I. What is compulsory liquidation
Compulsory liquidation refers to the liquidation in which the company is ordered to close down by the competent authority according to law due to illegal acts, or the liquidation in which the company is declared bankrupt by the court because it cannot pay off the debts due. The people's court is the organizer of the company's compulsory liquidation. Compulsory liquidation is through the intervention of public power, that is, the liquidation group designated by the people's court carries out liquidation. According to "Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of People's Republic of China (PRC) (II)", the company shall organize its own liquidation within 15 days after the cause of dissolution occurs, otherwise the people's court may appoint a liquidation group to conduct liquidation according to the application. The compulsory liquidation organized by the court can establish a reliable supervision mechanism of the liquidation group, which is beneficial for creditors to know the progress of the whole liquidation procedure, thus effectively safeguarding the interests of creditors. At the same time, it is also beneficial to protect the legitimate rights and interests of shareholders in the case that shareholders cannot liquidate themselves. The subject applying for compulsory liquidation of the company can be the creditor of the company or the shareholder of the company under certain circumstances. Article 184 of the Company Law of People's Republic of China (PRC) stipulates that the company shall set up a liquidation group within 15 days from the date of dissolution and start liquidation. If a liquidation group is not established for liquidation within the time limit, the creditor may apply to the people's court to appoint relevant personnel to form a liquidation group for liquidation. The people's court shall accept the application and promptly organize a liquidation group to carry out liquidation. Interpretation II of the Company Law stipulates that "if the creditors fail to file an application for liquidation and the shareholders of the company apply to the people's court to appoint a liquidation team to liquidate the company, the people's court shall accept it." In the case of compulsory liquidation, in order to better protect the interests of shareholders and creditors, the law allows the people's court to intervene in the liquidation procedure, and the members of the liquidation team are appointed by the court, and the liquidation procedure should be supervised by the people's court. Although the law stipulates that the period of compulsory liquidation is generally six months, it also stipulates that if the liquidation cannot be completed within the time limit under special circumstances, it may apply to the people's court for an extension of the time limit. The length of the extension period is not limited by law. On the jurisdiction of the company's compulsory liquidation cases. According to Article 24 of the Interpretation of Company Law (II), the company liquidation cases shall be under the jurisdiction of the people's court of the company's domicile. The company registration authority of the county, county-level city and district under the jurisdiction of the basic people's court approves the registration of company liquidation cases; The intermediate people's court and the company registration authority in the jurisdiction above prefecture-level cities approve the registration of company liquidation cases. The "company domicile" here refers to the location of the company's main office. Where the location of the company's office is unclear, it shall be under the jurisdiction of the people's court where it is registered.
Second, the application of compulsory liquidation
According to the judicial interpretation of the Company Law, creditors and shareholders may apply to the court to appoint a liquidation group for liquidation under the following circumstances:
(1) After the dissolution of the company, the liquidation group was not established within the prescribed time limit for liquidation;
(two) although the liquidation group has been established, but deliberately delayed liquidation;
(3) Illegal liquidation may seriously harm the interests of creditors or shareholders.
Third, the characteristics of compulsory liquidation.
1. Applicant: According to the judicial interpretation of the Company Law, after the above liquidation happens, it means that voluntary liquidation will be changed into compulsory liquidation. In this case, if the creditor does not apply for liquidation, the shareholders can also apply to the court to extend the subject of compulsory liquidation to shareholders.
2. The liquidation group appointed by the court shall be implemented in liquidation plan after confirmation by the court; Compared with bankruptcy liquidation, the court's intervention in compulsory liquidation procedure is relatively limited. The main duties of the court in the compulsory liquidation procedure include appointing and replacing the members of the liquidation team, confirming the liquidation plan and the liquidation report, deciding whether to extend the liquidation period and ruling to terminate the compulsory liquidation procedure. However, it should be noted that the duty of the court in a company liquidation case is not only to appoint members of the liquidation team, but also to supervise the whole liquidation procedure and decide to terminate the liquidation procedure before the case is closed.
3. In terms of paying off debts, when the negotiation mechanism is introduced to pay off debts that cannot be paid off by the company's property, it is not necessary to enter the bankruptcy liquidation procedure, that is, if creditors can negotiate their own debt settlement plan based on autonomy of will, they do not have to enter the bankruptcy liquidation procedure, only when creditors do not confirm the debt settlement plan or the people's court does not approve it, so as to improve liquidation efficiency and save economic costs.
