Sui Zhong Fa [2020] No. 89

　　Notice of Guangzhou Intermediate People’s Court on Issuing the Guidelines on Trial of Bankruptcy Reorganization Cases (for Trial Implementation)

To allprimary courts and all departments of this Court,

　　To properly apply rules and regulations on bankruptcy reorganization, regulate the trail of reorganization cases and improve the trail quality and effect, theGuidelines on Trial of Bankruptcy Reorganization Cases (for Trial Implementation) are hereby issued to you, please implement it carefully.

　　Guangzhou Intermediate People’s Court

　　May 28, 2020

Guidelines on Trial of Bankruptcy Reorganization Cases (for Trial Implementation)

　　The Guidelines on Trial of Bankruptcy Reorganization Cases (“Guidelines”) is hereby formulated based upon the bankruptcy reorganization practice of Guangzhou Municipality and in accordance with the Enterprise Bankruptcy Law of the People’s Republic of China, the Company Law of the People’s Republic of China and relevant laws and judicial interpretations, for purpose to properly apply rules and regulations on bankruptcy reorganization, regulate the trail of reorganization cases and improve the trail quality and effect.

　　I. General Provisions on Reorganization Procedure

　　1．The reorganization procedure shall make full use of its role in bankruptcy protection and rescue function. For enterprises suffering financial difficulties with a hope for reorganization, in consideration of the risk of failure of reorganization and the cost-income ratio of reorganization and other factors, priority of rescue shall be on those meeting the following requirements: the premium from the ongoing operation of the enterprise in the future may be sufficient for repayment of existing and new debt in certain period and the amount repaid is higher than the amount that all creditors can obtain immediately through bankruptcy liquidation; in case of a extremely expensive organization cost or a low probability of success, the rescue may be made by means of disposing of the operation or core business as a whole.

　　2．For purpose of maximizing the value of debtor’s property and protecting the legitimate rights and interests of creditors, debtors and other interested parties equally, the principle of maintaining the ongoing concern of debtor’s main business which may survive economically shall be implemented throughout the reorganization procedure in order to preserve the operation value of an enterprise with the expectation to secure a operation premium exceeding its liquidation value.

　　II. Reorganization Application and Review

　　3．A debtor satisfying the conditions set forth in Article 2 of the Enterprise Bankruptcy Law of the People’s Republic of China shall be deemed as having a cause for reorganization and may apply with this Court for reorganization.

　　4．In case of failure to repay matured debts, the creditor may apply with the people’s court for the reorganization of the debtor.

　　5．Upon the acceptance of a bankruptcy and liquidation application and prior to the declaration of bankruptcy, the contributor with capital contribution accounting over 10% of the registered capital of the debtor may apply with the people’s court for converting the bankruptcy liquidation procedure into a reorganization procedure.

　　6．If a debtor applies with the people’s court for reorganization, the following documents and materials shall be delivered:

　　(1) Letter of Application for Bankruptcy Reorganization, which shall specify the general information of applicant and facts and grounds for reorganization;

　　(2)Qualification certificate and the up-to-date business registration materials;

　　(3)Documents indicating that the reorganization application has been approved by the board of shareholders and other organs of authority of debtor. If the debtor is a foreign invested enterprise, documents indicating that the reorganization application has been approved by its board of directors and other organs shall be delivered as provided in laws and regulations and its articles of association;

　　If the debtor is a solely state-owned enterprise or solely state-owned corporation, documents indicating that the reorganization application has been approved by the body performing duties as a contributor to the debtor shall be delivered additionally;

　　(4)Name list and contact information of debtor’s legal representative or main principals and name list and contact information of debtor’s directors, supervisors, executives, heads of financial and other administrative department;

　　(5)Description of financial situation and details of investment of debtor. The above information of the subsidiaries, branches, invested enterprises, associates and joint ventures of debtor, if any, shall be specified separately;

　　(6)The annual reports and financial statements for the last three years, except those established less than three years;

　　(7)List of contracts in progress and to be performed;

　　(8) List of creditors, specifying each creditor’s name, domicile, contact details, amount of debt claimed, nature of claims, date creating the claim, guarantee provided or not, call for recovery, etc.;

　　(9)List of debtor, specifying the debtor’s name, domicile, contact details, amount of debt, nature of debt, date creating the debt, guarantee provided or not, demand for repayment, etc.;

　　(10)Information on litigation, arbitration and execution;

　　(11)Employee resettlement plan, specifying the general information of employees to be resettled, difficulties in resettlement and corresponding resolutions. Information on salary in arrears, industrial injuries benefits and social insurance contributions, if any, shall be specified separately;

　　(12)If the reorganization application is filed by a listed company, the following documents shall also be delivered: feasibility study of reorganization, information notification issued by the provincial people’s government of the domicile of the listed company to relevant security regulatory authority and opinion of such security regulatory authority, the stability maintenance plan of the provincial people’s government of the domicile of the listed company, etc.;

　　(13)If the reorganization application is filed by a financial institution, the following documents shall also be delivered: feasibility study of reorganization and the agreement or approval granted by financial regulatory agency of the State Council;

　　(14) If the reorganization application is filed by a sole proprietorship or an enterprise controlled by state-owned capital, the application must be approved by the state-owned assets supervision and administration agency or the competent superior department of the state-owned enterprise, which performs duty as contributor;

　　(15)Other documents and materials relating to the facts and grounds on application.

　　7．If the reorganization application is filed by a contributor satisfying the conditions set forth in Article 70.2 of the Enterprise Bankruptcy Law of the People’s Republic of China, the documents and materials specified in item (1), (2), (4), (5), (11), (12), (13) and (14) of Article 6 hereof shall be delivered.

　　8．If a creditor applies with the people’s court for reorganization, the following documents and materials shall be delivered:

　　(1)Letter of Application for Bankruptcy Reorganization, which shall specify the general information of the applicant and the respondent as well as facts and grounds for reorganization;

　　(2)Qualification certificates of the applicant and the respondent;

　　(3)Facts on the creation of claims and evidence on nature and amount of claims and whether any guarantee are provided;

　　(4)Evidence on the inability of debtor to repay the matured debt;

　　(5)Statement presenting that the debtor is worthy for reorganization or the probability of its reorganization;

　　(6)Other documents and materials relating to the facts and grounds of application.

　　9．The people’s court shall notify the applicant of reorganization with the composition of the collegiate bench within 5 days as of the date registering the case filed. If the applicant is an entity other than the debtor, information on reorganization application and the composition of the collegiate bench shall be notified to the debtor within 5 days as of the date registering the case filed.

　　If any document delivered by the applicant fails the requirements set forth in these Guidelines, the case filing department shall inform, in writing and one-off, the documents for which a correction or supplementary is required. If, within 10 days upon receipt of the notice, the debtor acting as the applicant fails to deliver the documents and materials provided in item (1), (2), (3), (5), (6), (8), (9) and (11) of Article 6 hereof, or the contributor fails to deliver the documents and materials provided in item (1), (2), (5) and (11) of Article 11 hereof, or the creditor fails to deliver the documents and materials provided in item (1), (2), (3) and (4) of Article 6 hereof, the application shall not be rejected.

　　10．In any of the following cases, the people’s court shall organize the known main creditors, contributors and other interested parties for hearing:

　　(1)Reorganization of a listed company or a financial institution;

　　(2)Substantial consolidation and reorganization of affiliated enterprise;

　　(3)Prepackaged reorganization;

　　(4)The reorganization application is made by creditors, which is objected by the debtor within a period provided by law;

　　(5)Applications for bankruptcy liquidation, for reorganization and for settlement are filed by different entities separately prior the acceptance by the people’s court;

　　(6)Upon the people’s court’s acceptance of an application filed by a creditor for the bankruptcy liquidation of its debtor and prior to the declaration of the bankruptcy of the debtor, a reorganization application is filed by the creditor, the debtor or the contributor of which the capital contribution accounts to over one tenth of the debtor’s registered capital;

　　(7)Reorganization of a debtor with a complex debtor-creditor relationship or a relatively large scale of assets or debt;

　　(8)Other cases in which the people’s court believes a hearing is warranted.

　　Upon being notified by the people’s court for hearing, if the applicant refuses to attend the hearing without proper cause, the application shall be automatically withdrawn.

　　The hearing period shall be from the date giving the notice of hearing to the end of the hearing. The hearing period shall not exceed 30 days in principle.

　　11．If the debtor has any objection to a reorganization application filed by its creditor, a written objection may be filed with the people’s court on matters such as the jurisdiction of the people’s court, the application qualification of the applicant, the qualification of the debtor and the reasons for reorganization within 7 days upon receipt of the notice from the people’s court, which shall be subject to review and determination of the people’s court.

　　12．The applicant may withdraw the reorganization application prior to its acceptance. If a request to withdraw the reorganization application is made after the acceptance of the bankruptcy liquidation and prior to the declaration of the bankruptcy, the bankruptcy liquidation procedure shall continue.

