Give the “honest and unfortunate” debtor a chance to be rescued

Give the "honest and unfortunate" debtor a chance to be rescued

There are many voices questioning the arrangement of the personal bankruptcy system. Some people say that “borrowing to repay the money is no longer justified”, and some people say that “personal bankruptcy will be counterproductive if the corporate bankruptcy law is not fully implemented.” In Wang Xinxin’s view, whether it is corporate bankruptcy or personal bankruptcy, it is precisely the best legal system to correct debt evasion. It not only allows creditors to orderly recover debts under the circumstances that there are laws to follow, but also helps ensure fairness and justice among creditors.

Liang Wenjin, a 35-year-old resident of Shenzhen City, became the first individual in bankruptcy in my country.

On July 19, the ruling of my country’s first personal bankruptcy case took effect. This is also the first case concluded by the Shenzhen Intermediate People’s Court since the Shenzhen Special Economic Zone Personal Bankruptcy Regulations, China’s first personal bankruptcy regulation, came into effect on March 1.

For Liang Wenjin, the result of the case decision means that he will no longer need to repay the interest in the future, will no longer be pressed by several debt calls a day, will no longer be burdened with huge psychological pressure, and be able to work with peace of mind to repay the debt principal.

For society, the significance of personal bankruptcy is even more far-reaching. The personal bankruptcy system is an inseparable part of the modern bankruptcy law. In my country, when the bankruptcy law was revised before, the supporting systems related to personal bankruptcy were not perfect. The Enterprise Bankruptcy Law was promulgated in 2006 and the personal bankruptcy legal system was not introduced at the same time. The “half bankruptcy law” means that our country is one step closer to the end of the half bankruptcy law era.

At the same time, there are also many voices questioning the arrangement of the personal bankruptcy system. Some people say that “borrowing debts to repay the money is no longer justified”, and some people say that “personal bankruptcy will be counterproductive if the corporate bankruptcy law is not in place.” Through further analysis of Liang Wenjin’s personal bankruptcy case and related scholars, court staff, The lawyer’s interview may give us more enlightenment from the case.

1. He does represent “honest and unfortunate”

The bankruptcy of Liang Wenjin, a citizen of Shenzhen, originated from the failure of his entrepreneurship. According to the acceptance ruling of the Shenzhen Intermediate People’s Court, Liang Wenjin stated that he started a joint venture with his former colleague in June 2018, and established Shenzhen Chaoyi Technology Co., Ltd. in March 2019 to develop and sell Bluetooth headsets.

The new product came out five months after the company was established, but the sales and promotion were not satisfactory. In the spring of 2020, Liang Wenjin changed to develop a temperature gun after the outbreak of the epidemic. It was also because of sales channel problems that the product could not be sold. Liang Wenjin tried to maintain the company’s operations by borrowing from banks and online loan companies, but in the end, with continuous investment but no corresponding income, the company quickly fell into the predicament of breaking the capital chain.

After the company ceased operations, Liang Wenjin found a job with a monthly salary of 25,000 yuan, maintaining debt settlement and living expenses.

Before filing for bankruptcy, Liang Wenjin’s total debt was about 750,000 yuan, and his assets included 36,120 yuan in deposits, 4719.9 yuan in housing provident funds, and he held two company shares, two patents, three trademarks, and no real estate, vehicles and other properties. “From my personal experience, the first time I saw their family, our management team visited where he lived. He had to go to work and leave early and return late. It was at night, and we waited for him to leave work after 20:30. Later, I went to his house. At that time, the family seemed to be in a heavy mood. What was a little relieved was that he told me that the court accepted his application.” Lawyer Liu Shengjun from Guangdong Jingtian Law Firm told reporters.

Liu Shengjun is the lead lawyer of the Liang Wenjin case bankruptcy administrator appointed by the Shenzhen Intermediate People’s Court and participated in handling the case throughout the process. According to his introduction, Liang Wenjin’s family lives in a rental house in Chengzhong Village, Longgang District. A family of 5 people lives in a 35-square-meter house. Liang Wenjin works early and returns late. His wife is also working, and both children are school-age children and are going to school.

