall announce the ruling prescribed in the preceding two paragraphs at the creditors' meeting or give a notice to the creditors separately.
　　

　　Article 66 Where the creditor refuses to accept the ruling made by the People's Court according to Article 651. of this Law, or the creditor with the amount of their credits more than half of the total amount of credits that are not secured with property refuses to accept the ruling made by the People's Court according to Article 652. of this Law, he may apply for reconsideration to the same People's Court within 15 days of the date of the announcement of such ruling or the receipt of the notice thereof. During the reconsideration period, the ruling shall be performed normally.
　　

　　Section 2 Creditors' Committee

　　Article 67 The creditors' meeting may decide to establish the creditors' committee, and the Creditors' Committee consists of the creditor representatives and an employee representative of the debtor or a representative of its Trade Union appointed by the creditors' meting. The number of the members of the Creditors' Committee shall not be more than nine.
　　The members of the Creditors' Committee are subject to the confirmation by the People's Court in a written decision.
　　

　　Article 68 The Creditors' Committee shall perform the following duties and powers:
　　1. Supervising the management and handling of the debtor's property;
　　2. Supervising the distribution of the bankrupt property;
　　3. Proposing the convening the creditors' meeting; and
　　4. Other functions authorized by the creditors' meeting.
　　When performing duties and powers, the Creditors' Committee shall be entitled to request the administrator and the relevant personnel of the debtor to make explanations or to supply relevant documents within the scope of their duties and powers.
　　Where the administrator or the relevant personnel of the debtor violates the provisions of this Law and refuse to accept supervision, the Creditors' Committee shall be entitled to request the People's Court to make a ruling on the supervision. The People's Court shall make a ruling within 5 days upon the Creditors' Committee's request.
　　

　　Article 69 The administrator shall report the following of its activities to the Creditors' Committee in time:
　　1. Transferring the ownership of real estate such as land and housing;
　　2. Transferring such property rights as mining rights, tenure and intellectual property rights;
　　3. Transferring all the stock or business operation;
　　4. Setting a loan;
　　5. Establishing a property collateral;
　　6. Transferring the credits and marketable securities;
　　7. Performing the contract the performance of which has not been completed by the creditor and the counterparts;
　　8. Giving up rights;
　　9. Withdrawing the guaranty; and
　　10. Other disposal of the property that are of material impact on the interests of the creditors.
　　Where no Creditors' Committee has been set up, the administrator shall implement the above-mentioned acts and promptly report the same to the People's Court.
　　

　　Chapter VIII Reorganization

　　Section 1 Application for and Period of Reorganization

　　Article 70 The debtor or the creditors may file an application for reorganization of the debtor directly with the People's Court.
　　In case the creditors apply for bankruptcy liquidation of the creditor and after the People's Court accepts the application for bankruptcy but before the debtor is declared into bankruptcy, the debtor, or the investors who holds more than one-tenth of the debtor's registered capital, may apply for reorganization with the People's Court.
　　

　　Article 71 Where examination reveals that the application for reorganization satisfies the provisions of this Law, the People's Court shall rule to permit the debtor to go through reorganization and make a public announcement to such end.
　　

　　Article 72 The period from the date when the People's Court makes the ruling for the debtor to reorganize to the date when the People's Court rules to terminate the reorganization procedure is the period of reorganization.
　　

　　Article 73 During the period of reorganization, with approval by the people' court at the request by the debtor, the debtor may manage its property and operation affairs under the supervision of the administrator.
　　In the situation above, the administrator who has taken over the property and management affairs of the debtor according to the provision of this Law shall transfer such property and operation affairs to the debtor and the functions of the administrators prescribed by this Law shall be exercised by the debtor.
　　

　　Article 74 The administrator in charge of the management of property and operation affairs may engage the operation and management personnel in the undertaking of the operation affairs.
　　