　　13．If the reorganization application is filed by creditor, the people’s court shall determine whether to accept the application or not within 10 days as of the expiration of the objection period provided for debtor.

　　In any other cases other than that set forth in the foregoing sentence, the people’s court shall determine on whether or not to accept the application within 15 days upon receiving the reorganization application.

　　If the periods provided above have to be extended for special circumstances, they may be extended for additional 15 days with the approval of the people’s court at the next higher level.

　　The periods for correcting or supplementing documents, organizing the hearing and appointing the administrator and the prepackaged reorganization period shall not be included in the application review period.

　　14．For cases of the bankruptcy reorganization applied by debtor, the determination on whether the reorganization procedure shall be applied shall be made focusing on the following aspects:

　　(1)Is the main business in ongoing concern status, which means the main business has not been closed or suspended, or has been closed or suspended for no more than 3 months;

　　(2)Preliminary evidence has been delivered by the debtor, showing that reorganization protection is required by the debtor for the financial difficulties suffered by it as a result of any of the following events: daily production and operation of the debtor will soon be in trouble due to the constant lack of liquidity; the debtor will soon be insolvent as a result of the repayment of large matured debt or being subject to the enforcement; the debtor is in financial difficulties due to market, policy, public emergency, business risks or otherwise and is incapable of getting out of the trouble without the reorganization procedure;

　　(3)Other proper causes indicating that the debtor is obviously insolvent.

　　15．The reorganization probability of “enforcement to bankruptcy” cases shall be identified and determined mainly from the following aspects:

　　(1)The parties concerned have intention for reorganization;

　　(2)The debtor has superior assets with significant value, such as land, properties, intellectual properties, franchise and otherwise;

　　(3)Products of the enterprise have certain market share or brand awareness;

　　(4)The enterprise in trouble has basic production conditions for ongoing operation;

　　(5)The industry of the enterprise is actively encouraged and supported by the state;

　　(6)Others cases where reorganization is possible.

　　16．Prior to the commencement of a reorganization procedure, creditors, debtors, contributors and other interested parties may negotiate the restructuring out of court through voluntary negotiation in advance. After the commencement of the reorganization procedure, relevant obligees may draw up the draft reorganization plan based on the restructuring agreement and submit it to the people’s court for review and approval according to law.

　　During the period of reorganization acceptance and review, if the restructuring agreement executed out of the court prior to the acceptance of bankruptcy application is considered to conform to the main provisions of Article 81 of theEnterprise Bankruptcy Law, the people’s court may rule to accept the reorganization application.

　　17．The people’s court, upon review, shall rule to reject the reorganization application if it considers that:

　　(1)The applicant is not qualified to file bankruptcy application, or the debtor is not qualified as a bankruptcy subject;

　　(2)The reorganization application of a listed company, financial institution or state-controlled debtor has not been approved or agreed by relevant authorities according to law;

　　(3)The debtor does not meet the conditions stipulated in Article 2 of the Enterprise Bankruptcy Law;

　　(4)The applicant fails to deliver the application materials in accordance with the requirements of these Guidelines within the specified period;

　　(5)The people’s court has ruled to not accept the application, and there are no new facts and reasons to re-apply for reorganization;

　　(6) Upon commencement of the reorganization procedure, the people’s court has ruled to reject the application and there are no new facts and reasons to re-apply for reorganization.

　　18．If the people’s court decides not to accept the reorganization application, it shall clearly indicate the facts and reasons for rejection in the ruling, and serve it on the applicant within 5 days from the date of ruling. If the applicant dissents with the ruling, it may appeal to the people’s court at the next higher level within 10 days from the date of service of the ruling.

　　19．Except for the cases specified in Article 17 hereof, the people’s court shall make a ruling to accept the reorganization application according to law, and serve it on the applicant within 5 days from the date of ruling. If the applicant is not the debtor, the people’s court shall also serve the ruling on the debtor within 5 days from the date of ruling.

　　III. Prepackaged Reorganization

　　20． “Prepackaged reorganization” referred herein means the procedure in which, prior to the commencement of the reorganization procedure, under the instruction of the people’s court and by means of negotiation, a consensus has been reached among the main creditors, contributors, debtors, and reorganization investors on key terms of the reconstructing, the prepackaged reorganization has been established in accordance with Article 81 of the Enterprise Bankruptcy Law and approved by a certain proportion of interested parties.

　　The prepackaged reorganization procedure shall not be applicable to reorganization application made after the acceptance of the bankruptcy liquidation application but prior to the declaration of bankruptcy of the debtor.

　　21．The debtor may apply for prepackaged reorganization; if the prepackaged reorganization application is made by a creditor and there is no express objection from the debtor, the people’s court may also apply the prepackaged reorganization procedure.

　　The debtor shall undertake in writing to accept the investigation and supervision of the provisional administrator in the prepackaged reorganization procedure and perform its obligations relating to the prepackaged reorganization.

　　22．The prepackaged reorganization procedure may be applied to the following debtor:

　　(1)A listed company or an affiliated company with significant impact on the listed company;

　　(2)A large scale enterprise with leading or important position in the industry and having significant impact on regional economic development and financial stability;

　　(3)A large-scale enterprise or enterprise group that has many creditors with complicated debtor-creditor relationship, with a large number of employees to be resettled, which may affect social stability;

　　(4)Any other enterprise , if the reorganization application of which was directly accepted would have negative impact on its production and operation or produce major social instability factors;

　　(5)Other debtors that the people’s court believes the prepackaged reorganization procedure may apply.

　　23．The people’s court may, on the basis of the application of debtor or creditor, commence the bankruptcy liquidation procedure at first for the debtor who suffers complicated internal situation and various external uncertain factors and falls under the conditions provided in the first paragraph of Article 2.1 of the Enterprise Bankruptcy Law. If, during the liquidation, the debtor satisfies the requirements for reorganization, the people’s court may transfer the liquidation procedure into a reorganization procedure based upon the application made by the debtor, creditor or qualified contributor.

　　24．If the debtor applies for prepackaged reorganization during the execution procedure through the “enforcement to bankruptcy” procedure, and upon review, requirements set forth in Article 2 of the Guiding Opinions of the Supreme People’s Court on Several Issues concerning the Transfer of Enforcement Cases for Bankruptcy Examination and in Article 15 hereof are met, the enforcement court responsible for transferring the case shall timely notify other enforcement courts to suspend the enforcement of debtor’s property in accordance with Article 8 of the Guiding Opinions of the Supreme People’s Court on Several Issues concerning the Transfer of Enforcement Cases for Bankruptcy Examination.

　　25．If the people’s court decides to implement the prepackaged reorganization, it shall appoint a provisional administrator simultaneously. The provisional administrator may be appointed based upon the consensus recommendation of the debtor and main creditors, or upon the recommendation of relevant regulatory agency or institution. The recommended candidates shall be preferably selected from the List of Bankruptcy Administrators of Guangdong Province, or be selected from the registered administrators outside Guangdong Province. The recommended candidates shall not violate any provisions in Article 24 of the Enterprise Bankruptcy Law.

　　If no agreement is reached or no recommendation is made in respect of the provisional administrator by the above mentioned entities, the provisional administrator shall be appointed by the people’s court according to law.

　　If there are special provisions on the appointment of administrator in relevant laws and judicial interpretations, the appointment shall be made subject to such special provisions.

　　26．The prepackaged reorganization period shall be from the date on which the people’s court issues the prepackaged reorganization notice to the date on which the provisional administrator submits the work report of prepackaged reorganization. The prepackaged reorganization period shall be 3 months and may be extended for 1 month upon application of the provisional administrator for justified reasons.

　　The prepackaged reorganization period shallnot be included in the review period of reorganization application.

　　27．In order to facilitate the opinion collection, information disclosure, voting and other related work, the provisional administrator may refer to the provisions of the Enterprise Bankruptcy Law on meeting of creditors to organize creditors to establish a provisional creditors committee.

　　In case of a large number of the known creditors with significant different nature, the provisional administrator may reasonably divide the creditor’s rights into groups based upon the different nature of the claims, and establish provisional creditors’ committees with different nature.

　　During the prepackaged reorganization, the provisional administrator may apply with the people’s court to organize a hearing for investigation if it deems necessary.

　　28．Prior to the application of prepackaged reorganization or during the prepackaged reorganization, for debtors with relatively high proportion of financial claims and with over three financial creditors, the financial institutions may initiate the establishment of a financial creditors committee in accordance with the Notice of the General Office of the China Banking Regulatory Commission on Effectively Completing the Relevant Work of the Creditors’ Committees of Banking Financial Institutions, for purpose to engage in the enterprise crisis resolution in advance .

　　29．The financial creditors committee may be organized and established under the leadership of financial regulatory agency or initiated and established by banking financial institutions as creditors.

