Abstract
Fair distribution in judgment execution generally served as the
de facto bankruptcy substitute from the 1980s to 2015, a time when
the China Supreme People's Court partially abolished this regime in an
effort to nudge more commercial judgment executions into formal
bankruptcy procedures. As will be reported later in this article, in view
of the insurmountable barriers to commence corporate bankruptcy
procedures, even after 2015, courts still use fair distribution to
pragmatically solve equal treatment between competing creditors.
However, there is little research on fair distribution in judgement
execution as a bankruptcy substitute in China, although there has been
significant academic study of China's commercial judgment execution
system per se, notably by Professors Donald Clarke, Randall
Peerenboom, and He Xin. To fill this gap, this article generally asks
one simple question: Is fair distribution in judgment executions
effective in filling the gap left by the virtual absence of bankruptcy law
in China? Under this general question, there are many specific questions
that need to be answered. For example, how often is fair distribution
used in the event of the bankruptcy of execution debtors? Are execution
creditors treated well under the fair distribution scheme? And if not,
what factors hamper the application of fair distribution? Is it the lack of
bankruptcy filings, as argued by many court officials in China, the cause
of the meagre use of the corporate bankruptcy law?