On June 22, the Shenzhen Intermediate People’s Court organized the first creditors meeting and voted to pass the exempt property list and the draft reorganization plan. The main content of Liang Wenjin’s draft reorganization plan is that 100% of the principal of the creditor’s rights will be repaid within 3 years, and interest and late fees will be exempted.

In an interview with the Economic Observer, Jing Xiaojing, director of the Comprehensive Office of the Shenzhen Bankruptcy Court, said, “The reason why Liang Wenjin’s case became the first bankruptcy case was because he and his family actively cooperated with the work of the court and administrators, and the procedures proceeded smoothly. In particular, the reorganization plan he proposed to pay off the principal in three years was sincere, and the creditors also accepted it. The conditions for voting on the draft reorganization plan were met at the first creditors meeting, and it was passed with a high number of votes.”

Liang Wenjin’s case is very representative in both honesty and misfortune. First of all, his entire experience is very typical: because entrepreneurship has undertaken market risks, every Shenzhener may have one or two of these friends around him, and it is almost uncontroversial for everyone to file for bankruptcy in such a situation.

Secondly, in Jing Xiaojing’s view, his “honesty” runs through the entire process of case handling. Specifically, each step has withstood the test of the design of the regulations and systems, “The property and debts he declared are basically the same as those verified by the administrator afterwards. The reasons for the bankruptcy stated are able to follow the experience and investment of starting the company, including the purchase of raw materials. , Supplier bills, etc. In addition, he and his family have a strong desire to repay debts. The current reorganization plan actually includes part of his wife’s income to pay off the debts. Therefore, the creditor checks his property debts and exempts the property. There are no comments on the reservation and the reorganization plan.” Jing Xiaojing said.

After the debt repayment plan came out, Liu Shengjun and his team came again, “When we go again, the whole atmosphere of his home is obviously different, and people relax a lot. In the future, as long as you work hard and work hard to make money, follow this rule. Just pay back the money.” Liu Shengjun said.

Liu Shengjun told reporters that for ordinary people, liquidated damages and late payment fees cease to occur, and there are no longer debt collection calls to disturb the family. The mood before and after bankruptcy is completely different. All this helps him to return to a normal life track and devote himself to the economic market.

2. Bankruptcy is not lying down

After the first case of personal bankruptcy came out, many netizens heatedly discussed, is it no longer necessary to borrow money in the future? Debt can also be smoothed out by this? Many people worry that this system may become Lao Lai’s umbrella. It must be admitted that in the eyes of ordinary people, “bankruptcy” is a terrible term, and even “bankruptcy” is equivalent to “life is over.”

In this regard, Wang Xinxin, a professor at the School of Law of Renmin University of China and director of the Bankruptcy Law Research Center, believes that “I often hear people say that personal bankruptcy is an evasion of debt and so on. These views and opinions are incomplete in themselves, and they are relevant to the personal bankruptcy system. A misunderstanding.” Regarding debt evasion, he said that this is a game that has always existed between creditors and debtors, and it does not change because of the existence of the bankruptcy law. “It is different from the cancellation and exit of the market after a company goes bankrupt. A natural person owes a debt, so no matter whether he can pay off the debt, the person will continue to exist in the market and in society.” Wang Xinxin emphasized that the legislation for personal bankruptcy is actually Used to achieve the purpose of “promoting competition, encouraging innovation, tolerance of failure, and guaranteeing survival”. “Through the implementation of the bankruptcy law, exemptions can be made if certain conditions are met, so that the debtor can lay down the burden and mobilize him to resume economic activities, to innovate, to compete, and to create social wealth.”

The first bankruptcy case provides us with a good example, and its effect is obvious. Due to the failure of his business, the family fell into poverty. Liang Wenjin later found a new job to work hard to repay his debts, but the debts were still accumulating in the process. Even if I have both the willingness to repay the debt and the ability to act, I will not be able to cover the interest accumulated day after day.

Jing Xiaojing mentioned that before the economic collapse, Mr. Liang estimated that the interest and late fees on his dozen debts had reached 7,000 yuan per month. “Although their family of 5 lives in Shenzhen with a rent of 1,500 yuan a month, their living is very economical, and his income does not seem to be low, but he still can’t support such a profit.”