　　Article 75 During the period of reorganization, the collateral rights against the specific property of the debtor shall be suspended. However, where the possibility that the collateral objects may be damaged or the value of the collateral objects may be decreased dramatically is such that they will hurt the rights of the guarantor, the guarantor shall be entitled to ask for resumption of exercising the collateral rights.
　　During the period of reorganization, where the debtor or the administrator raises a loan in order to go on with business operation, a guaranty may be established for such loan.
　　

　　Article 76 Where the right holder whose property is occupied by the debtor on legitimate grounds requests to take back the property during the period of reorganization, agreed requirements shall be met.
　　

　　Article 77 During the period of reorganization, the debtor's investor shall not ask for the distribution of the return to investment.
　　During the period of reorganization, the directors, supervisors or officers of the debtor shall not transfer their equities in the debtor to a third party, unless otherwise consented by the People's Court.
　　

　　Article 78 During the period of reorganization, upon the request of the administrator or the interested parties, the People's Court may rule to terminate the reorganization procedure and declare the debtor bankrupt in any of the following circumstances:
　　1. If the management and financial position of the debtor continue to be deteriorating and there is a lack of possibility to rescue it;
　　2. If the debtor acts with fraud, decreasing the property of the debtor in bad faith, or other behaviors that apparently are disadvantageous to the creditors; or
　　3. If the behaviors of the debtor make the administrator unable to perform its functions.
　　

　　Section 2 Preparation and Approval of Reorganization Plan

　　Article 79 The debtor or the administrator shall within six months of the date of the ruling by the People's Court on the reorganization of the debtor submit the draft reorganization plan to the People's Court and the creditors' meeting at the same time.
　　At the request by the debtor or the administrator with justified reasons upon the expiration of the term above, the People's Court may rule on extension of such term for another three months.
　　In case the debtor or the administrator fails to submit the draft reorganization plan, the People's Court shall rule to terminate the reorganization procedure ex officio and declare the debtor bankrupt.
　　

　　Article 80 The debtor shall prepare the draft reorganization plan when the debtor manages the property and operation business.
　　The administrator shall prepare the draft reorganization plan when the administrator manages the property and operation business.
　　

　　Article 81 The draft reorganization plan shall contain the following contents:
　　1. The operation and management scheme of the debtor;
　　2. The classification of the credits;
　　3. The adjustment scheme of the credits;
　　4. The repayment scheme of the credits;
　　5. The period for execution of the reorganization plan;
　　6. The period for supervision of the reorganization plan; and
　　7. Other schemes that are conducive to the reorganization of the debtor.
　　

　　Article 82 The creditors of the following categories of credits shall participate in the creditors' meeting for discussion of the draft reorganization plan and shall be divided into groups for voting on the draft reorganization plan by the following categories of debts:
　　1. The credits with secured rights against the specific property of the debtor;
　　2. The salaries and medical and disability subsidies and pension expenses due to employees by the debtor, the basic pension insurance and basic medical insurance expenses due to the individual accounts of employees, and compensations that shall be paid to the employees as prescribed by laws and administrative laws and regulations;
　　3. The tax due from the debtor; and
　　4. The ordinary credits.
　　The People's Court may, if necessary, decide to set up a small credit group in the ordinary credit group for voting on the draft organization plan.
　　

　　Article 83 The reorganization plan may not provide for the reduction or exemption of the social security expenses owed by the debtor other than those specified by Item 2, Paragraph 1 of Article 82 of this Law, the creditors of which shall not participate in the voting on the draft organization plan.
　　

　　Article 84 Within 30 days after receiving the draft plan of reorganization, the People's Court shall convene the creditors' meeting to vote on the draft reorganization plan.
　　Where over half of the creditors of the same voting group attending the meeting give consent to the draft reorganization plan with the amount of credits represented over two-thirds of the total amount of the credits of the same group, the draft reorganization plan shall be deemed as being passed by this group.
　　The debtor or the administrator shall make explanations about the draft reorganization plan to the creditors' meeting and answer inquiries.
　　

　　Article 85 The representatives of the investors of the debtor may attend as non-voting delegates the creditors' meeting that discusses the draft reorganization plan.
　　Where the draft reorganization plan involves the adjustments of the interests and benefits of the investors, an investor group shall be set up for voting on such matters.
　　

