On the Protection of Secured Creditors'Rights in Reorganization Plans
The restriction and protection of secured creditors'rights is a major theoretical and practical issue in bankruptcy law,and the construction of rules for the court's mandatory approval of reorganization plan and the correct use of the approval power are the key to solving this problem.Article 87,paragraph 2,subpara-graph 1 of China's Enterprise Bankruptcy Law establishes the rule of"liquidation in rem"for the valorization of secured property in bankruptcy reorganization procedures,i.e.,replacing de facto property liquidation with the proposed judicial valuation to determine the value of the interests in the secured property,and ulti-mately forcibly divesting the security rights in the secured property.However,the"fair compensation"norm of our law for the delayed settlement of the interest compensation impairs the certainty of property rights.Therefore,in the case of retention of debt settlement,the interest compensation should amended to the reor-ganization plan during the implementation of the reorganization plan for the reorganization plan to take effect at the time of the discounted compensation of the property's present value,aiming to preserve the present val-ue of the secured property."Substantive protection"is a unique institutional structure of ex ante prevention and ex post compensation,with both insolvency and non-insolvency law remedies working together,and is the justifiable basis for reorganization proceedings to limit the exercise of security rights and the institutional guarantee that the value of the encumbered property is maintained and the effectiveness of priority payments is safeguarded.
Secured ClaimsReorganization PlanLimitation of RightsSubstantive ProtectionMan-datory Authorization
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