Case Description
Supplier A and Company B have maintained a long-term commercial cooperation relationship. Supplier A provides the goods required by Company B, and Company B pays the corresponding consideration after receiving the goods. During the epidemic period, Company B's operations were impacted, resulting in poor capital turnover and overdue payment of more than one year. After urging, Company B only paid part of the payment for the goods in July. In August, Supplier A filed a lawsuit demanding that Company B pay the remaining amount, In October, Company B paid the remaining payment according to the judgment. In November of the same year, it was rumored that Company B might face bankruptcy. Supplier A learned that if Company B filed for bankruptcy at this time, the previously paid payment for goods might be revoked.

Lawyer Analysis

1、 Confirmation of the effectiveness of Company B's liquidation in July

According to Article 32 of the Enterprise Bankruptcy Law of the People's Republic of China, within six months before the people's court accepts the bankruptcy application, if the debtor still pays off individual creditors under the circumstances specified in Paragraph 1 of Article 2 of this Law, the administrator has the right to request the people's court to cancel it. Article 2 If an enterprise as a legal person is unable to repay its debts as they fall due, and its assets are insufficient to repay all its debts or it is obviously lacking in solvency, its debts shall be liquidated in accordance with the provisions of this Law.

In other words, if Company B already meets the bankruptcy conditions when it pays off in July, and the court accepts the bankruptcy application in November, the date on which the court accepts the bankruptcy application is the time point. Within six months before November, the bankruptcy administrator of Company B can request the judge to revoke the payment to Supplier A in July. How to determine whether Company B meets the bankruptcy conditions six months before accepting the bankruptcy application? The court generally refers to Company B's audit report, asset evaluation report, financial statements, and other financial information to comprehensively determine whether Company B meets the bankruptcy conditions when paying off the payment for goods from Supplier A.

2、 Confirmation of the effectiveness of Company B's liquidation in October

According to Article 15 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People's Republic of China (II) (Revised in 2020), if the debtor makes an individual payment to the creditor through litigation, arbitration, and enforcement procedures, and the administrator requests cancellation in accordance with Article 32 of the Enterprise Bankruptcy Law, the people's court will not support it.
The act of supplier A requesting company B to fulfill its contractual obligations to pay the remaining payment for goods through litigation is an exception to the revocable liquidation of individual creditors within six months before accepting the bankruptcy application. That is, now that company B has applied for or been filed for bankruptcy, the bankruptcy administrator of company B may not request a judge to revoke its liquidation in accordance with Article 32 of the Bankruptcy Law when the payment for goods was made in October.

Tips:

When Company B is facing a debt crisis and Supplier A accepts Company B's payment of matured claims, it can review the financial situation of Company B through due diligence and announcement content to determine whether it meets the bankruptcy conditions. If it meets the bankruptcy conditions, it can accept the risk of cancellation of Company B's payment through means other than litigation, arbitration, and enforcement. Therefore, in long-term commercial cooperation, creditors should promptly request the other party to fulfill their contractual obligations, actively take measures such as urging claims and litigation to protect their claims, and avoid falling into an unfavorable situation.