22 ALB CHINA INSOLVENCY & RESTRUCTURING GUIDE 2023 important to note that before deciding to accept a bankruptcy reorganization application from a listed company, the People's Court shall submit the relevant materials to the Supreme People's Court for review at different levels. 2. Implementation of the Reorganization Procedure 2.1 Debtor Management and Operations in the Duration of Revival Under Articles 73 and 74 of the Enterprise Bankruptcy Law, there are two modes of operation and management for the debtor during the reorganization period: one is self-management of assets and business affairs by the debtor under the supervision of the its bankruptcy administrator, and the other is full takeover by the bankruptcy administrator, who may employ the business managers of the debtor to take care of the business operations. The former mode emphasizes leveraging the debtor's familiarity with its own operational status, while the latter focuses on protecting the creditors. 2.2 Formulation and Implementation of the Revival Plan 2.2.1 Formulation of the Revival Plan According to Article 80 of the Enterprise Bankruptcy Law, the revival plan is to be formulated by the entity responsible for the debtor’s operation and management during the revival period. The formulation process shall involve thorough consultation and communication with various stakeholders, such as the debtor’s capital contirbutors, creditors, and reorganization investors, and take into account the opinions and suggestions of relevant government departments. If necessary, related entities can be invited, or external professional institutions or personnel can be commissioned to give opinions on specific matters[5]. 2.2.2 Review and Approval of the Revival Plan For the smooth passage of the revival plan and to provide a basis for the subsequent review of the plan by the People’s Court, the bankruptcy administrator and the debtor shall provide a thorough explanation of the draft plan for revival to the People’s Court and the entities involved in the voting before the discussion phase of the voting. This is especially necessary for demonstrating the feasibility of the revival plan and the practicality of the business proposal. According to Article 86 of the Enterprise Bankruptcy Law, the draft plan for revival is discussed and voted on by groups at the creditors' meeting. When all the voting groups agree to the draft plan for revival, the draft shall be deemed to be adopted. The debtor or bankruptcy administrator shall, within ten days from the date when the revival plan is adopted, apply to the People's Court for approval of the plan. The People's Court shall review the legality and feasibility of the revival plan, the legality of the voting procedure, and whether it impairs the liquidation interests of the dissenters in each voting group. For listed companies, if the draft plan for revival involves administrative licensing matters of the securities regulator, the Supreme People's Court shall send the relevant materials to the China Securities Regulatory Commission. The Commission arranges for an M&A and reorganization expert consultation committee to study the case. The People's Court shall refer to the expert consultation opinions when making a ruling on whether to approve the draft plan for reorganization. 2.2.3 Implementation of the Revival Plan The revival plan, once approved by the ruling of the People's Court, is binding on the debtor and all creditors. The bankruptcy administrator is responsible for supervising the implementation of the revival plan, and the People's Court reviews the supervision reports submitted by the bankruptcy administrator. If the debtor cannot or does not execute the revival plan, the People's Court, upon the request of the bankruptcy administrator or stakeholders, shall rule to terminate the implementation of the revival plan and announce the debtor bankrupt. 3. Conclusion The Enterprise bankruptcy reorganization procedure provides a viable solution for businesses with developmental potential that are currently facing operational challenges. Through this statutory procedure, [5] Refer to Article 94 of the Beijing Bankruptcy Court's Standards for Handling Bankruptcy Reorganization Cases (Trial) and Part 8, Article 7 of the Shanghai High People's Court Bankruptcy Trial Work Normative Guidelines (Trial).
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