　　All banking financial institutions as creditors of the enterprise as debtor and other financial institutions the establishment of which is approved by CBRC shall participate in the creditors committee in principle; financial institutions as creditors, the establishment of which is approved by other authorities other than CBRC, may also be allowed to participate in the creditors committee.

　　In principle, the financial creditors committee shall be organized and established by the banking financial institutions as creditors located at the place of the enterprise. If any central enterprise or important and complicated enterprise group is involved, the financial creditors committee may be organized and established at the headquarter level.

　　30．The Agreement of Creditors shall be executed by members of the financial creditors committee. The Agreement of Creditors shall be a legal document binding upon the creditors committee, covering matters including but not limited to: organizational structure of the creditors committee, rules of procedure, rights and obligations, mutual agreements, costs and expenses, etc.

　　31．The financial creditors committee may vote on the following matters in accordance with its rules of procedure:

　　(1)To coordinate the concerted action of financial creditors prior to the acceptance of the debtor’s bankruptcy; if a standstill period against the debtor is agreed upon, then in such standstill period, all of the financial creditors shall cease recourse against the debtor;

　　(2)To provide the debtor with necessary and controllable risk credit support such as loan recovery for re-loan, loan extension and renewal;

　　(3)To support the new financing need of the debtor by means of organizing syndicated loan, establishing a joint credit facility mechanism, providing closed type financing or otherwise to guarantee the going concern of the debtor;

　　(4)To participate in the selection of audit and evaluation agencies to evaluate the financial position and future prospects of the debtor;

　　(5)To protect the legitimate rights and interests of financial creditors according to law and to supervise the debtor’s self-management of property and business affairs;

　　(6)To negotiate with the debtor actively, study and make decisions on financial debt restructuring;

　　(7)Other matters on which a resolution is deemed necessary by the financial creditors committee.

　　32．During the prepackaged reorganization, the provisional administrator shall perform the following duties:

　　(1)To investigate the general background of the debtor, such as assets and liabilities, corporate operation, property preservation, litigation, arbitration and enforcement;

　　(2)In case an enforcement case is transferred to reorganization review, to notify all of the known enforcement courts to suspend the enforcement procedure against the debtor’s property;

　　(3)To find out whether the debtor is worthy for reorganization or has possibility of reorganization;

　　(4)To supervise the debtor’s performance of the obligations stipulated in the reorganization procedure, and make timely report to the people’s court;

　　(5)Where the debtor continues to operate, to supervise its operation;

　　(6)To assist the debtor to introduce restructuring investors as needed;

　　(7)To perform and cause the debtor to perform the obligation on information disclosure;

　　(8)To clarify the overall direction of the reorganization work, and organize the negotiation between the debtor and the contributors, creditors, and (interested) reorganization investors to draw up a prepackaged reorganization plan;

　　(9)To manage the litigation, arbitration and enforcement cases of the debtor against the third party during the prepackaged reorganization;

　　(10)To submit the application for termination of the reorganization procedure or the work report on reorganization procedure to the people’s court according to the situation, as the case may be.

　　33．During the prepackaged reorganization, the provisional administrator shall perform its duties in diligent, responsible and faithful manner according to law. If any party of the prepackaged reorganization, such as the debtor, any creditor, contributor or (interested) reorganization investor, believes that the provisional administrator violates any law or judicial interpretation, fails to perform its duties in whole or in part or is incompetent for its duties, an application may be filed with the people’s court to replace the provisional administrator. The provisional administrator may make an explanation, and the people’s court shall determine whether or not to approve the replacement.

　　34．During the prepackaged reorganization, the debtor shall perform following obligations:

　　(1)In case the business operation continues, to properly determine the business and management affairs and maintain the value of its assets;

　　(2)To properly keep its seals, account books, documents, property certificates and other important materials, and cooperate with the people’s court to take property preservation measures when necessary;

　　(3)To cooperate with the provisional administrator in investigation, audit and evaluation and truthfully answer questions and submit materials;

　　(4)For the disposal of property beyond the scope of daily operation and management (including but not limited to leasing, selling and creating additional guarantee), and the business decision that may have a significant impact on the debtor’s property value, the information disclosure obligation shall be performed in accordance with 4.9 and 4.10.2 hereof within 15 days prior to the disposal or decision implementation, and to make a report to and be subject to the supervision of the provisional creditors committee and the provisional administrator;

　　(5)To draw up a prepackaged reorganization plan with the contributors, creditors, (interested) reorganization investors and other interested parties;

　　(6)To explain the prepackaged reorganization plan and answer relevant questions and to truthfully disclose information on decisions which are made in respect of the prepackaged reorganization plan and which may impact interested parties;

　　(7)To cease the repayment of debts, with the exception of repayments that benefit the debtor’s property or are necessary for the enterprise to continue its business and maintain its operating value. A report shall be made to the provisional administrator and the provisional creditors committee for supervision 15 days in advance prior to the repayment of debts;

　　(8)Other obligations which shall be performed according to law.

　　35．In case the smooth implementation of the bankruptcy reorganization procedure may be impaired, the property of the debtor may be reduced, lost or changed, or the implementation of the reorganization procedure may be affected during the prepackaged reorganization, the people’s court may rule to take preservative measures against all or part of the debtor’s property based upon application of the provisional administrator, the debtor or the creditor.

　　If such an application is made by the creditor, the people’s court may require a guarantee from it; if no guarantee is provided as required, the people’s court may reject the application.

　　If an application is made improperly, the applicant shall indemnify the loss suffered by the debtor as a result of such preservative measures.

　　36．During the prepackaged reorganization, the obligor with an information disclosure obligation shall perform its information disclosure obligation. The principle and content of information disclosure shall be subject to the provisions in Article 53 and 54(2) hereof.

　　For information disclosed by the information disclosure obligor in the prepackaged reorganization procedure, if any party of prepackaged reorganization or the provisional administrator breaches the legal provision or its confidentiality obligation to disclose such information, resultingin any loss of others, such party or the provisional administrator shall be liable for damage.

　　37．If a prepackaged reorganization is transferred into the reorganization procedure, the administrator or the debtor shall prepare a draft reorganization plan based upon the prepackaged reorganization plan. If all of the following conditions are met, the voting result of creditors and contributors on the prepackaged reorganization plan shall be deemed as the voting result on the draft reorganization plan:

　　(1)Prior to vote on the prepackaged reorganization plan, the information disclosure obligor shall perform the information disclosure obligation provided herein to creditors, debtors and contributors who vote on such plan;

　　(2)The prepackaged reorganization plan is agreed by creditors, debtors and contributors who vote on such plan;

　　(3)The basic content of the draft reorganization plan is consistent with that of the prepackaged reorganization plan, or the modification of the draft reorganization plan has no substantial impact on the rights and interests of the interested parties voting in the prepackaged reorganization plan and the voting interested parties agree not to vote on the draft reorganization plan.

　　The content specified in Article 81 of theEnterprise Bankruptcy Law of the People’s Republic of China shall be included in the prepackaged reorganization plan.

　　Anyreorganization investor who breaches the commitments in prepackaged reorganization plan shall be liable for damage in accordance with such plan, except a substantial modification is made to the prepackaged reorganization plan in the reorganization plan.

　　38．If any of the following cases occurred in the reorganization procedure, the creditors and contributors whose rights are affected shall be entitled to vote again on the draft reorganization plan:

　　(1)A substantial modification is made to the prepackaged reorganization plan in the reorganization plan, which has substantial adverse effect on rights and interests of the voted creditors and contributors;

　　(2)Prior to the voting of the prepackaged reorganization plan, the debtor conceals any important information or discloses any false information, or after the voting of the prepackaged reorganization plan, there is any material change which may affect the voting of the obligees.

　　Before the investors and creditors express their agreement or disagreement to the prepackaged reorganization plan, the provisional administrator shall inform them of the provisions in preceding paragraph.

　　39．If, during the prepackaged reorganization, the provisional administrator finds any of the following cases upon investigation, it shall file an application with the people’s court in timely manner to terminate the prepackaged reorganization procedure, which shall specify the facts and reasons found. If, upon a review, the people’s court believes that they are true, it may rule to terminate the prepackaged reorganization procedure and reject the reorganization application.

　　(1)There is no reason for the debtor to apply for reorganization or the debtor is absolutely not worthy for reorganization or is impossible to be rescued;

　　(2)The debtor refuses to perform the obligations in the prepackaged reorganization stage, resulting in the frustration of the purpose of prepackaged reorganization;

　　(3)There is certain material discrepancy between the draft prepackaged reorganization plan and terms of agreement, or in the reasonable opinion, it is impossible to establish the prepackaged reorganization plan within reasonable period;

　　(4)The debtor is unable to pay the costs required for prepackaged reorganization and no advance payment is made by others for the debtor;

　　(5)Other cases in which the prepackaged reorganization procedure shall be terminated and the reorganization application shall be rejected;

　　The people’s court may approve the application made by the debtor voluntarily to withdraw its prepackaged reorganization application and if any loss is suffered by other interested parties as a result, it shall be solved by other legal means separately.