　　Article 86 Where the groups all pass the draft reorganization plan, the plan shall be deemed as being adopted.
　　Within 10 days of the date of the passing of the reorganization plan, the debtor or the administrator shall file an application to the People's Court for approval. If finding that the plan has met the provisions of this Law after examination and review, the People's Court shall rule to approval such plan within 30 days of the date of the receipt of the application and then, the reorganization procedures shall be terminated and a public announcement thereof shall be made.
　　

　　Article 87 Where part of the voting groups have not passed the draft reorganization plan, the debtor or the administrator may negotiate with the voting groups that have not passed the draft reorganization plan. Such voting groups may vote again after negotiation. The compromise reached by both parties through negotiation shall not impair the interests of other voting groups.
　　Where the voting groups that have not passed the draft reorganization plan have refused to vote again or the draft reorganization plan has not yet been passed by the second voting, the debtor or the administrator may apply to the People's Court for approval of the draft reorganization plan under the following conditions:
　　1. If based on the draft reorganization plan, the credits secured with the specific property listed in Item 1, Paragraph 1 of Article 82 of this Law are fully paid off, the losses incurred by delayed repayment are fairly compensated and the collateral rights does not suffer substantial damages or the draft reorganization plan has been adopted by the voting group with secured credits;
　　2. If based on the draft reorganization plan, the credits listed Items 2 and 3, Paragraph 1 of Article 82 of this Law are fully paid off, or the draft reorganization plan has been adopted by the corresponding voting group;
　　3. If based on the draft reorganization plan, the repayment proportion of the ordinary credits is no lower than the repayment proportion of the credits according to the bankruptcy liquidation procedure at the time when the reorganization plan is submitted for approval, or the draft reorganization plan has been adopted by the voting group;
　　4. If the draft reorganization plan has provided fair and equal adjustment on the interests and benefits of the investors or the draft reorganization plan has been adopted by the investor group;
　　5. If the draft reorganization plan has treated the members of the same voting group equal and the repayment order prescribed in the draft reorganization plan does not violate the provisions in Article 113 of this Law; and
　　6. If the operation and management scheme of the debtor is feasible.
　　Within 30 days upon receipt of the application, the People's Court shall rule on the approval of the draft organization plan after examining the draft reorganization plan that meets the aforesaid provisions, and terminate the reorganization procedures and make a public announcement.
　　

　　Article 88 Where the draft reorganization plan has not been passed, and not approved according to the provision of Article 87, or where the draft reorganization plan that has been passed has not been approved, the People's Court shall rule to terminate the reorganization procedures and declare the debtor bankrupt.
　　

　　Section 3 Execution of Reorganization Plan

　　Article 89 The debtor shall be in charge of execution of the reorganization plan.
　　After the People's Court has ruled to approve the reorganization plan, the administrator that has taken over the property and operation affaires shall transfer to the debtor the property and management affairs.
　　

　　Article 90 From the date of the approval by the People's Court of the reorganization plan and during the supervision term specified by the reorganization plan, the administrator shall supervise the execution of the reorganization plan.
　　During the supervision term, the debtor shall report to the administrator the execution of the reorganization plan and the financial position of the debtor.
　　

　　Article 91 At the expiration of the supervision term, the administrator shall submit the supervision report to the People's Court, and from the date of the submission of the supervision report, the supervision functions of the administrator terminates.
　　The interested parties of the reorganization plan are entitled to inspect and read the supervision report submitted by the administrator to the People's Court.
　　At the application by the administrator, the People's Court may rule to extend the supervision term of the execution of the reorganization plan.
　　

　　Article 92 The reorganization plan approved by the People's Court shall have binding force over the debtor and all the creditors.
　　The reorganized credits that have not been declared by the creditors according to the provisions of this Law shall not be claimed during the execution period of the reorganization plan and may be claimed according to the repayment conditions prescribed as the same kind of credits in the reorganization plan after the completion of the execution of the reorganization plan.
　　The rights of the creditors against the guarantor of the debtor or other joint debtors shall not be affected by the reorganization plan.

