Circular of the Supreme People's Court on Issuing the Guiding Opinions on Several Issues concerning the Transfer of Enforcement Cases for Bankruptcy Review

　　Fa Fa [2017] No.2

　　January 20, 2017

　　The higher people's courts of all provinces, autonomous regions and municipalities directly under the Central Government, the Military Court of the People's Liberation Army, and the Production and Construction Corps Branch of the Higher People's Court of the Xinjiang Uygur Autonomous Region,

　　The Guiding Opinions of the Supreme People's Court on Several Issues concerning the Transfer of Enforcement Cases for Bankruptcy Review are hereby issued to you for your earnest compliance and implementation.

　　Guiding Opinions of the Supreme People's Court on Several Issues concerning the Transfer of Enforcement Cases for Bankruptcy Review

　　Promoting the transfer of enforcement cases for bankruptcy review is beneficial to improving the remedy and exit mechanism for market players, optimizing the judicial working mechanism and resolving the backlog of enforcement cases. As an important initiative of people's courts for implementing the Central Government's arrangements for the supply-side structural reform, it is and will be an important task of the people's courts in serving the overall economic and social development for the current and the coming period. In order to promote and regulate the transfer of enforcement cases for bankruptcy review, ensure the orderly coordination between the enforcement and bankruptcy procedures, and in accordance with the Enterprise Bankruptcy Law of the People's Republic of China, the Civil Procedure Law of the People's Republic of China, the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China and other provisions, the opinions regarding several issues concerning the transfer of enforcement cases for bankruptcy review are set forth below.

　　I. Principles, Conditions and Jurisdiction regarding the Transfer of Enforcement Cases for Bankruptcy Review
　　1. Where the transfer of an enforcement case for bankruptcy review involves the change of and coordination between the enforcement and bankruptcy procedures, different courts as well as the enforcement, case filing and bankruptcy trial departments within the same court shall adhere to the working principles of compliance with the law and order, coordination and cooperation, efficiency and convenience, so as to prevent buck-passing, affecting the judicial efficiency and damaging the legitimate rights and interests of the parties concerned.
　　2. Any enforcement case transferred for bankruptcy review shall satisfy all the following conditions:
　　(1) the party subject to the enforcement is an enterprise legal person;
　　(2) the party subject to the enforcement or the party applying for the enforcement in any enforcement case involving the party subject to the enforcement gives a written consent as to the transfer the enforcement case for bankruptcy review; and
　　(3) the party subject to the enforcement is unable to pay off due debts, and its assets are insufficient to settle all debts or it is insolvent obviously.
　　3. An enforcement case transferred for bankruptcy review shall be under the jurisdiction of the people's court in the place where the party subject to the enforcement has its domicile. In terms of jurisdiction by level, a jurisdiction system under which the jurisdiction shall be conducted by an intermediate people's court in principle and by a grassroots people's court as an exception shall apply to meet requirements for specialized development of bankruptcy trial and reasonably assign trial tasks. An intermediate people's court may, upon the approval of the relevant higher people's court, assign the relevant case to a qualified grassroots people's court for trial.