Liang Wenjin himself also said in the interview, “I used to receive debt collection calls every day, and the whole family was under heavy mental stress. Now I can finally breathe a sigh of relief and there is room for buffering.”

From a practical perspective, many people currently have no concept of the legal requirements and consequences of the personal bankruptcy system, and it is not ruled out that there are people who want to try to free ride the system. Jing Xiaojing gave an example to reporters, “For example, there is an applicant who has indeed owed debts because of doing business, but still maintains the income and living standards of the middle class. There are houses in other places and cars in Shenzhen, and they don’t want to tighten their belts. It is a typical misunderstanding that you want to apply for bankruptcy and liquidation for debt repayment.” “The judge explained to the applicant the procedural requirements and legal consequences of bankruptcy and liquidation during the interview. For example, the need to sell the car and the house to pay off the debt; When leaving the exempt property, he can only reserve basic living expenses for him and his minor children. At the same time, his full-time wife is an adult with full working capacity and needs to go out to work; the children’s education expenses are in addition to tuition, school uniforms, books, and stationery , Tens of thousands of extracurricular interest class fees a year cannot be reserved; I am subject to a series of supervision restrictions such as consumption behavior restrictions, credit publicity, and inspection period supervision for exemption. After the explanation, the debtor immediately withdrew the application.” She said .

“About 200 of them were withdrawn after the judge’s interpretation.” Jing Xiaojing emphasized that the bankruptcy law was actually very strict, and the debtor was exempted for not supporting the debtor to maintain a living standard beyond ordinary people. Regarding the expectations of the entire society and creditors, whether the debt can be repaid is one thing, but they all hope that the debtor will have the attitude and effort to repay the debt. Judging from the effect of the Liang Wenjin case, it is precisely because he and the whole family are in the reorganization plan. He showed his sincerity in saving expenses and working hard to repay his debts, and public opinion is also very supportive of him to obtain the opportunity of economic regeneration.

Liu Shengjun also mentioned in an earlier interview with the Economic Observer, “The implementation of this regulation does not mean that you have to lie flat and don’t have to pay back the money. You still have to work hard and work hard to pay it back.”

3. Will it affect the interests of others?

The reporter learned that if the debtor succeeds in bankruptcy, then the debt of the creditor will inevitably not be paid off in full. Personal bankruptcy is a system generally accepted by the society and the people in European and American countries. However, in the traditional Chinese concept, “repaying debts is justified”, then is the exemption of debts from debtors a kind of harm to creditors? Does society have to pay for the bankrupt?

In Wang Xinxin’s view, whether it is corporate bankruptcy or personal bankruptcy, it is precisely the best legal system to correct debt evasion. It not only allows creditors to orderly recover debts under the circumstances that there are laws to follow, but also helps ensure fairness and justice among creditors. “Whether it is an individual or an enterprise, when there is no bankruptcy system, the creditor wants to collect debts from the outside. It is not clear about the internal situation, such as whether the debtor has separately paid back to some creditors? Is there any transfer for debt evasion? Assets? The establishment of the bankruptcy system allows creditors to enter the debtor, and the court forces the debtor to provide relevant information. This allows both the creditor and the debtor to have a clear expectation of future debt distress, and may be protected by law, or Obtain legal sanctions. At the same time, it is convenient for creditors to make better adjustments to their behavior, including lending behavior.” He said.

Regarding whether the exemption of debts from debtors is harmful to creditors, Wang Xinxin told reporters, “When we talk about personal bankruptcy, we apply to those who have objectively insolvent, especially those who do not have enough assets to pay off their debts in full. Be a debtor When you really fall into this level of debt dilemma, regardless of bankruptcy or not, the creditor’s losses have objectively occurred, but there is a difference between the bankruptcy law and the lack of bankruptcy law to resolve losses.”

