(a) In relation to each type of insolvency procedure available in the legal system of this economy, what are the administrative organs/entities involved in the implementation and management of that procedure? (For example a trustee, liquidator, receiver, government official.)

 

The following persons act as administrators in different insolvency proceedings:

• Bankruptcy: the trustee in bankruptcy appointed by the court; and the supervisor elected form the creditors' meeting.
• Composition: a district court judge as the supervisor; and a certified public accountant as assistant supervisor.
• Reorganization: the examiner appointed by the court; the reorganizer(s) appointed by the court from among the directors or creditors; and the supervisor appointed by the court.
• Special Liquidation: the examiner appointed by the shareholders meeting; the liquidator(s) appointed by the court from among the directors or other persons.

(b) What qualifications must each type of administrator of insolvency procedures possess? Is there a system of regulation of insolvency administrators in this economy?

 

The qualifications of the administrators for each type of insolvency proceeding are set forth below:

• Trustee in bankruptcy shall be
  • elected from among certified public accountants or other persons qualified for the management of the corporate debtor's assets; or
  • ppointed from among the creditors at the creditors' meeting.
• Supervisor in bankruptcy shall be
  • lected by the creditors' meeting.
• Supervisor in composition shall be:
  • judge designated by the court.
• Assistant supervisor in composition shall be:
  • elected from among certified public accountants;
  • elected by the local chamber of commerce; or
  • one or two other proper persons.
• Examiner in reorganization shall be:
  • non-interested person with special knowledge or experience in the operation of the company in reorganization and appointed by the court.
• Reorganizer in reorganization shall be:
  • the director of the company; or
  • ny other person appointed by the court among the creditors or shareholders when the directors are deemed unsuitable by the court.
• Supervisor in reorganization shall be:
  • non-interested person with special knowledge or experience in the operation of the company in reorganization and appointed by the court.
• Liquidator shall be
  • directors of the company or any other person elected by the shareholders meeting.
• Examiner in liquidation shall be
  • non-interested person with special knowledge or experience in the operation of the company in liquidation and appointed by the court.-

(c) Are the creditors of a corporate debtor permitted to participate in the administration of the relevant insolvency procedure, and if so, how? (For example are the creditors permitted to assist the administrator, or supervise or dictate the conduct of the administration?)

 

Pursuant to the Bankruptcy Law and Company Law, the creditor may form, or the court may call upon the creditor to form, a creditors' meeting to participate in the bankruptcy, composition and special liquidation proceedings. In addition, the Company Law also provides that the creditors and shareholders of a corporate debtor may form an "interested parties meeting" to participate in the reorganization proceeding. The formation and function of such meetings are as follows:

• Creditors' meeting in the bankruptcy proceeding: The court shall, upon the application of the trustee in bankruptcy or of the supervisor, convene the creditors' meeting. The court shall designate a judge to preside at the creditors' meeting. Resolution may be passed by a majority vote of the creditors present at the meeting, which together represents more than one half of the aggregate claim amount, on the following matters:
  • ² election of one or several supervisors to supervise the progress of the bankruptcy procedures on behalf of the creditors;
  • ² measures for the management of the bankrupt estate;
  • ² continuation or discontinuation of the business of the corporate debtor;
  • ² election, appointment, and change of the trustee in bankruptcy;¨² approval or disapproval of the reconciliation plan (with the purpose and effect to terminate the bankruptcy procedures, if approved by the court); and
  • ² giving instructions regarding the disposal of the properties of the bankruptcy estate, in addition to auctions.
• Creditors' meeting in the composition proceeding: Unlike the bankruptcy proceeding, there must be a creditors' meeting in the composition proceeding to negotiate with the corporate debtor. The supervisor shall be the chairman of such meeting, and the corporate debtor's representative(s) shall be present at the meeting and answer the inquiries raised by the supervisor, the assistant supervisor, or the creditors. A resolution for composition at the creditors' meeting shall be adopted by a majority vote of the creditors present at the meeting, who together represent more than two thirds of the aggregate unsecured claim amount. The composition resolution is subject to the approval of the court.
• Interested parties meeting in the reorganization proceeding: Pursuant to the Company Law, all creditors and shareholders shall be interested parties in the reorganization of a company and shall attend the interested parties meetings. Interested parties shall be classified into four groups: secured group, unsecured group, preferred group and shareholders group. The resolution of the meeting shall be approved by creditors or shareholders holding more than one-half of the aggregate claims or equity (as the case may be) in each group; provided that the decision on the reorganization plan shall be made by a majority of over two-thirds of the aggregate votes. The functions of the meeting are to:
  • ² review reports on the business and financial conditions of the company and the opinions on the reorganization of the company provided by the reorganizer;
  • ¨ review and approve (or disapprove) the reorganization plan; and
  • ² resolve other matters relating to reorganization.
• Creditors' meeting in the liquidation proceeding: Whenever it is deemed necessary, the liquidators may, during the process of liquidation, convene a meeting of creditors. The liquidators may consult the opinion of the liquidation examiner and make a proposal for an agreement of settlement to the creditors' meeting. An agreement of settlement shall be adopted by the concurrence of the unsecured creditors holding three-fourths or more of the total unsecured claim amount at a meeting attended by over one half of the unsecured creditors. However, the resolution shall be approved by the court.