　　Article 93 Where the debtor is unable to carry out or fails to carry out the reorganization plan, the People's Court shall rule to terminate the execution of the reorganization plan at the request of the administrator or the interested parties and declare the debtor bankrupt.
　　Where the People's Court rules to terminate the execution of the reorganization plan, the commitment to credit adjustment made by the creditors in the reorganization plan will lose its validity, the payment obtained by the creditor owing to the execution of the reorganization plan is still in force and the unpaid part of the reorganized credit shall be deemed as the bankrupt credits.
　　The creditors prescribed in the preceding paragraph shall continue to receive distribution only if the other creditors of the same order are paid to the same proportion.
　　Under the circumstances prescribed in Paragraph 1 of this Article, the guaranty provided for the execution of the reorganization plan shall continue to be in force.
　　

　　Article 94 As to the reorganized debts that are deducted or exempted according to the reorganization plan, the debtor shall be exempted from his repayment liability of this part from the date of the completion of the execution of the reorganization plan.
　　

　　Chapter IX Composition

　　Article 95 The debtor may, according to the provisions of this Law, apply for a composition to the People's Court directly or after the acceptance by the People's Court of the application for bankruptcy and before the declaration of the bankruptcy of the debtor.
　　In applying for a composition, the debtor shall put forth a draft composition agreement.
　　

　　Article 96 When finding that the composition agreement meet the provisions of this Law through examination and review, the People's Court shall rule to confirm the composition, make a public announcement and convene the creditor's meeting for discussion on the draft composition agreement.
　　The right owners with rights secured against the specific property of the debtor may exercise its rights from the date on which the People's Court rules to confirm the composition.
　　

　　Article 97 The resolution of the composition agreement concluded at the creditors' meeting shall be adopted by over half of the creditors with voting rights present at the creditors' meeting and the amount of their credits must take up more than two-thirds of the total amount of unsecured credits.
　　

　　Article 98 Where the resolution on the composition agreement has been concluded at the creditors' meeting, the People's Court shall decide to terminate the composition procedures and make a public announcement. Thereafter, the administrator shall transfer the property and the management affairs to the debtor, and also submit a report concerning his performance of duties to the People's Court.
　　

　　Article 99 Where the draft composition agreement is not passed at the creditors' meeting, or the draft composition agreement passed at the creditors' meeting has not passed the recognition of the People's Court, the People's Court shall decide to terminate the composition procedures and declare the debtor bankrupt.
　　

　　Article 100 The composition agreement confirmed by rule of the People's Court shall have binding force over the debtor and all the composition creditors.
　　The composition creditors herein are the persons who have the credits unsecured against the debtor at the acceptance by the People's Court accepts of the application for bankruptcy.
　　The composition creditors who have not properly declared their credits in accordance with the provisions of this Law shall not exercise their rights during the performance of the composition agreement, who may exercise their rights according to the repayment conditions prescribed in the composition agreement after the completion of the performance of the composition agreement.
　　

　　Article 101 The rights of the composition creditors against the guarantor of the debtor or other joint debtors shall not be affected by the establishment of the composition agreement.
　　

　　Article 102 The debtor shall pay off his debts according to the conditions prescribed in the composition agreement.
　　

　　Article 103 The composition agreement shall be invalidated on the grounds of the debtor's fraud or other unlawful activities as ruled by the People's Court and the People's Court shall declare the debtor bankrupt in such case.
　　In the circumstances prescribed in the preceding paragraph, the repayment that the creditors get based on the composition agreement shall not be returned within the scope of equal proportion.
　　