Wang Xinxin further explained that the biggest difference between whether or not there is a bankruptcy law for creditors is whether the problem is resolved fairly . “In the absence of a bankruptcy system, if those creditors want to protect their rights, they can only scramble to collect debts from the debtor. Whoever gets the money first gets the money, and who gets the money later suffers. This has created the entire market economic order. It is possible that some creditors can be repaid in full, but most of the creditors will not get the money. This has caused an unfair and evil result.”

There is a Chinese saying that “don’t worry about being scarce while worrying about inequality.” He believes that any kind of unfairness will definitely affect the entire social and economic order, including social order. “For example, we often see in the news that due to personal debt problems, various social conflicts and even some criminal cases have occurred. Frankly speaking, this means that there is no law to solve the problem. The society uses other means to solve it. If you want to solve it, you must pass the law. System construction enables it to realize the fairness of creditor’s rights and debts and the comprehensive protection of the interests of creditors and debtors under the protection of national coercive power.”

The implementation of the personal bankruptcy regulations actually helps to ensure that all creditors get a fair and just payment when there is no way to obtain full payment.

In the case of a bankruptcy law, the bankruptcy law divides various debts into different levels of rights according to social conditions, and the repayment of all debts is relatively open and transparent. Wang Xinxin said, “Banks or creditors will indeed suffer losses, but it must be clear that this loss is not caused by the bankruptcy law, and such losses will also occur without the bankruptcy law. This loss is the development of the society and economy, and it is inevitable in the process of competition and entrepreneurship. There will be risks. Anyone may encounter risks.”

In addition to the profits and losses of creditors, from the perspective of every ordinary individual, the implementation of the personal bankruptcy system must also have more advantages than disadvantages. Wang Xinxin likened it to the bottom line for the survival of the natural person debtor. Lawyer Liu Shengjun also agrees with this view. He said, “For ordinary people, when entrepreneurs fail or encounter some unfortunate incidents, the whole family is often implicated. In this case, it actually provides a legal way. Saving his family is equivalent to an opportunity for regeneration. It also illustrates a problem. Credit will be an increasingly important asset for individuals. For us people and ordinary people, we need to love and cultivate our own credit. .”

4. Go forward in groping

On March 1 this year, the “Regulations on Personal Bankruptcy of the Shenzhen Special Economic Zone” came into effect. Natural persons who live in the Shenzhen Special Economic Zone and have participated in Shenzhen social insurance for three consecutive years and lose the ability to pay off debts or have insufficient assets to pay off all debts due to production, operation or living consumption, may conduct bankruptcy liquidation, reorganization or settlement in accordance with the regulations.

According to Wang Xinxin, in the process of enacting my country’s bankruptcy law in 2006, it was considered that a corresponding bankruptcy system was also formulated for individuals. It was only that a part of the legislative drafting group at that time, together with some representatives of the National People’s Congress, believed that individuals were bankrupt. The social-related systems in China are not sound enough, such as credit punishment systems such as property registration systems, credit investigation systems, high consumption restrictions, etc., which are not enough to support the implementation of the personal bankruptcy system throughout the country.

Cao Qixuan, President of the Shenzhen Bankruptcy Court of the Shenzhen Intermediate People’s Court, revealed in a recent interview that as of July 16, the “Shen Po Cocoon” system (a comprehensive application system of the “Personal Bankruptcy Integration Platform”) had received 615 applications and interviewed. More than 230 applicants. However, including Liang Wenjin, only 7 cases have been ruled to initiate bankruptcy proceedings.

According to the discussion of netizens, on the one hand, everyone does not understand how the court judges that this person is indeed “honest and unfortunate.” On the other hand, since the implementation of the regulations, many applications have been revoked and inadmissible, and there are very few cases actually accepted. The due effect of the personal bankruptcy system. “Huge efforts have been made.” This is Jing Xiaojing’s evaluation of the work done by Shenzhen Intermediate People’s Court to promote the implementation of the personal bankruptcy system. According to the information provided by the interviewees, the current slow progress is mainly due to the following reasons: participants need time to establish correct concepts and accumulate relevant experience, need to screen cases to accept, and the actual operation process is heavy.