　　For reorganization application rejected by the people’s court, if it is found that the obligor has reason for bankruptcy,the court may directly rule to accept the bankruptcy liquidation with consent of the creditors or the debtor.

　　40．Except for the cases provided in Article 39 hereof, the provisional administrator shall, upon the completion of the prepackaged reorganization or the expiration of the prepackaged reorganization period, deliver its work report for prepackaged reorganization to the people’s court. The work report for prepackaged reorganization shall set forth the information on duties performed by the provisional administrator and shall at least contain the following details:

　　(1)General information of the debtor;

　　(2)Analysis of the reasons for difficulties suffered by the debtor;

　　(3)Analysis and determination of the reorganization value or feasibility of the debtor. If, in the opinion of the provisional administrator, the debtor is worthy for reorganization or has possibility of reorganization, the potential risks and possible losses of an unsuccessful reorganization shall be put forwarded, especially the impact on employee’s claim and other particular claims and relevant suggestions;

　　(4)Whether the prepackaged reorganization plan has been prepared or not and information on the negotiation and voting result of the prepackaged reorganization plan;

　　(5)Whether an application has been made for commencement of the reorganization procedure or not;

　　(6)Other matters which, in the opinion of the people’s court, shall be reported by the provisional administrator.

　　41．Upon receiving the prepackaged reorganization report, the people’s court shall decide whether to accept the reorganization application or not in timely manner.

　　For reorganization application already rejected, if it is found that the obligor has reason for bankruptcy, the people’s court may directly rule to accept the bankruptcy liquidation with the consent of the creditors or the debtor.

　　42．Upon commencement of the reorganization procedure, the debtor may prepare and submit the draft reorganization plan on the basis of the prepackaged reorganization plan. The people’s court shall hold a creditors’ meeting to vote on the draft reorganization plan within 15 days as of the date receiving such plan. However, if the debtor submits the draft reorganization plan prior to the expiration of the declaration period of claims, the people’s court shall hold a creditors’ meeting to vote within 15 days after the expiration of the declaration period of claims.

　　43．During the prepackaged reorganization period, the expenses incurred for the preparation and voting of the prepackaged reorganization plan and the expenses necessary for the performance of the provisional administrator’s duties shall be borne by the provisional administrator and the participants of the prepackaged reorganization through negotiation; if the negotiation fails, the debtor shall pay such costs and expenses when required.

　　If the debtor fails to make timely payment or its property is insufficient to make such payment, and the provisional administrator or any other party advances the payment before the acceptance of the reorganization application, then after the acceptance of the reorganization application and upon claimed by the obligee making such advance payment, the amount shall be included in the bankruptcy expenses, which shall be reviewed by the creditors’ meeting.

　　44．No remuneration for prepackaged reorganization may be withdrawn by the provisional administrator during the prepackaged reorganization. If, upon the conclusion of the prepackaged reorganization procedure, the people’s court decides to accept the reorganization application and the remuneration of the provisional administrator has been reviewed by the creditors’ meeting, then the people’s court shall determine or adjust the provisional administrator’ remuneration plan in accordance with Article 9 of the Provisions of the Supreme People’s Court on the Determination of Administrator’s Remuneration in the Trial of Enterprise Bankruptcy Cases, taking into account the duty performance of the provisional administrator in prepackaged reorganization and other factors. Details of the provisional administrator’ remuneration plan shall be included in the draft reorganization plan.

　　If, upon deciding to accept the reorganization application, the people’s court reappoints an administrator, the remuneration for prepackaged reorganization shall be determined by the people’s court. Remuneration for prepackaged reorganization shall beconsidered as bankruptcy costs as provided in Article 41 of the Enterprise Bankruptcy Law.

　　If, upon the conclusion of the prepackaged reorganization procedure, the people’s court decides to not accept the reorganization application, or during the prepackaged reorganization, the people’s court approves theapplication to withdraw reorganization application, the remuneration of the provisional administrator shall be subject to the agreement between the provisional administrator and other parties of the prepackaged reorganization through negotiation before or after the procedure. If no agreement is reached, the remuneration shall be determined by the people’s court based upon the work of the provisional administrator, which shall not exceed RMB 500,000 in principle.

　　IV. During the Reorganization

　　45．If the reorganization application is accepted, the people’s court shall serve the decision on the applicant and the respondent within 5 days and publish an acceptance announcement within 15 days as of the date on which the decision is made.

　　46．While accepting a reorganization application, an administrator shall be appointed. If a provisional administrator is appointed during the prepackaged reorganization, it shall serve as the administrator in the reorganization case in principle. If Articles 33 and 34 of the Provisions of the Supreme People’s Court on the Determination of Administrator in the Trial of Enterprise Bankruptcy Cases apply to the provisional administrator or evidence is present, proving that it fails to perform its duties in an impartial and legitimate way or it is incompetent to perform its duties, then a new administrator shall be appoint.

　　If, prior to the appointment of the administrator by the people’s court in a random or competitive manner, the debtor and main creditors jointly choose a registered administrator in or outside Guangdong Province as the administrator of the bankruptcy case based upon negotiation and without breaching any law, the people’s court accepting the case may appoint the selected intermediary agency as the administrator of the case.

　　If the administrator of a bankruptcy case is appointed by means of accepting recommendations in accordance with Article 22 of theProvisions of the Supreme People’s Court on the Determination of Administrator in the Trial of Enterprise Bankruptcy Cases, then, in general, at least two candidates on the list of administrators with corresponding ranks shall be recommend by the financial regulatory agency, which shall be subject to the evaluation of the competition review committee.

　　47．In principle, the debtor shall manage its property and business affairs on its own during the reorganization. In the process of managing property and business affairs, the debtor may form a management team separately and report to the administrator. The members of the new management team shall meet the requirements set forth in the Company Law of the People’s Republic of China on the qualifications of directors, supervisors and senior managers.

　　If the self-managed debtor decides to continue or cease its business operation or has one of the acts specified in Article 69 of the Enterprise Bankruptcy Law, it shall obtain the approval of the people’s court prior to the first creditors’ meeting; after the first creditors’ meeting, it shall report to the creditors committee in timely manner; if there is no creditors committee, the debtor shall, prior to the implementation of the act specified in preceding sentences, report to the administrator and the people’s court. The administrator shall be entitled to supervise the aforementioned acts of the debtor.

　　48．After the acceptance of the case and prior to the submission of the reorganization plan, creditors and contributors with capital contribution accounting to over 10% of the debtor’s registered capital may apply to the people’s court to terminate the self-management of the debtor with preliminary evidence proving that:

　　(1)The debtor falls into any of the cases specified in Article 31, 32 and 33 of the Enterprise Bankruptcy Law of the People’s Republic of China to a serious extent;

　　(2)The debtor’s management fails to perform the duty of loyalty and diligence, and there are fraud, incompetence, serious mismanagement, etc;

　　(3)The debtor’s management breaches the duty of diligence and loyalty, causing procedural delay or has other acts that materially damage the interests of creditors;

　　(4)The management has abnormal behaviors in daily operation and management, such as improper transactions with affiliated enterprises, and material potential conflicts of interest will be resulted from its continuity of self-management;

　　(5)It is impossible for the normal operation of the internal governance mechanism of the debtor;

　　(6)The debtor’s business or property condition continues to deteriorate;

　　(7)Material loss is suffered in bankrupt property;

　　(8)The debtor applies for the termination of self-management;

　　(9)The debtor has other behaviors such as concealing, transfer of property or a negative attitude in reorganization;

　　(10)The creditors’ meeting decides to terminate the debtor’s self-management with an application submitted to the people’s court;

　　(11)Any other cases in which the self-management is not applicable for the debtor.

　　If the administrator or the creditors committee finds that the debtor has committed the aforesaid misconduct, and the debtor refuses to correct it after being informed so, the administrator or the creditors committee may apply with the people’s court for terminating the debtor’s self-management.

　　In the above mentioned cases other than that set forth in item(8) and (10), the people’s court shall organize a hearing to hear from each party and make the decision on whether or not to terminate the self-management of the debtor. If it decides to terminate, the administrator shall take over the property and business affairs of the debtor in a timely manner.

　　49．Upon termination of self-management, if the directors, senior executives or other personnel who are responsible for the operation and management of the property have intentional or gross negligence, causing material losses to the bankruptcy property, they shall bear corresponding civil liabilities according to law.