　　Article 104 Where the debtor refuses or is unable to pay off his debts according to the conditions prescribed in the composition agreement, the composition creditors may request the People's Court to terminate the execution of the composition agreement and declare the debtor bankrupt.
　　Where the People's Court decides to terminate the execution of the composition agreement, the commitments to credit adjustment by the composition creditors in the composition agreement will lose its validity. The repayment to the composition creditors for the execution of the composition agreement shall still be in force. The unpaid composition credits shall be deemed as the bankrupted credits.
　　The creditors prescribed in the preceding paragraph may continue to receive distribution only when the distribution of bankrupt property of other creditors reaches the same proportion as theirs.
　　In the circumstances prescribed in Paragraph 1 of this Article, the guarantee that a third party provides for the execution of the composition agreement shall keep effective.
　　

　　Article 105 After the People's Court accepts the application for bankruptcy, in case of conclusion of an agreement concerning the disposal of the credits and debts with all the creditors, the debtor may request the People's Court to decide on recognition of the agreement and at the same time decide to terminate the bankruptcy proceedings.
　　

　　Article 106 As to the reorganized debts that are deducted and exempted according to the composition agreement, the debtor shall be exempted from his repayment liability of this part from the date of the completion of the execution of the composition agreement.
　　

　　Chapter X Bankrupt Liquidation

　　Section 1 Declaration of Bankruptcy

　　Article 107 Where the People's Court declares the debtor bankrupt in accordance with this Law, it shall make a ruling in written and shall deliver it to the debtor and the administrator within 5 days after making the ruling. After making the ruling of declaring the debtor bankrupt, the People's Court shall notify the creditors who have definite addresses of the ruling within 10 days after the ruling and make a public announcement.
　　The debtor shall be called "the bankrupt person" after being declared bankrupt, and the credits against the debtor at the acceptance by the People's Court of the application for bankruptcy shall be called "bankrupt credits".
　　

　　Article 108 The People's Court shall decide to terminate the bankruptcy proceedings and make a public announcement before the declaration of bankruptcy in any of the following cases:
　　1. If a third party provides full guarantee for the debtor or assists the debtor to pay off all the debts due; or
　　2. If the debtor has paid off all its debts due.
　　

　　Article 109 The right owners with secured rights against the specific property of the bankrupt person have the preemptive rights for repayment with such specific property.
　　

　　Article 110 When the creditors with the secured rights specified in Article 109 of this Law have not been fully paid in exercising such preemptive rights for repayment, their unpaid credits shall be taken as ordinary credits and the credits with preemptive rights for repayment discarded shall also be taken as ordinary credits.

　　Section 2 Appraisal and Distribution

　　Article 111 The administrator shall be responsible for drafting up promptly the appraisal plan of bankruptcy property and submit the same to the creditors' meeting for discussion.
　　The administrator shall appraise and sell the bankruptcy property in due time according to the appraisal plan of bankruptcy property passed by the creditors' meeting or decided by the People's Court according to the provision of Paragraph 1 of Article 65 of this Law.
　　

　　Article 112 Bankruptcy property shall be appraised and sold off through auction unless otherwise provided by resolutions of the creditors' meeting.
　　The bankrupt enterprise may be sold either as a whole or in parts and the intangible assets and other assets of the bankrupt enterprise may be sold separately.
　　Bankrupt property that is not allowed to be sold by auction or the transfer of which is restricted as provided by state laws or regulations shall be disposed of as per the relevant state provisions.
　　

　　Article 113 After the prior deduction of bankruptcy expenses and debts of common benefits from the bankruptcy property, repayment shall be made in the following order:
　　1. Salaries and medical and disability subsidies and pension expenses due to employees by the bankrupt person, the basic pension insurance and basic medical insurance expenses due to the individual accounts of employees, and compensations that shall be paid to the employees as prescribed by laws and administrative laws and regulations;
　　2. Social security expenses owed by the bankrupt person other than those specified by the preceding paragraph and taxes owed by the bankrupt person; and
　　3. Ordinary bankruptcy credits.
　　Where the bankruptcy property is insufficient to meet all repayment needs within a single order of priority, it shall be distributed on a pro-rata basis.
　　The salaries of the directors, supervisors and officers of the bankrupt enterprise shall be calculated as per the average salaries for the employees of the enterprise.
　　

　　Article 114 Distribution of bankruptcy property shall be conducted in the form of money unless otherwise provided by the creditors' meeting.
　　

