Enterprise Bankruptcy Law of the People's Republic of China
Chapter X Bankruptcy Liquidation
Section 1 bankruptcy declaration
Article 107 If the people's court declares the debtor bankrupt according to the provisions of this Law, it shall serve it on the debtor and the administrator within five days from the date of ruling, notify the known creditors within ten days from the date of ruling, and make a public announcement.
After the debtor is declared bankrupt, the debtor is called bankruptcy, the debtor's property is called bankruptcy property, and the creditor's rights enjoyed by the people's court when accepting the bankruptcy application are called bankruptcy claims.
Article 108 Before bankruptcy is declared, in any of the following circumstances, the people's court shall order the termination of bankruptcy proceedings and make an announcement:
(1) The third party provides full guarantee for the debtor or pays off all debts due for the debtor;
(2) The debtor has paid off all due debts.
Article 109 A creditor who enjoys a security right over a bankrupt's specific property shall have the priority to be compensated for that specific property.
Article 110 Where a creditor who enjoys the rights stipulated in Article 109 of this Law exercises the right of priority in payment, and it has not been fully paid off, its outstanding creditor's rights shall be regarded as ordinary creditor's rights; The creditor's rights shall be regarded as ordinary creditor's rights.
Section 2 Price Change and Distribution
Article 111 The administrator shall formulate a plan for changing the price of bankrupt property in time and submit it to the creditors' meeting for discussion.
The administrator shall sell the bankrupt property in a timely manner according to the scheme of changing the price of the bankrupt property adopted by the creditors' meeting or ruled by the people's court in accordance with the first paragraph of Article 65 of this Law.
Article 112 The sale of bankrupt property at a different price shall be conducted by auction. However, unless otherwise decided by the creditors' meeting.
Bankrupt enterprises can be sold in whole or in part. When an enterprise sells at different prices, it can sell its intangible assets and other property at different prices.
Property that cannot be auctioned or restricted in transfer according to state regulations shall be disposed of in the manner prescribed by the state.
Article 113 After the bankruptcy expenses and debts are paid off first, the bankruptcy property shall be paid off in the following order:
(1) Wages, medical care, disability allowance and pension expenses owed by the bankrupt to employees, basic old-age insurance and basic medical insurance expenses owed to employees' personal accounts, and compensation that should be paid to employees according to laws and administrative regulations;
(2) Social insurance premiums and taxes owed by the bankrupt other than those specified in the preceding paragraph;
(3) Ordinary bankruptcy claims.
If the bankruptcy property is insufficient to pay off the repayment requirements in the same order, it shall be distributed in proportion.
The wages of directors, supervisors and senior managers of bankrupt enterprises shall be calculated according to the average wages of employees of the enterprise.