  In addition, in doing any of the following acts, the liquidators shall obtain the consent of the liquidation examiner and, if the liquidation examiner does not give consent, they shall convene a creditors' meeting to resolve on the matters, unless the value involved is not more than one-tenth of one percent of the total assets of the company:

  • ¨ disposal of any property of the company;
  • ² borrowing of money;
  • ² bringing of an action;
  • ¨ agreement to composition or seek arbitration; or
  • ² waiver of any right.

(a) In relation to each type of insolvency procedure available in the legal system of this economy, what are the powers given to each type of administrator by statute, at general law or pursuant to the terms of the appointment? (for example power to carry on the business of the organization, to pay creditors, to compromise claims of or against the debtor, to issue or defend legal proceedings, to obtain credit, to sell property, to execute documents on behalf of the debtor.)

 

• Trustee in bankruptcy:
  • ² apply to the court to summon the bankrupt's interested parties for the purpose of investigating the bankrupt's assets and business status.
  • request the statement on the status of the bankrupt's assets and a list of its creditors and debtors from the bankrupt.
  • ² request all the books and documents relevant to the bankrupt's properties and all the properties in the bankrupt's custody to be handed over by the bankrupt.
  • ² inquire the bankrupt in connection with its properties and business.
  • ² manage and dispose of the bankrupt's assets.
  • ² terminate the lease agreement entered into by the bankrupt even if the lease has a fixed term.
  • ² apply to the court and repudiate any gratuitous or onerous acts done by the bankrupt prior to the adjudication of bankruptcy, if such acts are prejudicial to the creditors' rights and are repudiatable in accordance with the provisions of the Civil Code.
  • ² repudiate the following acts done by the bankrupt within six months before the adjudication of bankruptcy: (a) furnishing securities for outstanding debts (except that the bankrupt has promised six months before the adjudication of bankruptcy that the security will be furnished for such debts) and (b) repaying debts which are not yet due.
  • ² take necessary precautionary actions with respect to the bankrupt's rights that form a part of the estate in bankruptcy.
  • ² prior to the first meeting of creditors, continue the bankrupt's business within the necessary scope.
• Examiner in bankruptcy:
  • ² supervise the bankruptcy proceeding on behalf of the creditors.
  • ² petition to the court to replace the trustee in bankruptcy.
  • ² inquire the bankrupt and other persons in accordance with the Bankruptcy Law of the status of the bankrupt's properties and business.
  • ² approve or disapprove material acts to be conducted by the trustee.
  • ² petition to the court for the convening of the creditors' meeting.
  • ² petition to the court to injunct the execution of the resolution made in the creditors' meeting.
  • ² request the report regarding, and investigate the status of, the bankruptcy estate.
  • ² give opinions to the court in connection with the reconciliation proposal made by the creditors meeting.
• Supervisor in composition:
  • ² supervise the debtor's business.
  • ² give instructions to the assistant supervisor.
  • ² report to the court for any improper act done by the debtor.
  • ² act as the chairman of the creditor's meeting.
  • ² call the creditors' meeting and make a report to the court if the debtor, after being duly notified, fails to be present at the creditor's meeting without any justifiable reason. The court then shall adjudicate the debtor bankrupt.
  • ² report on the status of the debtor's assets and business on the basis of the result of investigation, and state his opinion regarding the composition plan proposed by the debtor at the creditors' meeting.
  • ² rule and resolve the disputes between the claims or amount alleged by the creditors.
  • ² declare the composition procedure closed and make a report to the court when a composition is rejected at the creditors' meeting.
  • ² report the successful composition to the court when it is passed. The court then shall give a ruling to approve or disapprove the composition.
  • ² state opinions in the court before giving a ruling for the dispute of among the creditors.
• Assistant supervisor in composition shall be:
  • ² supervise the debtor's business.
  • ² attend the creditors' meeting.
  • ² report on the status of the debtor's assets and business on the basis of the result of investigation, and state his opinion regarding the composition plan proposed by the debtor at the creditors' meeting.
  • ² state opinions in the court before giving a ruling for the dispute of among the creditors.
  • ² supervise the management of business by the debtor and stop any action of the debtor prejudicial to the interest of creditors, upon the supervisor's instruction.
  • ² safekeep the current assets and business receipts of the debtor upon the supervisor's instruction.
  • ² complete the preparation of the creditors' list upon the supervisor's order.
• Examiner in reorganization shall:
  • ² complete the examination and report to the court, within 30 days after appointment, in respect of (a) the actual business, financial condition, and evaluation of the assets of the company, (b) whether the business is still worthy of operation according to the standard of reasonable financial expenditure, (c) whether there was any neglect or improper act on the part of the responsible persons of the company in the performance of their duties, and (d) whether there is any fraudulent or false statement in the petition.
  • ² inspect all books, records of accounts, documents and property relating to the business or financial condition of the company.
  • ² Reorganizer in reorganization
  • ² perform the daily business of the company under reorganization.
  • ² attend the court hearing with respect to the rights of creditors and shareholders.
  • ² answer questions at the meeting of concerned persons.
  • ² prepare the reorganization plan and submit the same to the court.
  • ² execute the reorganization plan.
  • ² petition to the court to remove the obstacles of reorganization.
  • ² petition to the court to instruct the interested parties meeting to reconsider the reorganization plan on the grounds of situations being changed or justifiable reasons which results in the effect that the plan cannot be executed or it becomes unnecessary to execute the plan.
  • ² convene a meeting of shareholders after reorganization.
  • ² Petition to the court for the adjudication of completion of reorganization.
• Supervisor in reorganization:
  • ² after delivery of the ruling for reorganization of the company, the operation of the business of the company and the power of controlling and disposing of the property thereof shall be transferred to reorganizers, and the reorganization supervisor shall supervise such transfer.
  • ² supervise the performance of the reorganizers.
  • ² petition to the court for the replacement of the reorganizer if he or she acts unlawfully or improperly.
  • ² approve or disapprove material acts to be conducted by the reorganizers.
  • ² petition for necessary injunctions.
  • ² handle the registration of creditors' and shareholders' rights.
  • ² prepare lists of preferred creditors, secured creditors, unsecured creditors and shareholders, stating therein the nature of their rights, sums of money and number of votes, and shall submit a report to the court.
  • ² attend the court hearing with respect to the rights of creditors and answer questions.
  • ² act as the chairman of the meeting of interested parties.
  • ² report to the court when the meeting of interested parties does not pass the reorganization plan.
  • ² petition to the court to instruct the interested parties meeting to reconsider the reorganization plan on the grounds of situations being changed or justifiable reasons which results in the effect that the plan cannot be executed or it becomes unnecessary to execute the plan.
• Liquidator
  • ² inspect the corporate debtor's properties and make books of accounting, submit the same to the examiner for the recognition by the shareholders' meeting.
  • ² wind up all pending business of the corporate debtor.
  • ² collect all outstanding debts and to pay off all claims.
  • ² allocate surplus or loss.
  • ² allocate the residual assets.
  • ¨ call the shareholders' meeting.
  • ² petition for the bankruptcy of the company if the debts exceed the corporate debtor's assets.

