中华人民共和国企业破产法（试行） Law of the Peoples Republic of China on Enterprise Bankruptcy

has applied for the termination of reorganization； and

　　（3） committing any of the acts listed in Article 35 of this Law and seriously harming the interests of creditors.

　　Article 22 With respect to an enterprise that has undergone reorganization and is able to repay debts in accordance with the settlement agreement， the people's court shall terminate the bankruptcy proceedings for such an enterprise， and also make a public announcement thereof.

　　With respect to an enterprise that， on the expiration of the period of reorganization， is unable to repay debts in accordance with the settlement agreement， the people's court shall declare the enterprise bankrupt， and shall reregister the claims in accordance with the provisions of Article 9 of this Law.

　　Chapter V Bankruptcy Declarations and Bankruptcy Liquidations

　　Article 23 In any of the following circumstances， after the judgment of the people's court， an enterprise shall be declared bankrupt：

　　（l） if， in accordance with the provisions of Article 3 of this Law， it should be declared bankrupt；

　　（2） if reorganization has been terminated in accordance with the provisions of Article 21 of this Law， and

　　（3） if upon the expiration of the period of reorganization， it is unable to repay debts in accordance with the settlement agreement.

　　Article 24 The people's court shall， within 15 days after the date the enterprise is declared bankrupt， establish a liquidation team to take over the bankrupt enterprise. The liquidation team shall be responsible for the keeping， putting into order， appraisal， disposition and distribution of the bankruptcy property. The liquidation team may carry out necessary civil actions in accordance with the law.

　　The members of the liquidation team shall be designated by the people's court from among the superior departments in charge， government finance departments， and other relevant departments and professional personnel.

　　The liquidation team may hire necessary work personnel.

　　The liquidation team is responsible to， and shall report on its work to， the people's court.

　　

Article 25 No unit or individual may illegally dispose of the property， account books， documents， materials， seals， etc.， of a bankrupt enterprise.

　　The debtors of a bankrupt enterprise and persons holding the property of a bankrupt enterprise can repay debts or deliver property only to the liquidation team.

　　Article 26 The liquidation team may decide to terminate or to continue to perform the contracts that have not yet been performed by the bankrupt enterprise.

　　If the liquidation team decides to terminate a contract， and the other party to the contract suffers harm as the result of the termination of the contract， the amount of compensation for the harm constitutes a bankruptcy claim.

　　Article 27 Before the legal representative of the bankrupt enterprise handles the procedures for transfer to the liquidation team， he shall be responsible for the keeping of the property， account books， documents， materials， seals， etc.， of such enterprise.

　　Before the conclusion of the bankruptcy proceedings， the legal representative of the bankrupt enterprise shall carry out work according to the requirements of the people's court or the liquidation team， and may not leave his position without authorization.

　　Article 28 Bankruptcy property comprises the following property：

　　（l） all property that the bankrupt enterprise operated and managed at the time bankruptcy was declared；

　　（2） property obtained by the bankrupt enterprise during the period from the declaration of bankruptcy until the conclusion of the bankruptcy proceedings， and

　　（3） other property rights that the bankrupt enterprise should exercise.

　　Property that already constitutes security collateral is not bankruptcy property； the portion of the value of the security collateral exceeding the amount of the debt that it secures is bankruptcy property.

　　Article 29 Property in the bankrupt enterprise that belongs to other persons shall be retrieved by the persons with the right to such property through the means of the liquidation team.

　　Article 30 Claims not secured with property and claims secured with property for which the priority right to receive repayment has been abandoned， which were established before bankruptcy was declared， are bankruptcy claims.

　　The expenses of creditors for participating in the bankruptcy proceedings may not constitute bankruptcy claims.

　　Article 31 Claims that are not due when bankruptcy is declared shall be deemed to be claims that have already become due； however， the interest that is not yet due shall be deducted.

