Does the company still have to repay its debts when it files for bankruptcy?
If the enterprise is not well managed or has no capital to run, it can apply for bankruptcy.The litigant action that the parties put forward to the court for declaring the debtor bankrupt. Does the enterprise still need to repay the debts after filing for bankruptcy?
The company is an independent legal person, and its property is independent of its founder and shareholders. The liability for the company’s debts is limited to its property. The individual shareholder shall be liable only to the extent of his capital contribution to the company, and shall not be liable for the part exceeding his capital contribution.
In case of bankruptcy of a limited company, the registered capital shall be taken as the bottom line of debt compensation, that is, the debt shall be compensated according to the amount of registered capital.
If a company goes bankrupt, it only needs to repay its debts with all the property of the company. And the part of the company’s property that is insufficient to be paid off, the debt shall be extinguished
Therefore, if the enterprise meets the bankruptcy conditions, it can apply to the court for bankruptcy liquidation and debt repayment.And the remaining property of the company needs to be used to repay the debt. If there is no property available for distribution, the people’s court will rule to terminate the bankruptcy procedure and the debt will not be repaid.
According to Article 186 of "The Company Law of the People's Republic of China“
After clearing up the company’s assets and preparing the balance sheet and list of assets, the liquidation group shall formulate a liquidation plan and submit it to the shareholders’ meeting or the people’s court for confirmation.
In addition, the remaining properties of the company’s assets after paying the liquidation expenses, employees’ wages, social insurance expenses and legal compensation, paying the taxes owed and paying off the company’s debts,a limited liability company shall be allocated in proportion to the capital contribution of its shareholders, and a joint stock limited company shall be allocated in proportion to the shares held by its shareholders.
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