Legal Issues Behind the Qvod Bankruptcy Case
Qvod Software (Shenzhen Qvod Technology Co., Ltd.), which had been in operation for over a decade and was once highly popular, was recently ordered by the Shenzhen Intermediate People's Court in Guangdong Province to accept the bankruptcy liquidation petition filed by Shenzhen Jin Yatai Technology Co., Ltd. The court ruling states that the creditor's claim against the debtor has been confirmed by effective legal documents and has undergone enforcement procedures, yet remains unsatisfied. The debtor, Qvod Company, is unable to repay its due debts and clearly lacks the capacity to do so. Therefore, the applicant's petition meets the statutory conditions. In accordance with the provisions of the Enterprise Bankruptcy Law of the People's Republic of China, the court's decision to accept the bankruptcy liquidation application filed by Shenzhen Jin Yatai Technology Co., Ltd. against Qvod Company takes effect from the date of issuance. Zhang Longjun, former financial officer of Qvod, stated in an interview, "There are a thousand Hamlets in a thousand people's eyes, and the same goes for Qvod. Some see it as their youth and their dream, while others say Qvod is nothing but piracy and pornography."
As early as 2014, Qvod was slapped with a record fine of 260 million yuan by the Shenzhen Market Supervision Administration for copyright infringement. In 2016, Qvod and its shareholder Wang Xin were sentenced by the Haidian District Court in Beijing for the crime of spreading obscene materials for profit. Now that Qvod has entered bankruptcy liquidation proceedings, it means the company cannot undergo bankruptcy reorganization, will no longer "survive," and is shutting down for good. So readers may ask, who can apply for a company's bankruptcy and under what circumstances? Once a company enters bankruptcy proceedings, is there no way for it to make a comeback? Next, the editor will guide you through the relevant legal issues concerning corporate bankruptcy.
I. Multiple applicants may apply for an enterprise to enter bankruptcy proceedings.
Life and death are inevitable for both individuals and businesses. When a company is unable to repay its debts as they fall due, and its assets are insufficient to cover all liabilities or it is clearly lacking the capacity to pay,The company's creditors and debtors themselves(the company itself)[1] Liquidator[2] (For situations where a company has been dissolved but not yet liquidated, or the liquidation has not been completed) an application for bankruptcy may be filed with the People's Court. The bankruptcy of Qvod this time was initiated by its creditor, Shenzhen Jinyatai Technology Co., Ltd., because in 2014, the Nanshan District People's Court of Shenzhen issued a civil mediation document confirming that Qvod owed Jinyatai Technology nearly 100 million yuan in principal and interest for goods. Subsequently, Jinyatai Technology applied to the Nanshan District People's Court of Shenzhen for compulsory enforcement, but as of now, there is no property available for execution, so the court ruled to suspend the case and transfer it to bankruptcy proceedings.
[3] 2. Once a company enters bankruptcy proceedings, it does not immediately "die," but rather has a chance to be "rescued."
[4] The Bankruptcy Law stipulates three types of bankruptcy proceedings, namely[5] reorganization, composition, and bankruptcy liquidation proceedings[6] , with the first two aimed at "treating" companies on the verge of "death" to achieve a comeback. However, once the bankruptcy declaration procedure is passed and bankruptcy liquidation proceedings begin, it is no longer possible to revert to reorganization or composition proceedings, and the company's "death" becomes irreversible. That is to say, the bankruptcy declaration procedure is an important time node in a bankruptcy case. Before this node, reorganization or composition can be carried out; after this node, the company will undergo liquidation until it goes bankrupt and closes down. Therefore, Qvod's entry into liquidation proceedings after the bankruptcy declaration this time means it will completely exit the market.
3. How to Handle Corporate Debts After Bankruptcy
After an enterprise applies for bankruptcy, the court may initiate a creditor protection mechanism in accordance with the Bankruptcy Law, appoint a manager to recover and preserve the bankruptcy property, and then allow creditors to receive discounted repayment. Full repayment is impossible, but it is better than receiving nothing. On the other hand, it prevents the bankrupt enterprise from incurring new debt burdens. According to the Enterprise Bankruptcy Law, after the bankruptcy expenses and debts of common interest are paid in priority from the bankruptcy property, the remaining property shall be distributed in the following order: (1) wages, medical and disability subsidies, and funeral expenses owed to employees by the bankrupt, as well as basic pension and basic medical insurance premiums that should be credited to employees' personal accounts, and compensation payable to employees as stipulated by laws and administrative regulations; (2) social insurance premiums and taxes owed by the bankrupt, excluding those specified in the preceding item; (3) ordinary bankruptcy claims. If the bankruptcy property is insufficient to satisfy all claims in the same order, distribution shall be made proportionally. The two most important functions of bankruptcy are: first, creditors receive fair discounted repayment; second, the debtor enterprise's debts are legally extinguished, preventing future unlawful debt evasion. Shareholders can later make a comeback, which benefits both debtors and creditors.
The bankruptcy process for enterprises is complex and requires high-quality legal services. In recent years, Guangdong Zhiming Law Firm has provided legal services for the entire bankruptcy process of multiple enterprises, achieving excellent performance.
Literary and Artistic Rights Litigation‐ — To safeguard the development of the vast number of enterprises!