　　Article 115 The administrator shall draft in due time the distribution plan of bankruptcy property and submit it to the creditors' meeting for discussion.
　　The above-mentioned distribution plan of bankruptcy property shall include the following items:
　　1. Name and domicile of creditors participating in the distribution;
　　2. Total sum of claims entitled to creditors qualified for the distribution;
　　3. Total sum of bankrupt property available for distribution;
　　4. The order, proportion and amount of the distribution of the bankrupt property; and
　　5. The ways of distribution.
　　Upon passing of the resolution on the distribution plan made at the creditors' meeting, the administrator shall submit the plan to the People's Court for confirmation.
　　

　　Article 116 The administrator shall be responsible to carry out the plan on distribution of bankruptcy property upon its confirmation by the People's Court.
　　The administrator that arrange distributions for many times as per the distribution plan shall announce the total amount of property and that of creditors' right of each current distribution. In the case of final distribution, the administrator shall also make announcement as appropriate, which shall incorporate all the items listed in Paragraph 2, Article 117 of this Law.
　　

　　Article 117 The administrator shall separately set aside the amount of distribution for the credit claims with effectiveness or discharging conditions attached.
　　The portion of property set aside by the administrator for conditional claims set forth above shall be distributed, provided that the effectiveness conditions are not met or the discharging conditions are met upon the announcement of final distribution, to the other creditors; otherwise, should the effectiveness conditions are met or the discharging conditions are not met upon the announcement of final distribution, the portion set aside shall be distributed to the creditor involved.
　　

　　Article 118 The portion of distributed property unaccepted by creditors shall be set aside separately by the administrator and sixty days following the announcement of final distribution, the distributed property unaccepted by the creditor shall be deemed as abandonment of claims. The administrator or the People's Court shall distribute the unaccepted property to other creditors.
　　

　　Article 119 With respect to pending claims in course of litigation or arbitration at the distribution, the administrator shall set aside due proportion of property. With respect to the claims that cannot be distributed two years following the conclusion of bankruptcy proceedings, the due proportion set aside shall be distributed to other creditors.
　　

　　Section 3 Termination of Bankruptcy Proceedings

　　Article 120 If the bankrupt person has no property to distribute, the administrator may apply to the People's Court for conclusion of the bankruptcy proceedings.
　　Following the final distribution of the bankruptcy property, the administrator shall, without delay, submit to the People's Court a distribution report and apply for the conclusion of the bankruptcy proceedings.
　　The People's Court shall, within 15 days of the request by the administrator for the conclusion of the bankruptcy proceedings make its ruling on whether to conclude the bankruptcy proceedings or not. If the bankruptcy proceedings are to be concluded, a public announcement shall be made.
　　

　　Article 121 The administrator shall, within 10 days upon the conclusion of the bankruptcy proceedings, handle the procedures for the revocation of registration of the bankrupt person at the original registration authority by producing the ruling of the People's Court on the conclusion of the bankruptcy proceedings.
　　

　　Article 122 The administrator shall terminate its performance of functions from day after the date of the completion of the revocation of the registration unless there is litigation or arbitration pending.
　　

　　Article 123 Within two years of the date of the termination of the bankruptcy proceedings as specified by the provisions in Paragraph 4 of Article 143 or Article 120 of this Law, the creditors are entitled to apply to the People's Court for additional distribution according to the distribution plan in any of the following circumstances:
　　1. Under the conditions provided in Article 31, Article 32, Article 33 and Article 34 of this Law where the bankruptcy property shall be recovered; or
　　2. The bankrupt person is discovered to be in possession of other property that should be distributed.
　　In the circumstances as provided in the above-mentioned Articles where the property discovered is insufficient to cover the distribution expenses, no additional distribution will be made, and the property discovered shall be turned over to the state treasury.
　　

　　Article 124 Upon conclusion of the bankruptcy proceedings, the guarantor and other joint debtors of the bankrupt person shall continue to be responsible for repayment of any bankruptcy claims of the creditors that have not been satisfied during the bankruptcy proceedings.
　　

