The Provisions of the Supreme People’s Court on Designating Bankruptcy Administrators in Bankruptcy Cases, and the Provisions of the Supreme People’s Court on Deciding the Remunerations of Bankruptcy Administrators in Bankruptcy Cases, were adopted at the 1422nd meeting of the Judicial Committee of the Supreme People's Court on April 4, 2007, and came into force on June 1, 2007.

These two Provisions were promulgated to promote the enforcement of the Law of the People’s Republic of China on Enterprise Bankruptcy (“Bankruptcy Law”) considering current circumstances and the need for the development of administrative systems.

1.  The key features of the Provisions of the Supreme People’s Court on Designating Bankruptcy Administrators in Bankruptcy Cases are as follows:

(1) List of Administrators
The Higher People’s Court will compile or designate the Intermediate People’s court under its governance to compile the List of Administrators (“List”), based on the number of bankruptcy cases, local social intermediary organizations and their employees in its jurisdiction.

The People’s Court shall establish a special committee to review the competency and qualification of the candidates of the List, so as to examine and approve the List ultimately.  The People’s Court may modify the List considering the factors, such as the situation of bankruptcy cases, the performance of Administrators, the change of the Administrator’s qualification, and etc.

(2) Principals and procedures of designating Administrators

Generally, the People’s Court which has the jurisdiction over bankruptcy cases shall designate the Administrator from local List by the following means:

(a) To designate social intermediary organizations or individuals contained in the List as the Administrator, by choosing randomly, competing or recommending.

(b) To designate the Liquidation Committee as the Administrator in particular bankruptcy cases as provided by the Provisions.

(3) Qualifications of the Administrators

The Provisions provide negative qualifications of the Administrator rather than the positive qualifications. And in the compilation of the List, the People’s Court shall pay more attention to the candidate’s professional capability and its capacity to undertake civil liabilities and shall take into account of the number of bankruptcy cases, the social intermediary organizations and their employees in its jurisdiction to determine the List.

(4) Supervision upon the Administrator by the People's Courts and the creditor’s meeting

The creditors have the right to apply the court to replace the Administrator. And the People's Courts also have the right to replace the Administrator initiatively by authority, where causes that the Administrator must be replaced arise, while the creditor’s meeting is not able to apply for such replacement, through which to ensure the effective supervision upon the Administrator.

(5) Withdrawal of the Administrators 

The Administrators shall initiate to apply for a withdrawal in the event that they have been found or recognized to be the interested person of the case.

Any organization or individual, which is involved in material indebtedness or under the investigation in connection with illegal conducts by relevant authorities, shall not be designated as the Administrator in the case.

2. The key features of the Provisions of the Supreme People’s Court on Deciding the Remunerations of Bankruptcy Administrators in Bankruptcy Cases are as follows:

(1) The Procedures of deciding the remunerations of Administrators

The People’s Court, after accepting the bankruptcy case, shall forecast the workload of Administrators and the value of assets which are distributable, and shall decide the remuneration plan, including the calculation standard and time of payment.  The People’s Court also has the right to adjust the original remuneration plan considering the practical situation of bankruptcy cases and the performance of the Administrators.  The Administrators shall collect the remuneration according to the final remuneration plan.

(2) The rights and roles of the parties who decide the remuneration

Both the creditor’s meeting and the People’s Court have voice in determination of the remuneration.  While the creditor’s meeting has the right to know, to negotiate and dissent, the People’s Court is the final decision maker.

(3) The proportion of remuneration

According to the Provisions, the remuneration shall be based on the value of assets which can be discharged by the debtor.  The Provisions stipulates the maximum proportions of the remuneration separately applied to different ranges of the assets discharged, and authorizes the Higher People's Courts to adjust the proportion within the range provided in the provisions according to the local economic situations, so as to establish a reasonable limit of remuneration consistent with the local conditions.

(4) The solution in the event that there are not enough assets of the debtor to pay for the Administrator’s remuneration

In the event that the debtor’s assets are insufficient to pay for the Administrator’s remuneration and the performance expense, the Administrator shall apply the People’s Court to terminate the bankruptcy proceeding.  However, if the creditors, administrators, investors of the debtors and other interested persons are willing to pay the foregoing remuneration and expense for the debtors, the bankruptcy proceeding may proceed.