　　Article 32 With respect to claims secured with property that are established before bankruptcy is declared， the creditors enjoy the right to receive repayment with priority with respect to such security.

　　With respect to claims that are secured with property whose amount exceeds the value of the security collateral， the part that is not repaid constitutes a bankruptcy claims， and will be repaid in accordance with the bankruptcy proceedings.

　　Article 33 Creditors who owe debts to the bankrupt enterprise may offset them before the bankruptcy liquidation.

　　Article 34 Priority shall be given to saving the following bankruptcy expenses from the bankruptcy property：

　　（l） the expenses needed for the management， sale and distribution of the bankruptcy property， including the expenses of hiring work personnel；

　　（2） the litigation expenses of the bankruptcy case； and

　　（3） other expenses paid in the course of bankruptcy proceedings for the common interest of the creditors.

　　With respect to enterprises whose bankruptcy property is insufficient to cover bankruptcy expenses， the people's court should declare termination of bankruptcy proceedings.

　　Article 35 During the period from six months before the people's court accepts the bankruptcy case until

the date that bankruptcy is declared， the following actions of a bankrupt enterprise are null and void：

　　（l） concealment， secret distributions or transfers of property without compensation；

　　（2） sale of property at abnormally depressed prices；

　　（3） securing with property claims that originally were not secured with property；

　　（4） early repayment of claims that are not yet due； and

　　（5） abandonment of the enterprise's own claims.

　　With respect to bankrupt enterprises which have committed acts listed in the previous paragraphs， the liquidation team has the right to apply to the people's court to recover the property， which shall be added to the bankruptcy property.

　　Article 36 Complete sets of equipment in the bankruptcy property shall be sold as a whole， and that which cannot be sold as a whole may be sold in parts.

　　Article 37 The distribution plan for the bankruptcy property shall be proposed by the liquidation team， adopted by the creditors' meeting and submitted to the people's court for judgment before implementation.

　　After the prior deduction of bankruptcy expenses from the bankruptcy property， repayment shall be made in the following order：

　　（1） wages of staff and workers and labour insurance expenses that are owed by the bankrupt enterprise；

　　（2） taxes that are owed by the bankrupt enterprise； and

　　（3） bankruptcy claims.

　　Where the bankruptcy property is insufficient to repay all the repayment needs within a single order of priority， it shall be distributed on a pro-rata basis.

　　Article 38 Upon the completion of the distribution of the bankruptcy property， the liquidation team shall apply to the people's court for the conclusion of the bankruptcy proceedings. After the termination of bankruptcy proceedings， claims that have not been repaid shall no longer be repaid.

　　Article 39 After the conclusion of the bankruptcy proceedings， the liquidation team shall handle the procedures for the cancellation of registration at the original registration authorities of the bankrupt enterprise.

　　Article 40 With respect to bankrupt enterprises that are discovered within one year after the date of the conclusion of the bankruptcy proceedings to have committed any of the acts listed in Article 35 of this Law， the people's court shall recover the property and order repayment in accordance with Article 37 of this Law.

　　Article 41 With respect to bankrupt enterprises that have committed any of the acts listed in Article 35 of this Law， the legal representative and the directly responsible personnel of the bankrupt enterprise shall be subject to administrative sanctions； Where the acts of the legal representative and the directly responsible personnel of the bankrupt enterprise constitute crimes， criminal responsibility shall be investigated in accordance with the law.

　　Article 42 After an enterprise is declared bankrupt， the government supervisory departments and audit departments are responsible for pinpointing the responsibility for the bankruptcy of the enterprise.

　　Where the legal representative of the bankrupt enterprise bears the major responsibility for the bankruptcy of the enterprise， administrative sanctions shall be applied.

　　Where the superior departments in charge of the bankrupt enterprise bear the major responsibility for the bankruptcy of the enterprise， administrative sanctions shall be applied to the leaders of such superior departments in charge.

　　With respect to the legal repr

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