　　50．The self-management of the debtor shall be subject to the investigation and supervision of the administrator. The administrator shall investigate the following:

　　(1) The general background of the debtor, such as assets and liabilities, financial condition, operation condition and litigation, arbitration and enforcement involved;

　　(2) Whether or not a relatively sound internal governance mechanism is in place;

　　(3) The feasibility of its going concern and relevant measures;

　　(4) The possibility to overcome the difficulties and the operation prospect;

　　(5) Whether or not the provisions of item (1), (2), (3), (4), (6),.(7), (9), (11) of Article 48 hereof applies to the debtor;

　　(6) Whether or not the debtor initiates the reorganization procedure in bad faith to prevent the normal exercise of rights of creditors;

　　(7) Other affairs which may be related to the file of the case or the preparation of reorganization plan;

　　The creditors committee, creditors and contributors may also apply in writing with the administrator for investigation on other issues concerning the corporate governance structure and the debtor’s properties.

　　The administrator shall prepare a report and submit it to the applicant, the creditors committee and the people’s court.

　　51．Self-managed debtor shall perform following duties:

　　(1)To manage the business affairs;

　　(2)To administer the debtor’s properties, account books, documents and other materials;

　　(3)To establish the system framework of the debtor’s daily management and formulate relevant normative documents;

　　(4)To decide the internal management affairs of the debtor;

　　(5)To decide on the retention of the debtor’s staff;

　　(6)To determine day-to-day expenses and other necessary expenses based upon the financial management system;

　　(7)To report the property conditions to the creditors’ meeting;

　　(8)To be subject to the supervision of the administrator and submit the budget and final statement to the administrator, and check accounts regularly;

　　(9)To prepare the draft reorganization plan and relevant explanatory notes;

　　(10)Other duties of the debtor as stipulated by relevant laws or division of duties. The execution of new contract, continuous performance of contracts and other material disposal acts concerning its properties or business operation of the debtor shall be subject to the vote of the creditors committee or the creditors’ meeting and shall be reported to the people’s court for approval.

　　52．In case of the self-management of the debtor, the administrator shall perform the following duties:

　　(1)Obligations provided in Article 50 hereof;

　　(2)To accept and review the declaration of claims and review the claims on recall right and right of set-off;

　　(3)To recover assets in accordance with Articles 31 to 33 of the Enterprise Bankruptcy Law of the People’s Republic of China;

　　(4)To organize the creditors’ meetings and meetings of interested parties;

　　(5)To present in litigation, arbitration or other legal proceedings on behalf of the debtor;

　　(6)To facilitate the consultation and preparation of the draft reorganization plan;

　　(7)To guide and urge the debtor to prepare and submit the draft reorganization plan on schedule according to law;

　　(8)Where the debtor is under any of the cases set forth in Article 48 hereof, to request the people’s court to terminate the self-management of the debtor;

　　(9)Other duties which shall be performed by the administrator as prescribed by law, agreed by the parties or required by the people’s court.

　　53．In the reorganization procedure, the following disclosure principles shall be followed by the debtor, the administrator and the investors of reorganization:

　　(1)The principle of full disclosure: all the information related to interested parties of the reorganization, such as creditors, shareholders whose rights and interests are subject to adjustment, and the interested investors, as well as the information affecting the trend of the reorganization procedure and voting of interested parties on the draft reorganization plan, shall be disclosed;

　　(2)The principle of sufficient disclosure: the information disclosure shall enable the interested parties to make a correct judgment on the draft reorganization plan in line with their own interests;

　　(3)The principle of objective disclosure: the disclosure shall be objective and accurate, and shall not hide any important information or deliberately induce an expression of consent or opposition;

　　(4)The principle of continuous disclosure: the obligors of information disclosure shall continuously disclose information on its business operation, financial condition, business decisions beyond the scope of daily operation and management and the disposal of major properties, the progress of reorganization negotiations, the performance of duties by the administrator and self-management debtor, etc.;

　　(5)The principle of disclosure in advance: the information disclosure obligor shall actively disclose business decisions beyond the scope of daily operation and management and the disposal of major properties, such as guarantee newly created for financing, new loan contract and major property disposal, within 15 days prior to decision-making or such civil juristic acts;

　　(6)The principle of legal disclosure: the disclosure procedure shall comply with relevant provisions of law and be subject to confidentiality clauses between the parties involved.

　　54．The plans for the operation, management and price adjustment of the debtor’s properties approved by the creditors’ meeting according to law shall be binding on all creditors.

　　Prior to taking actions provided in Article 69 of the Enterprise Bankruptcy Law, and in addition to the performance of information disclosure in advance in accordance with Article 15 of the Provisions (III) of the Supreme People’s Court on Several Issues concerning the Application of the Enterprise Bankruptcy Law of the People’s Republic of China, the administrator and the self-managed debtor shall also perform the obligation of information disclosure to creditors whose rights and interests may be damaged as a result of the above actions.

　　55．If any creditor whose interest is likely to be damaged has any objection to the information disclosed, it shall require the self-managed debtor or administrator to make an explanation or provide relevant basis for such actions; or if it has objection to the disclosure itself, and believes that the disclosure has damaged its legitimate rights and interests and requires the revocation of the decision, this may be resolved through negotiation with the self-managed debtor or administrator, or an objection may be filed with the people’s court. The people’s court may make the decision in accordance with the fourth paragraph of Article 15.4 of the Provisions (III) of the Supreme People’s Court on Several Issues concerning the Application of the Enterprise Bankruptcy Law of the People’s Republic of China.

　　In case any damage is incurred by creditors or other interested parties due to the delay in or insufficient information disclosure, the liability of damage shall be assumed by the self-managed debtor, the administrator and other information disclosure obligors.

　　56．When reviewing the material disposal of properties or business operation implemented by the debtor, the people’s court shall comply with the following principles:

　　(1)Whether or not the disposal is necessary for maintaining the production and operation of the debtor without damage to legitimated rights and interests of creditors as a whole;

　　(2)Whether or not the disposal is necessary for maintaining the reorganization value of the debtor;

　　(3)Whether or not the disposal could contribute to realize the legitimated rights and interests of creditors as a whole;

　　(4)If the proposal of material property constitutes a substantial overall transfer of business transactions or core business, then the review shall be made to check if the self-managed debtor or administrator has disclosed information based upon the information disclosure procedures and requirements applied prior to vote on the draft reorganization plan; whether or not all creditors and contributors whose rights and interests are subject to adjustment are organized for voting as required by the draft reorganization plan; whether the reorganization investors and transferee of assets are solicited in accordance with these Guidelines; whether there is any unfair transaction which may affect the interests of creditors as a whole.

　　57．If, in the opinion of the administrator or the self-managed debtor, any collateral is required for the reorganization of the debtor, then the exercise of security interest thereon shall be suspended and proper measures shall be taken by the administrator or the self-managed debtor to maintain the value of the collateral or provide security or compensation corresponding to a reduction or potential reduction in the value of the collateral.

　　Ifa secured party believes there is damage to or material value reduction in the collateral, which may damage its rights, it may apply with the people’s court to resume the exercise of its security interest, provided that a written application together with relevant evidences shall be submitted. The people’s court shall make its ruling within 30 days upon receiving the application. If the secured party is dissatisfied with the ruling, it may apply with the court issuing such ruling for reconsideration within 10 days upon receiving the ruling.

　　If the people’s court approves the resumption of exercise of security interest, the administrator or the debtor shall initiate a realization procedure against thecollateral 15 days upon receiving the ruling and the amount from such procedure shall, upon the payment of relevant costs, be applied to settle the claim of the secured party in priority.

　　In preparing the realization plan, the administrator or the self-managed debtor shall follow the principle of maximizing the value of the debtor’s property and listen to the opinion of the secured party.

　　58．During the reorganization, a contributor of the debtor shall not request for distribution of investment return.

　　Where a director, supervisor or senior manager of the debtor requests the transfer of the debtor’s equity held by it to a third party, the request shall not be permitted, except where the transfer of equity is in favor of the reorganization without damage to the legitimate rights and interests of other interested parties.

　　59．During the reorganization, the self-managed debtor or the administrator may engage intermediary agencies to provide intermediary services necessary for the reorganization. The advisory fees may be included in common debt upon being approved in the draft reorganization plan and paid in one installment at the implementation stage of the reorganization plan.

　　If the reorganization plan is not approved or the implementation of the plan is not completed, the advisory fees agreed in the consultant agreement shall be limited to 20% or less of the administrator’s remuneration. In case of a failure in the full compensation of the claims of employees, the amount agreed shall not exceed 10% of the administrator’s remuneration.

　　If the properties and business affairs are under the management of the administrator, it may employ themanagement of the debtor to manage such business affairs. The post and duties of such management shall be fixed and their remuneration shall be determined with reference to the salary standard applicable for staff at the same position in the same industry in Guangzhou.