4. After the court decides to terminate the liquidation procedure, it shall go through the cancellation procedures with the ruling.
Four, the difference and connection between compulsory liquidation and bankruptcy liquidation
(1) Compulsory liquidation and bankruptcy liquidation are subject to different legal provisions.
1. Applicable laws and regulations for compulsory liquidation: Company Law of People's Republic of China (PRC), Provisions of the Supreme People's Court on Several Issues Concerning the Application of Company Law of People's Republic of China (PRC) (II), Summary of Symposium on Trial of Compulsory Liquidation Cases of Companies issued by the Supreme People's Court on June 4, 2009.
2. Laws and regulations applicable to bankruptcy liquidation: Enterprise Bankruptcy Law of the People's Republic of China, Provisions of the Supreme People's Court on Several Issues Concerning the Application of Enterprise Bankruptcy Law of the People's Republic of China (I) and (II), Provisions of the Supreme People's Court on Appointing Managers to Trial Enterprise Bankruptcy Cases, etc.
(two) the reasons for compulsory liquidation and bankruptcy liquidation to enter the procedure are different.
1, two conditions must be met for forced liquidation:
First, the company is dissolved.
(1) Voluntary dissolution: the business term stipulated in the Articles of Association expires, or other reasons for dissolution stipulated in the Articles of Association occur; The shareholders' meeting or general meeting decides to dissolve;
(2) Administrative dissolution: the company's business license is revoked, ordered to close or revoked according to law;
(3) Judicial dissolution: serious difficulties have occurred in the operation and management of the company, and the continued existence will cause great losses to the interests of shareholders and cannot be solved by other means. Shareholders who hold more than 10% of the voting rights of all shareholders of the company may request the people's court to dissolve the company. In case of automatic dissolution and administrative dissolution, the company's liquidation obligor shall set up a liquidation group within 15 days from the date of dissolution and start liquidation on its own.
Second, the company cannot liquidate itself due to the above dissolution reasons. After the dissolution of the company, the liquidation group is not established within the prescribed time limit for liquidation; Although a liquidation group was set up, it deliberately delayed liquidation; Illegal liquidation may seriously harm the interests of creditors or shareholders; Creditors or shareholders of the company may apply to the people's court for appointing a liquidation group for compulsory liquidation.
2. The reason for bankruptcy liquidation is that, according to Articles 2 and 7 of the Enterprise Bankruptcy Law, if an enterprise as a legal person is unable to pay off its debts due, and its assets are insufficient to pay off all its debts or obviously lack solvency, the debtor and creditors may apply to the people's court for bankruptcy liquidation.
(3) The conflict of interest between compulsory liquidation and bankruptcy liquidation is different.
1, forced liquidation, the company's assets can pay off all debts, the interests of creditors can be fully protected, and the remaining property is distributed by shareholders, so conflicts of interest mainly occur among shareholders;
2, bankruptcy liquidation, the company is basically insolvent, shareholders have no remaining assets to distribute, so this procedure mainly focuses on the equal protection of the interests of all creditors.
(4) Compulsory liquidation and bankruptcy liquidation procedures are different.
1. The compulsory liquidation can be withdrawn before the court decides to accept it. After acceptance, if the remaining property is dissolved voluntarily due to the expiration of the business term or resolution, the applicant may withdraw the application on the grounds of continued existence by amending the articles of association or the resolution of the shareholders' meeting. If the business license is revoked or the court decides to dissolve, the relevant administrative decision shall be revoked before the distribution of the remaining property. If the parties reach a settlement agreement on the company's existence after the dissolution decision, they may withdraw the application for compulsory liquidation.
2, bankruptcy liquidation, before the people's court accepts the bankruptcy application, the applicant may request to withdraw the application; It is up to the court to decide whether it can be withdrawn after the court accepts it and before the bankruptcy declaration; However, after the bankruptcy declaration, the bankruptcy applicant cannot request to withdraw the bankruptcy application.
(5) The reporting period and relief results of creditor's rights in compulsory liquidation and bankruptcy liquidation are different.
1. In the compulsory liquidation procedure, the liquidation group shall notify the creditors within 10 days from the date of its establishment and make an announcement in the newspaper within 60 days. Creditors shall, within 30 days from the date of receiving the notice, and within 45 days from the date of announcement if they have not received the notice, declare their claims to the liquidation group.