　　II. Consultation and Decision-making Procedures of Enforcement Courts
　　4. Enforcement courts shall, in the enforcement procedures, strengthen the notification and consultation regarding the matters in connection with the transfer of enforcement cases for bankruptcy review. Where, upon adoption of any property investigation measure, an enforcement court finds that the enterprise legal person as the party subject to the enforcement satisfies the provisions of Article 2 of the Bankruptcy Law, such court shall timely inquire whether the party applying for the enforcement and the party subject to the enforcement agree to transfer the case for bankruptcy review. Where both the party applying for the enforcement and the party subject to the enforcement disagree with the transfer and no petition for bankruptcy is filed, the enforcement court shall handle the case in accordance with Article 516 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China; where any other creditor of the enterprise legal person that has obtained the basis for enforcement requests for participation in the distribution, the people's court shall not grant any support.
　　5. Enforcement departments shall strictly comply with the internal decision-making procedures for the transfer of enforcement cases for bankruptcy review. Where the person handling an enforcement case holds that the case meets the conditions for the transfer for bankruptcy review, he/she shall submit a review opinion, and upon the approval of the collegiate bench, a decision on transfer shall be signed by the president of the relevant enforcement court.
　　6. In order to reduce the arbitrariness regarding the transfer between courts in different regions, a grassroots people's court intending to transfer an enforcement case to an intermediate people's court in another region for bankruptcy review shall, before making a decision on transfer, report to the enforcement department of the intermediate people's court in the place where such grassroots people's court is located for examination and approval first.
　　7. An enforcement court shall, within five days after a decision on transfer is made, serve such decision on the party applying for the enforcement and the party subject to the enforcement. Where the party applying for the enforcement or the party subject to the enforcement has any objection to such decision, it may raise its objection during the period of bankruptcy review conducted by the court to which the case has been transferred for handling at the same time.
　　8. An enforcement court shall, after making a decision on transfer, notify all the known enforcement courts concerned in writing, and all the enforcement courts concerned shall suspend the enforcement procedures against the party subject to the enforcement. However, with respect to any seasonal goods or fresh or perishable or other articles not suitable for long-term preservation, an enforcement court shall promptly dispose of such goods or articles by selling and the proceeds from the disposal will not be distributed. Where the court to which the case has been transferred makes a ruling on accepting the bankruptcy case, the enforcement court shall, within seven days upon receipt of the ruling, transfer the said proceeds to the court accepting the bankruptcy case.
　　Where a case meets the conditions for the procedures to terminate enforcement, the relevant enforcement court may also rule on applying the procedures to terminate enforcement.
　　9. The relevant courts shall ensure the continuity of seizure, attachment and freezing measures against the property of the party subject to the enforcement; such measures shall not be relieved after the relevant enforcement court makes a decision on transfer and before the court to which the case has been transferred makes a ruling on accepting the bankruptcy case. Where the time limit for the seizure, attachment or freezing expires during the period of bankruptcy review, the party applying for the enforcement may apply to extend the time limit with the relevant enforcement court, which shall handle the extension.

　　III. Transfer of Materials and the Obligation of the Court to Which the Case Has Been Transferred of Receiving Materials
　　10. An enforcement court shall, after making a decision on transfer, transfer the following materials to the court to which the case has been transferred:
　　(1) the decision on the transfer of the enforcement case for bankruptcy review;
　　(2) the written consent of the party applying for the enforcement or of the party subject to the enforcement for the transfer;
　　(3) the property status of the party subject to the enforcement identified by the enforcement court by taking the property investigation measures, the list of seized, attached or frozen property and other relevant materials;
　　(4) the list of the property that has been distributed by the enforcement court and related materials;
　　(5) the list of debts of the party subject to the enforcement; and
　　(6) other materials to be transferred.
　　11. Where the transferred materials are incomplete or contain any error, which affects the court to which the case has been transferred in determining whether any cause for bankruptcy exists, the court to which the case has been transferred may require the enforcement court to supplement or correct the transferred materials, and the latter shall do so within ten days. Such period will not be included in the period of bankruptcy review conducted by the court to which the case has been transferred.
　　Where the court to which the case has been transferred needs to refer to any other case materials involved in the enforcement procedures, or entrusts the relevant enforcement court to handle the matters relating to the disposal of the property according to the law, the relevant enforcement court shall provide assistance and cooperation.
　　12. The materials transferred by an enforcement court for bankruptcy review shall be received by the case filing department of the court to which the case has been transferred. The court to which the case has been transferred shall not refuse to receive such materials on the ground that such materials are incomplete. Where the case filing department identifies the transferred materials as complete upon examination, it shall develop a case number and file the case with "Po Shen" (which means bankruptcy application) as the code for the case type, and promptly transfer the case to the bankruptcy trial department for bankruptcy review. If the bankruptcy trial department finds, in the course of review, that the court to which it is subordinate does not have the jurisdiction over the case, it shall handle the situation in accordance with Article 36 of the Civil Procedure Law of the People's Republic of China.