　　60．If any claim in bankruptcy is transferred during the reorganization, as of the date the administrator is informed with the claim transfer, the transferee of such claim shall exercise the rights of original creditor enjoyed in reorganization procedure, provided that the vote already made by original creditor shall remain in force. Where a creditor transfers the same claim to more than one transferee with the intention to increase the number of voting rights, those transferees shall exercise the voting rights attached to the claim as if they constitute a single creditor.

　　61．If the debtor applies for reorganization voluntarily, and upon review, the people’s court may reject the reorganization application of the debtor if it finds that:

　　(1)There is no such a fact that the debtor is in financial difficulties due to its inability to pay the due debts, and there is no business or major debts for which a restructuring is needed. The reorganization application is made by the debtor solely for purpose to avoid paying due debts and lead to unreasonable delay in the realization of claims of creditors;

　　(2)The debtor fails to perform its obligations during the reorganization, fails to cooperate with the administrator in performing duties or fails to follow the instructions of the people’s court to a serious extent;

　　(3)Other cases in which the debtor initiates the reorganization procedure in bad faith to prevent the normal exercise of rights of creditors.

　　If, upon investigation, the administrator finds that any of the above cases applies to the debtor, it shall report to the people’s court proactively and apply for rejecting the reorganization application of the debtor. The creditor and other parties of the reorganization may submit to the administrator and the people’s court the evidences supporting the fact of existence of such cases.

　　If the debtor dissents with the ruling, it may appeal to the people’s court at the next higher level within 10 days from the date of service of the ruling.

　　The debtor shallbe liable for losses suffered by creditors as result of a reorganization procedure application made in bad faith or the delay in the performance of debt.

　　62．If the reorganization application of the debtor is accepted, and during the reorganization the people’s court finds upon a review that the debtor fails any of the conditions set forth in Article 2 of the Enterprise Bankruptcy Law, it may reject the reorganization application of the debtor. If the applicant dissents with the ruling, it may appeal to the people’s court at the next higher level within 10 days from the date of service of the ruling.

　　V. Preparation and Approval of Reorganization Plan

　　63．A reorganization investor means, in reorganization procedure, any natural person, legal person or other organization that participates in the reorganization procedure and helps the debtor recover profits or improve the repayment rate of all creditors by means of debt restructuring, asset restructuring, equity restructuring, business restructuring or otherwise.

　　Reorganization investors may be introduced by the debtor or the administrator through negotiation and public solicitation, or recommended by creditors or by self-recommendation.

　　64．If the debtor manages its properties and business affairs on its own, it may introduce reorganization investors by means of negotiation or by public solicitation from market.

　　If, within 3 months from the date of the first creditors’ meeting, or within 1 month from the dateof the people’s court’s ruling to reorganize the debtor in bankruptcy liquidation, the debtor fails to put forward a feasible plan for debt repayment and follow-up business operation, or if the debtor gives up soliciting reorganization investors on its own, the administrator may publicly solicit reorganization investors.

　　65．If the administrator manages the debtor’s property and business affairs, it shall publicly solicit reorganization investors.

　　In any of the following cases, the administrator may, with the approval of the creditors’ meeting, apply for determination of reorganization investor through negotiation:

　　(1)The debtor and the interested investor have initially formed a feasible debt settlement plan and a contributor’s equity adjustment plan in the prepackaged reorganization stage or during the debtor’s self-management period;

　　(2)When the administrator takes over the debtor’s property and business operation, a interested reorganization investor has expressly indicated with the administrator its intention to reorganize the debtor and has provided the debtor with bankruptcy costs and necessary funds to continue business operation during the reorganization period by means of borrowings or otherwise;

　　(3)The debtor’s business operation continues during the reorganization by means of operation entrusted to a third party and when accepting the entrustment, such third party intends to be a reorganization investor;

　　(4)Prior to the acceptance of the reorganization application, some reorganization investors has express intention to restructure the debtor and a feasible restructuring plan in compliance with the Enterprise Bankruptcy Law has been formulated;

　　(5)Reorganization value may be lost dramatically, so that it is necessary to identify reorganization investors as soon as possible;

　　(6)There are other cases that are not suitable for public solicitation of reorganization investors and the negotiation is approved by the creditors’ meeting.

　　If the negotiation is not approved by the creditors’ meeting, provisions in Articles 87 and 88 of the Enterprise Bankruptcy Law shall apply.

　　66．During the reorganization, reorganization investors may access to documents and materials relating to its decision-making on the investment, provided that it shall perform obligations such as to undertake a confidentiality obligations as required by the non-disclosure agreement executed with the debtor, provisional administrator and administrator and to commit to be bound by the draft reorganization plan.

　　67．The administrator or the self-managed debtor shall submit the draft reorganization plan to the people’s court and the creditors’ meeting within 6 months as of the date of the court’s ruling on reorganization.

　　If requested by the debtor or administrator with justified causes 15 days prior to the expiration of the aforesaid period, the people’s court may rule to extend such period for 3 months.

　　In the preparation of the draft reorganization plan, the administrator or the debtor shall discuss with creditors, contributors, reorganization investors and other interested parties sufficiently and listen to the opinions of managers, actual controller, employee representative or trade union. It may also invite relevant parties or entrust the third-party professional agencies and personnel to comment on certain affairs when necessary.

　　If the debtor or the administrator believes that proposals on the draft reorganization plan submitted by creditors, shareholders, reorganization investors and other interested partiesare feasible, it may submit such proposals to the creditors’ meeting for discussion.

　　68．The draft reorganization plan prepared by the debtor shall be subject to the review of the administrator prior to be submitted to the people’s court. The administrator shall submit an analysis report to the people’s court on the legality and feasibility of the draft reorganization plan and whether it infringes upon the legitimate rights and interests of interested parties.

　　If the draft reorganization plan is prepared by the administrator, it shall submit together with such plan an analysis report to the people’s court on the legality and feasibility of the draft reorganization plan and whether it infringes upon the legitimate rights and interests of interested parties.

　　69．The following details shall be included in the draft reorganization plan:

　　(1)Information on assets and liabilities of the debtor;

　　(2)Management plan of the debtor;

　　(3)Classification of claims;

　　(4)An adjustment plan of claims;

　　(5)A repayment plan of claims;

　　(6)An overall transfer plan of business operation;

　　(7)Term for implementing the reorganization plan;

　　(8)Term for supervising the implementation of the reorganization plan;

　　(9)Major uncertainties concerning the implementation of the reorganization plan;

　　(10)Any other plan in favor of the debtor.

　　The plan initem (4) shall specify the interests or interest adjustments of each voting group under the draft reorganization plan; the plan in item (5) shall contain the comparison and analysis on repayment of claims under reorganization and liquidation; and the term provided in item (8) shall not be less than that provided in item (7). If there is any reorganization investor, the draft reorganization plan shall make specific arrangements for the cost sharing, the repayment of investment funds and related liabilities in case of failure in completing the reorganization plan. In general, the draft reorganization plan shall also specify the allocation of litigation costs for reorganization case.

　　If the draft reorganization plan involves the adjustment of contributors’ rights and interests, the contributors participating in the voting shall be obliged to truthfully disclose the litigation involving their rights and interests to capital contribution, as well as the pledge, preservation and other encumbrances created on such rights and interests.

　　Prior to the vote, the information disclosure obligor shall sufficiently state the information which may affect the reasonable decision-making of creditors and contributors during voting and which is not included in the draft reorganization plan and shall answer relevant inquiries at the creditors’ meeting.

　　70．The debtor or administrator preparing the draft reorganization plan shall, within 15 days prior to submit such plan to the creditors’ meeting for voting, explain the contents of the draft reorganization plan and disclose the following information to the creditors, contributors and other interested parties by means of instant message system, e-mail, fax or other effective means:

　　(1)The debtor’s background, development history, facts and reasons of financial crisis;

　　(2)Operating status, financial condition, list of assets and present value estimation report;

　　(3)Value for survival, business prospects and future revenue forecasts;

　　(4)Details of liabilities, list of claims, status of properties available for distribution and estimated amount of distribution available for creditors under a simulated liquidation;

　　(5)Explanation of the accounting policies and value evaluation methods used to produce financial information;

　　(6)The sequence of compensation of creditors, a comparative analysis of the amount to be distributed to creditors in bankruptcy liquidation procedure and the amount to be repaid to creditors in reorganization procedure;

　　(7)Introduction and description of the reorganization plan;

　　(8)Notice of major risks of the draft reorganization plan;

　　(9)Pending and threatened litigations and their predicted outcome;

　　(10)The disclosure of relationship between the debtor and its affiliated company and related party transactions;

　　(11)The debtor’s tax statement and the taxation affairs in the implementation of the reorganization plan;

　　(12)Estimation of administrative costs of bankruptcy (including attorney fee and accountant fees);

　　(13)Other affairs required to be explained:

　　If the creditors, investors and other interested parties believe that the explanation made on the draft reorganization plan is insufficient, they may require the debtor or the administrator to make supplementary explanations or answer inquiries.