First of all, with the birth of the new system, all participants in the program need time to establish concepts and accumulate experience. Jing Xiaojing said, “Debtors often cannot afford to hire lawyers in financial difficulties, and most of them apply for themselves. However, due to lack of personal financial knowledge, it is very confusing to sort out debts and declare property. Although the court has issued various guidelines, many people still The procedure requirements are unfamiliar, and the uploaded materials are diverse. For example, the system requires social security records to be uploaded. Someone will directly take a photo of a social security card. The court needs to spend a lot of time and energy on counseling and guidance.”

Secondly, because it is a pilot, all the procedures in the early stage, including case selection, must be cautious. Wang Xinxin believes that this is a necessary process. He said, “Personal bankruptcy is the first time that the Shenzhen Special Economic Zone personal bankruptcy regulations have been adopted after the reform and opening up. If the law is to be implemented well, it is necessary to pass a case by case. Gradually improve the legal system and implementation experience. At the beginning, we will definitely consider the selection of cases to be accepted. From this, we must first choose some relatively typical, relatively complete legal regulations, and system construction that can accommodate. Priority is given to handling the cases, gradually gaining experience, and then expanding.”

Jing Xiaojing said that applicants have a variety of reasons for filing for bankruptcy, including online gambling and gambling debts, and some suffering from slaughter, falling in love and being deceived. Although some situations are worthy of sympathy, they are not at this stage. May accept it. “Now we must first relieve the part that needs relief most. It is based on the consensus of all people. Because Shenzhen is now a pilot, the most valuable part of this system must be brought into full play. Controversial situations can be discussed again.”

In addition to case selection, the process of hearing bankruptcy cases also needs to be very comprehensive and careful. According to Jing Xiaojing, the data that needs to be checked for a personal bankruptcy application case includes 26 categories of large items and more than 100 small items, and the number is still increasing. The court strives for comprehensive and accurate identification of property and debt. “Although the Shenzhen Personal Bankruptcy Regulations has a complete anti-bankruptcy fraud system, including those that were discovered after the exemption by fraudulent means, the court will also revoke them in accordance with the law. However, during the pilot reform period, we still hope that every case will be meticulous and solid. Reflects the court’s trial thinking and judgment rules.”

At the same time, it is a long, complicated and prudent process that the court judges a debtor as “honest and unfortunate” and finally grants exemption from liability. She said that it must go through a series of strict legal procedures: in the first stage, the debtor declares the property, the creditor declares the claims, and the administrator investigates and verifies; in the second stage, the creditor’s financial verification results and the property investigation report are submitted to the creditors’ meeting for deliberation. Reorganization plan, reconciliation agreement or liquidation plan; In the third stage, the debtor shall pay off according to the reorganization plan and reconciliation agreement. Or, after the bankruptcy liquidation is declared, the exemption period is inspected. In the whole process, the debtor must also accept the supervision of the public through the bankruptcy credit publicity system, and the court will rule that the exemption is granted if bankruptcy fraud is excluded.

“Creditors’ participation in the bankruptcy process is also very important. For example, when there is a settlement hearing, the bank’s creditors will show up and say that the debtor stayed in a four-star hotel in Beijing last month, and the debtor argued that it was set by the company on a business trip.” Jing Xiao Jing said, “Bankruptcy cases are not a one-to-one legal relationship, such as how a debtor’s loan relationship with more than a dozen creditors is formed, the use and flow of funds, all property changes within two years, etc., all the evidence involved requires a large amount of evidence. The workload of the comparison and verification is very large, and the active participation and serious cross-examination of creditors can greatly promote the process of the procedure.”

According to Wang Xinxin, the bankruptcy law is currently being revised, and the personal bankruptcy system should be included in the bankruptcy law in the future. According to the provisions of the Legislative Law, the revision of the law generally has to go through three trials and three readings. If everything goes smoothly, the first trial may be conducted within the year.

“Since Shenzhen has taken the first step, the current revision of the bankruptcy law will also consider the personal bankruptcy system. Next, with the improvement of the entire legislation, I believe that the personal bankruptcy system will definitely become one of our bankruptcy laws in the future. An important part.” Wang Xinxin said.

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