(b) To what extent and in what circumstances may each type of insolvency administrator seek assistance, advice or direction in the conduct of the administration, and from what sources? (for example the Court, his appointor, the creditors of the debtor, a solicitor, accountant or other relevant person.)

 

Regarding the involvement of the court, please refer to answers above. The administrator will generally seek assistance or advice from professionals in terms of, e.g., evaluation of property, management of companies which requires specialty or know-how, etc.

(a) In relation to each type of insolvency procedure available in the legal system of this economy, what are the duties imposed upon each type of administrator by statute and at general law? (for example a duty to take possession of assets of the debtor, to realise those assets, to discharge the debt owed to his appointor, to call for proofs of debts owed to creditors, to adjudicate upon claims of creditors, to apply available assets in discharge of those claims, to report on the conduct of the debtor by the proprietors.)

 

As to the duties of the administrators in the insolvency proceedings, please refer to J2 (a) above. The following are in addition to the above:

• Trustee in bankruptcy shall exercise his powers as mentioned in J2 above in due care and shall be supervised by the court and post bonds, if necessary. If the trustee in bankruptcy fails to exercise due care, it shall be liable jointly with the bankrupt for any losses or damages so caused to any other person, or it shall be liable for losses or damages caused to the bankrupt.
• The reorganizer shall perform its duties in due care and its performance is subject to the supervision of the supervisor in reorganization. The supervisor needs to exercise due care. If the reorganizer or the supervisor fails to exercise due care, it shall be liable jointly with the corporate debtor for any losses or damages so caused to any other person, or it shall be liable for losses or damages caused to the corporate debtor.
• The liquidator shall perform its duties in due care. If the liquidator fails to exercise due care, it shall be liable jointly with the corporate debtor for any losses or damages so caused to any other person, or it shall be liable for losses or damages caused to the corporate debtor.

(a) What remedies and/or sanctions are available in the legal system of this economy in respect of breaches of duty or transgressions committed by each type of insolvency administrator?

 

Please refer to J3 (a) above with respect to the civil liability. In violation of fiduciary duties, certain criminal penalty (imprisonment up to five years, detention and/or fines no more than 3,000 New Taipei,China dollars) could possibly be imposed upon the breaching administrator by the court.

(b) Have there been actual instances of breach of duty or transgressions committed by insolvency administrators?

 

No.

(c) If so, give the details of any major cases and a summary of the action taken and the results.

 

Not applicable.