　　IV. Bankruptcy Review and Acceptance by the Court to Which the Case Has Been Transferred
　　13. The bankruptcy department of the court to which the case has been transferred shall, within 30 days upon receipt of the transferred materials, make a ruling on whether to accept the case. After making such a ruling, the court to which the case has been transferred shall serve the ruling on the party applying for the enforcement and the party subject to the enforcement within five days and deliver the same to the relevant enforcement court.
　　14. Where it is the party applying for the enforcement that applies for or consents to the transfer for bankruptcy review, the ruling shall have the party apply for the enforcement as the applicant and the party subject to the enforcement as the respondent; where it is the party subject to the enforcement that applies for or consents to the transfer for bankruptcy review, the ruling shall have the party subject to the enforcement as the applicant; where both the party applying for the enforcement and the party subject to the enforcement consents to the transfer for bankruptcy review, both parties shall be deemed as the applicants.
　　15. Where the court to which the case has been transferred makes a ruling to accept the bankruptcy case, any evaluation cost, announcement fee, custody fee and any other enforcement costs incurred during the previous enforcement procedures may be paid off from the property of the debtor at any time in accordance with the provisions on bankruptcy costs.
　　16. The enforcement court shall, within seven days upon receipt of the ruling on acceptance made by the court to which the case has been transferred, hand over the property of the party subject to the enforcement including bank deposits transferred to the designated account and actually attached moveable property or negotiable securities to the court in charge of handling the bankruptcy case or the administrator.
　　17. At the time when the enforcement court received the ruling on acceptance made by the court to which the case has been transferred, any property which has been disposed through auction procedures and for which the ruling on the relevant deal has been served upon the buyer, any property used for paying off debts in kind and for which the ruling on paying off debts in kind has been served on the relevant creditor, or any payments subject to the enforcement for which the transfer, remittance or cash delivery has been completed, shall not be handed over to the court in charge of handling the bankruptcy case or the administrator because the ownership of such property has been changed and such property does not belong to the party subject to the enforcement any more.

　　V. Handling Procedures for Case Not Accepted or Application Rejected by the Court to Which the Case Has Been Transferred
　　18. Where the court to which the case has been transferred makes a ruling on not accepting the case or rejecting the application, it shall return the received materials and property of the party subject to the enforcement within seven days upon the coming into force of the ruling to the enforcement court, which shall resume the enforcement against the party subject to the enforcement.
　　19. After the court to which the case has been transferred makes a decision on not accepting the case or rejecting the application, no people's court may initiate the procedures for the transfer of the enforcement case for bankruptcy review again. If the party applying for the enforcement or the party subject to the enforcement files a request for the transfer of the enforcement case for bankruptcy review again on the ground that new evidence is sufficient to prove that the party subject to the enforcement has the reasons for bankruptcy, the relevant people's court shall not support the request. However, the party applying for the enforcement or the party subject to the enforcement may file a bankruptcy application with the court which has jurisdiction directly.
　　20. Where the court to which the case has been transferred renders a ruling on declaring the bankruptcy of the party subject to the enforcement or terminating the reconciliation or reorganization procedure, the relevant ruling shall be delivered to the enforcement court with five days from the date when it is rendered, and the enforcement court shall rule to terminate the enforcement against the party subject to the enforcement.

　　VI. Supervision of the Transfer of Enforcement Cases for Bankruptcy Review
　　21. In the case that the court to which the case has been transferred refuses to receive the transferred materials, or fails to render a ruling on whether to accept the case within the specified time limit after receiving the transferred materials, the enforcement court may request by letter the immediately superior court of the court to which the case has been transferred to conduct supervision. The said superior court shall, upon receipt of the letter, instruct the court to which the case has been transferred to receive the transferred materials or render a ruling on whether to accept the case within ten days.
　　In the case that the court to which the case has been transferred still refuses to accept the materials or make a ruling on whether to accept the case within ten days upon receipt of the notice from the said superior court, the said superior court may directly exercise its jurisdiction over the case transferred for bankruptcy. Where the said superior court renders a ruling on accepting the bankruptcy case, it may order the court to which the case has been transferred to hear the bankruptcy case.