　　Chapter XI Legal Liability

　　Article 125 The directors, supervisors or officers of the bankrupt enterprise that have violated the duties of loyalty and due diligence and led to the bankruptcy of the enterprise shall bear the relevant civil liability.
　　The person involved in the above-mentioned circumstances shall not act as the director, supervisor or officer of any enterprise within three years of the date of the conclusion of the bankruptcy proceedings.

　　Article 126 The relevant personnel of the debtor, who are obliged to be present at the creditors' meeting but absent from the meeting without justified reasons after being serviced with a summon by the People's Court, shall be constrained to appear with a peremptory writ by the People's Court and shall be subject to a fine legally. The relevant personnel of the debtor who, in violation of the provisions of this Law, refused to provide statement or answers or made false statement or answers shall be imposed with a fine by the People's Court.

　　Article 127 Where the debtor, in violation of the provisions of this Law, refuses to submit the statements of his financial position, the detailed list of debts, the detailed list of credits, the related financial and accounting reports, and the payment of the salaries of the employees and the payment of the social security expenses to the People's Court, or submit false ones, the People's Court may impose a fine upon the person directly responsible for such cases.
　　Where the debtor, in violation of the provisions of this Law, refuses to transfer the property or the accounting books, documents, material, data, or seals related to the property to the administrator, or the debtor counterfeits or destroys any evidence materials related to the property, resulting in the ambiguity of the financial position, the People's Court may impose a fine upon the person directly responsible for such cases.

　　Article 128 Where the debtor acts as prescribed in the provisions of Article 31, Article 32 and Article 33 of this Law, causing damages to the interests of the creditors, the legal representative and other persons directly responsible shall undertake the liability for damages legally.
　　

　　Article 129 Where the relevant personnel of the debtor has, in violation of the provisions of this Law, left their domicile without authorization, the People's Court may admonish or detain him, and may also impose a fine.

　　Article 130 Where the administrator fails to loyally execute its functions in due diligence according to the provisions of this Law, the People's Court may impose a fine legally; and if losses occurred to the creditors, the debtor or a third party, liquidated damages shall be undertaken legally.
　　

　　Article 131 Where the violation of the provisions of this Law constitutes a crime, the person concerned shall be prosecuted for his criminal liability according to law.

　　Chapter XII Supplementary Provisions

　　Article 132 After the implementation of this Law, the part of the salaries and medical and disability subsidies and pension expenses due to employees from the bankrupt person, the basic pension insurance and basic medical insurance expenses due to the individual accounts of employees, and compensations that shall be paid to the employees as prescribed by laws and administrative laws and regulations before the date of the promulgation of this Law that has not been paid off after the payment specified by the provisions of Article 113 of this Law shall be paid from the specific property specified in Article 109 of this Law prior to the right owners with secured rights against such specific property.
　　

　　Article 133 The special matters relating to the implementation of bankruptcy of the state-owned enterprises within term and scope specified by the State Council shall be handled according to the relevant provisions of the State Council.
　　

　　Article 134 If any commercial bank, securities firm, insurance company or other financial institutions falls under any of the circumstances set forth in Article 2 of this Law, the financial regulatory authority of the State Council apply for reorganization or bankruptcy liquidation of such financial institution with the People's Court. When adopting such measures as takeover and custody with the financial institutions that have incurred material operational risks, the financial regulatory authority of the State Council may apply to the People's Court for suspending the civil proceedings or execution proceedings where such financial institutions are the plaintiff or the parties against which execution is performed.
　　Where the financial institutions implement bankruptcy, the State Council may formulate implementing measures according to the provisions of this Law and other relevant laws.

　　Article 135 The liquidation of other organization than enterprise legal persons as specified by other laws that belongs to bankruptcy liquidation shall mutatis mutandis be subject to the proceedings provided for by this Law.
　　

　　Article 136 This Law shall enter into force as of June 1, 2007 and the Law of the People's Republic of China on Enterprise Bankruptcy for Trial Implementation shall be repealed the same day.