　　Creditors, contributors and other interested parties shall be entitled to propose amendments and suggestions to the party preparing the draft reorganization plan.Before a creditors’ meeting is held by the people’s court for voting on the draft reorganization plan, the party preparing the plan may make modification or supplementary to such plan.

　　71．If different adjustments to ordinary claims are made in the draft reorganization plan, the administrator shall divide the creditors into corresponding voting groups and submit the plan to the people’s court for confirmation and for voting on the plan.

　　In addition to the groups provided in Article 82.1 of the Enterprise Bankruptcy Law, the administrator may also establish voting groups based upon the nature of claims, different adjustment plans made for claims and other realities.

　　In case of a contributor group, the establishment of voting groups shall be subject to the provisions in the second paragraph of this Article.

　　72．If any creditor fails to declare its claims within the time limit for declaration of claims, and makes a supplementary declaration before submission of the draft reorganization plan to the creditors’ meeting for voting, the administrator shall review and submit it to the creditors’ meeting for verification. If, prior to the ruling of the people’s court to terminate the reorganization procedure, no objection is raised upon the verification of the creditor’s rights meeting, the administrator shall timely submit the declaration of claims to the people’s court for confirmation.

　　73．The people’s court shall hold a creditors’ meeting to vote on the draft reorganization plan within 30 days as of the date receiving such plan. The voting result shall be generated within 10 days after the meeting. The administrator shall give 15-day prior notice of meeting to all parties concerned.

　　Prior to the creditors’ meeting referred to in the preceding paragraph, the people’s court shall, in general, confirm the undisputed claims in advance.

　　If an individual creditor is unable to vote on time due to justified reasons, the administrator may allow it to postpone the voting, provided that the period postponed shall not exceed 30 days.

　　74．Creditors or investors whose rights and interests have not been adjusted or affected shall not participate in voting on the draft reorganization plan.

　　75．A meeting of contributor group shall be held for voting on adjustment of contributors’ rights and interests and all of the contributors shall be notified 15 days in advance. The adjustment of contributors’ rights and interests shall be deemed as being approved if the voting result of the contributor group meets any of the following conditions:

　　(1)In case of a limited liability company, the draft reorganization plan is approved by shareholders representing more than two-thirds of the voting rights of the company;

　　(2)In case of a joint stock company, the draft reorganization plan is approved by more than two-thirds of the voting rights of the shareholders present at the meeting;

　　Meeting of the contributor group may be held separately or jointly with the creditors’ meeting. If a resolution has been made by the shareholders’ meeting, general meeting of shareholders or other authorities of the debtor on the adjustment of contributors’ rights and interests in the draft reorganization plan, no meeting of the contributor group is required for voting.

　　If the contributor group of a listed company or other public company withlarger numbers of shareholders votes on the draft reorganization plan, the vote may be made online or on site. The online voting rights shall be exercised in accordance with the provisions issued by the China Securities Regulatory Commission.

　　76．If the draft reorganization plan is approved by each and all voting groups, the plan shall be approved.

　　If the rights and interests of each and all voting groups are not adjusted or affected, the plan shall be deemed as approved as the preceding paragraph shall apply.

　　77．If more than half of the creditors in a voting group which fails to pass the draft reorganization plan explicitly object to another vote or they fail to negotiate without justified reasons at a specified time, and the amount of claims represented by such creditors exceeds one third of total claims of the group, then no further vote is allowed.

　　If contributors with more than one-third of the voting rights explicitly object to vote on the adjustment of contributors’ rights and interests again or refuse the negotiation without justified reasons at a specified time, then no further vote is allowed.

　　Where the debtor or the administrator applies for a second vote, the application shall be made within 3 months after the first vote. If the draft reorganization plan concluded upon negotiation damages the interests of any voting group, the people’s court shall reject the application for a second vote.

　　78．If an application is made by the debtor or administrator for approval of the reorganization plan, the people’s court shall review of the contents of the reorganization plan and the voting procedures within 30 days from the date of receiving such application. If the debtor applies for approval of the draft reorganization plan prepared based upon a reorganization plan made at the prepackaged reorganization stage, the people’s court shall also review the information disclosure and comment collection procedures.

　　The people’s court may organize a hearing to determine whether or not to approve the draft reorganization plan, focusing on hearing and reviewing whether the objection has a factual and legal basis.

　　79．In reviewing the adjustment of the contributors’ rights and interests, if the pledgee of equity raises an objection on the ground that such adjustment damages its security interest, the approval of the draft reorganization plan shall not be affected.

　　80．If any of the following case occurred during the reorganization, upon the request of the administrator or any interested party, the people’s court shall rule to terminate the reorganization procedure and declare the bankruptcy of the debtor:

　　(1)The debtor’s business and property condition continues to deteriorate without a possibility for rescue;

　　(2)The debtor commits fraud, maliciously reduces its properties, or any other act significantly detrimental to the obligee;

　　(3)The debtor or its business lacks of the value and feasibility of reorganization;

　　(4)The debtor fails to fully perform the obligation of information disclosure in accordance with the form, content and period as provided by relevant laws, judicial interpretations and these Guidelines;

　　(5)The debtor or administrator fails to submit draft reorganization plan within the prescribed period;

　　(6)The draft reorganization plan has not been passed and dissatisfies with the provisions of Article 87 of the Enterprise Bankruptcy law.

　　81．If any of the following case occurred during the reorganization, the people’s court shall rule to terminate the reorganization procedure and declare the bankruptcy of the debtor:

　　(1)The administrator or the self-managed debtor fails to put forward a draft reorganization plan in accordance with Article 79 of the Enterprise Bankruptcy Law;

　　(2)The draft reorganization plan has not been passed and approved or the draft reorganization plan passed has not been approved.

　　82．Upon the ruling of the people’s court to terminate the reorganization procedure and the declaration of the debtor’s bankruptcy, the administrator shall continue to perform its duties as an administrator in accordance with the bankruptcy liquidation procedure. The remuneration of the administrator shall be determined based upon the total value of the unsecured property finally paid off by the debtor in the reorganization and liquidation procedures. However, if the administrator is unable to perform its duties continuously or is not further suitable to act as an administrator, the people’s court shall appoint a new administrator according to law.

　　If a new administrator is appointed in accordance with the provisions of the preceding paragraph, the total remuneration of the administrator of the reorganization procedure and the administrator of the liquidation procedure shall be determined by the people’s court on the basis of the total value of the unsecured properties finally paid off by the debtor in the reorganization and liquidation procedures, and the remuneration distribution scheme shall be submitted to the people’s court for determination upon negotiation of the two administrators; if negotiation fails, their respectively remuneration shall be determined by the people’s court in reference to the provisions on administrator’s remuneration, taking consideration of relevant situation.

　　VI. Implementation and Supervision of the Reorganization Plan

　　83．The reorganization plan approved by the people’s court shall be binding upon the debtor and all creditors. The adjustment made on the rights and interests of contributors as provided in the reorganization plan shall be binding upon all contributors of the debtor.

　　If the contributors, creditors or other parties refuse to cooperate with the procedures for adjusting the rights and interests in and to capital contribution in accordance with the reorganization plan without justified reasons, the people’s court may, upon the application of the administrator or any interested party, issue notice for assistance in execution to relevant parties.

　　84．The debtor shall be responsible for implementing the reorganization plan and reporting the details of implementation and its financial condition to the administrator, and unless otherwise agreed in the reorganization plan, the administrator shall responsible for supervising the implementation of such plan.

　　85．The administrator shall supervise the implementation of the reorganization plan and prepare supervision plan. The supervision responsibilities of administrator mainly include:

　　(1)To regularly receive reports on the debtor’s financial condition;

　　(2)To timely discover and correct the illegal or improper acts of the debtor in implementing the reorganization plan;

　　(3)To review the debtor’s application for extending the period for implementing the reorganization plan.

　　Upon the successful implementation of the reorganization plan, the administrator shall submit a supervision report to the people’s court.

　　86．If a creditor make a supplementary declaration for its claims upon the expiration of the claim declaration period and such claims has not been confirmed by the people’s court prior to the creditors’ meeting held for voting on the draft reorganization plan, then, except that certain repayment amount has been reserved for such claims in the reorganization plan, such creditor shall not exercise its right against the debtor to require paying off the claims, file new action for performance of a property type or apply for enforcing the debtor’s property.

　　Upon the completion of the organization plan, the creditor in preceding paragraph may exercise its rights in accordance with the repayment conditions of similar claims specified in the organization plan.

　　87．In the implementation of the organization plan and with the application of the debtor or the administrator, the people’s court may coordinate with relevant functional departments to assist the debtor to resume its normal production and operation, including but not limited to remove the debtor from lists of enterprises with abnormal operations, restore its business license, delete its bad credit records, remove it from lists of enterprises with dishonest tax payment acts and remove it from the list of dishonest persons subject to enforcement, etc.