If the creditor's rights are not declared within the time limit in the compulsory liquidation procedure, before the liquidation procedure of the company is completed, the creditors who have made supplementary declarations will be compensated in equal amount with the creditors who declared during the reporting period within the scope of the company's undistributed property; However, when the undistributed property of the company cannot be fully paid off, only the creditors who have no major fault are entitled to compensation within the scope of the remaining property distributed by shareholders;
2. In the bankruptcy liquidation procedure, the subject of the announcement is the people's court, not the administrator. The people's court shall notify the known creditors within 25 days from the date of accepting the ruling of the bankruptcy application and make an announcement. The time limit for filing creditor's rights shall be decided by the people's court, counting from the date when the people's court issues an announcement. The shortest time shall not be less than 30 days and the longest time shall not exceed 3 months.
If the creditor's rights are not declared within the time limit in the bankruptcy liquidation procedure, it may be supplemented before the final distribution of the bankruptcy property; However, the distribution that has been made before, regardless of major faults, will not be supplemented. Because shareholders have no surplus property to distribute in the bankruptcy liquidation procedure, overdue creditors can only pay off within the scope of undistributed property.
(six) compulsory liquidation and bankruptcy liquidation have different effects on lifting property preservation and suspending execution.
1. Compulsory liquidation has no suspensive effect on pending litigation. After accepting a compulsory liquidation case, it does not have the effect of lifting the property preservation of the respondent and suspending the execution of the respondent's property. Because the compulsory liquidation procedure does not have the effect of freezing the company's property, the compulsory execution can be carried out during the liquidation period.
2. At the time of bankruptcy liquidation, the preservation measures for the property of the bankrupt enterprise shall be lifted and the execution procedures shall be suspended. A civil lawsuit or arbitration that has been started but not yet concluded shall be suspended. All creditor's rights and debts are merged into the bankruptcy liquidation procedure for centralized settlement, and individual settlement is not allowed, or even individual settlement within six months before the bankruptcy application is accepted is cancelled to ensure fair compensation for all creditors.
(7) The composition of the liquidation group and the administrator of compulsory liquidation and bankruptcy liquidation are different.
1. Forced liquidation. The members of the liquidation group shall be appointed by the court, and may be composed of both shareholders and social intermediary organizations, or all members of the intermediary organizations.
2. Bankruptcy liquidation, the administrator of bankruptcy liquidation cases is usually appointed by the people's court from the roster of administrators. The designation method can take random methods such as waiting, drawing lots and shaking numbers. For commercial banks, securities companies, insurance companies and other financial institutions or bankruptcy cases with great influence, complex legal relations and scattered debtor's property in the whole country, the people's court may invite social intermediary institutions in the local management roster to participate in the competition by way of announcement. In addition, if a liquidation group has been established in accordance with relevant regulations before the bankruptcy application is accepted, or if it falls within the bankruptcy scope of state-owned enterprises as stipulated in Article 133 of the Enterprise Bankruptcy Law, the people's court may appoint the liquidation group as the administrator.
(eight) the convergence of compulsory liquidation and bankruptcy liquidation procedures.
1. Forced liquidation. If the liquidation group finds that the property of the respondent is insufficient to pay off the debts, it may negotiate with the creditors about the debt settlement plan. If the debt settlement plan is agreed by the creditors, recognized and performed by the court, the compulsory liquidation procedure will be terminated. If the creditor refuses to confirm the debt settlement plan or the people's court refuses to approve it, the liquidation group shall file a bankruptcy application against the respondent, and the creditor and the respondent may also file a bankruptcy application according to law.
2. Bankruptcy liquidation. If the original liquidation group consists of or participates in an intermediary organization or individual listed in the register of administrators of the people's court, the people's court may designate the intermediary organization or individual as the administrator or member of the administrator, except that the intermediary organization or individual is not suitable to serve as the administrator or member of the administrator because of its interest in the case, or it is absorbed as a newly established administrator.
Through the above, I believe you have a certain understanding of compulsory liquidation. There are also courts involved. Bankruptcy liquidation is based on the bankruptcy of the company, and the basic situation of compulsory liquidation is the dissolution of the company, but it is not bankruptcy, but both of them are not voluntary liquidation of the company and have certain judicial coercive power. You can consult a lawyer if you have any questions.