Under the Bankruptcy Law 2014, technically, creditors of a bankrupt enterprise can complete procedures to liquidate the bankrupt enterprise without cooperation of the bankrupt enterprise. However, there may be certain difficulties in doing so. These difficulties include, among other things:
- The bankrupt enterprise may request a direct negotiation with the creditors who file a request for commencing bankruptcy procedures (the requesting creditors). The negotiation may take up to20 days.
- The bankrupt enterprise may refuse to provide necessary documents and information for implementing bankruptcy procedures. For example, the bankrupt enterprise may refuse to provide documents necessary for the requesting creditors to submit the application for commencing bankruptcy procedures to the court or to conduct an inventory of the bankrupt enterprise’s assets. The Bankruptcy Law 2014 does not have a specific procedures to require the bankrupt enterprise to provide necessary documents and information.
- The bankrupt enterprise may refuse to attend meeting of creditors. The Bankruptcy Law 2014 does not have specific procedures to require the bankrupt enterprise to attend a meeting of creditors. That said, attendance of the bankrupt enterprise does not prevent a meeting of creditors from proceeding.
- The bankrupt enterprise is allowed to continue its business subject to supervision by the appointed liquidator and certain limitation. It remains to be seen if the supervision of the appointed liquidator could ensure that the creditors’ interest is taken care of.
- There is no statutory sub-ordination of shareholder loans extended by shareholders of the bankrupt enterprises to loans extended by other creditors to the bankrupt enterprise. Therefore, there is a risk that a shareholder who has extended a shareholder loan to the bankrupt enterprise may take a different view from other creditors and cause obstacles to the bankruptcy procedures.
- The bankrupt enterprise may petition a resolution of the meeting of creditors.