　　88．If the reorganization plan fails to be implemented within the prescribed period due to objective reasons, the debtor shall submit an application for extension to the administrator and the people’s court no later than 30 days prior to the expiration of the implementation period of the plan. The administrator shall review the application and issue a special supervision report to the people’s court accordingly. The administrator shall apply with the people’s court at the same time to extend the supervision period for the implementation of the reorganization plan if it is found by review that the delay is resulted by reasons other than the debtor’s rejection to implement the reorganization plan and the reorganization plan may be implemented continuously.

　　If the people’s court, upon review, believes that the application complies with relevant law and regulations, it may rule to extend the implementation period of the reorganization plan and the supervision period for such implementation.

　　If the repayment is deferred accordingly as a result of the extension of the implementation period, a fair compensation shall be provided by the debtor to the corresponding obligees.

　　89．In case of a failure in implementing the organization plan as a result of certain objective reasons, the administrator may call a creditors’ meeting to vote on whether to approve the modification of the reorganization plan.

　　If the modification of the reorganization plan is approved by the creditors’ meeting, the administrator or debtor shall, within 10 days upon the resolution is adopted, submit it to the people’s court for approval. The application for modifying the reorganization plan may only be made in once.

　　If the modification is disapproved by the creditors’ meeting or the application for the change is rejected by the people’s court, the people’s court may, upon request of the manager or any interested party, rule to terminate the implementation of the reorganization plan and declare the debtor bankrupt.

　　If the modification of the reorganization plan is approved by the creditors’ meeting, the administrator or debtor shall, within 10 days upon the resolution is adopted, submit to the people’s court anApplication for Approval of the Modification of the Reorganization Plan, which shall be attached with the resolution of the creditors’ meeting and the modified draft reorganization plan.

　　90．If the modification of reorganization plan is approved by the people’s court, the debtor or administrator shall propose a new reorganization plan within 6 months. The modified reorganization plan shall be submitted to creditor group and contributor groups which are adversely affected by such modification for voting. The repayment received by creditors in accordance with the reorganization plan shall remain in valid, provided that the portion of the claims that have been repaid shall not have any voting right. Procedures for voting, applying with the people’s court for approval and deciding whether to approve or not are the same as that applied during reorganization.

　　Unless otherwise agreed by the parties,any security provided for the implementation of the original reorganization plan shall not be invalid as a result of the approval of the modification by the people’s court to the extent of the scope and period of the original security. If the modified reorganization plan is approved by the people’s court and as a result of which, the burden of providing security for the implementation of the original reorganization plan is increased, the guarantor shall not be liable for the increased part of security, unless otherwise agreed by the parties.

　　91．If the debtor refuses to implement the reorganization plan, or fails to implement the reorganization plan due to objective reasons, and fails to apply for modifying the reorganization plan, or the application is not approved by the creditors’ meeting or is rejected by the people’s court, the people’s court shall, upon the request of creditors, the debtor, contributors of the debtor or other interested parties or the administrator, rule to terminate the implementation of the reorganization plan and declare the debtor bankrupt.

　　92．Upon the termination of the implementation of reorganization plan and the declaration of the debtor’s bankruptcy, the administrator shall immediately take over the debtor’s seal, account books and properties, and carry out bankruptcy liquidation on the debtor.

　　The bankruptcy claims that have been paid off during the implementation of the reorganization plan shall be reduced by the administrator in accordance with provision in Article 93.2 of the Enterprise Bankruptcy Law of the People’s Republic of China; remaining bankruptcy claims upon such reduction shall be paid off in accordance with the order of repayment stipulated in Article 113 and the conditions of repayment specified in Article 93.3 of the Enterprise Bankruptcy Law of the People’s Republic of China.

　　93．Upon the completion or primary completion of the reorganization plan, the administrator shall apply to conclude the reorganization implementation procedure and submit a supervision report. The people’s court shall rule to conclude the procedure within 3 days upon receiving the application.

　　94．Upon the conclusion of reorganization procedure ruled by the people’s court, the debtor shall not assume any repayment liability for the debt reduced in accordance with the reorganization plan.

　　VII. Expedited Trail Mechanism for Reorganization

　　95．The expedited trail mechanism for reorganization shall apply to debtor meeting any of the following conditions:

　　(1)A single reason for financial crisis suffered by the enterprise; clear property status with few dispute on such properties; clear debtor-creditor relationship, and a small scale of the enterprise;

　　(2)Few assets of the debtor, a small number of creditors with no material stability risk;

　　(3)The business operation continues prior to and after the commencement of the bankruptcy procedure;

　　(4)The debtor or the creditors with claims, individually or in aggregate, accounting for over one fourth of the total known claims, apply for the application of summary procedure;

　　(5)The debtor’s main assets or main business have high liquidity or the industry it operates in is on the upward trend with a bright market prospect;

　　(6) Other cases in which the people’s court deems it appropriate to apply the expedited trial mechanism.

　　96．The expedited trial mechanism shall not apply to a bankruptcy case if:

　　(1)The debtor has a complicated property status, a complicated debtor-creditor relationship or suffered financial crisis for multiple reasons;

　　(2)The debtor is a listed company or a financial institution, or there are factors in the debtor, such as merger and reorganization of affiliated enterprises, cross-border reorganization, etc.;

　　(3)Bankruptcy cases involving a large number of creditors and the difficulties in staff resettlement;

　　(4)The audit work suffers difficulties due to the complicated account books and important document of the debtor;

　　(5)An inter-cross of criminal and civil procedures is involved;

　　(6)Other cases in which the speedy trial mechanism shall not apply.

　　97．The application period of expedited trail mechanism for reorganization shall be from the date of the acceptance of the reorganization case to the date of the approval of the draft reorganization plan by the people’s court.

　　98．In general, at the stage of bankruptcy application review, the people’s court shall decide whether the expedited trail mechanism shall be applied by means of written review, or it may make the decision upon consulting the opinions of the applicant, the respondent and main creditors.

　　If the people’s court decides to apply theexpedited trial mechanism while accepting the bankruptcy application, it shall notify such decision in the written decision on appointing the administrator and shall make an announcement in respect of the decision together with the matters specified in Article 14 of the Enterprise Bankruptcy Law.

　　If, upon the acceptance of the bankruptcy application, the people’s court decides to apply theexpedited mechanism, the parties of the bankruptcy case shall be notified with relevant matters.

　　99．For cases to which the expedited trial mechanism shall apply, the notification period and method, service method, announcement period and method shall be subject to the provisions of the Opinions of the Supreme People’s Court on Promoting Lawful and Efficient Trials of Bankruptcy Cases and the Opinions for the Promotion of Speedy Trial of Bankruptcy Cases (for Trial Implementation) issued by Guangzhou Intermediate People’s Court.

　　100．For cases to which the expedited trial mechanism shall apply, in addition to the method of appointing the administrator through negotiation as stipulated in paragraph 2 of Article 46 hereof, the people’s court generally appoints the administrator by means of random selection. If there are special provisions on the appointment of administrator in laws and relevant judicial interpretations, the appointment shall be made subject to such special provisions.

　　101．For cases to which the speedy trial mechanism shall apply, the content of information disclosure may be simplified as appropriate, provided that information which has a significant impact on the interests of relevant parties shall be disclosed in a complete, accurate and sufficient way.

　　The period for pre-disclosure of information may be shortened as appropriate, provided that sufficient period shall be provided for receiving party to learn, understand the information and to express its opinion and in case of any objection, the period required for asking for supplementary information, making inquiry, and raising objection to the people’s court if the inquiry result is not satisfactory.

　　102．For cases to which the expedited trial mechanism shall apply, the trail shall be completed within 6 months as of the date the case accepted, in principle. During the application of the expedited trial for reorganization, if any party of the bankruptcy object to the application of the expedited trial mechanism with sufficient reasons, or if it is not suitable for the further application of the expedited trial mechanism, the people’s court shall timely convert the trail mechanism into general mechanism and continue the trial, and the procedures already completed shall remain valid.

　　The people’s court shall serve on the administrator the decision to change the trail mode, who shall inform the creditors, the debtor and relevant interested parties.

　　103．For cases to which the expedited trial shall apply, the administrator and the self-managed debtor shall submit a draft reorganization plan within 120 days after the case is accepted.

　　104．If any of the events in Article 61 and 62 hereof applies to a case which is accepted by the people’s court and to which the expedited trial shall apply, the people’s court may, upon review, reject the application.

　　105．In any of the following case, the people’s court shall rule to terminate the reorganization procedure and declare the bankruptcy of the debtor:

　　(1)The debtor or administrator fails to submit the draft reorganization plan within 120 days as of the date the reorganization ruled by the people’s court;

　　(2)Any condition in Article 80 and 81 hereof applies to the debtor.

　　106．The power to interpret these Guidelines shall remain with the Judicial Committee of this Court.