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	REPLY OF THE SUPREME PEOPLE'S COURT ON HOW TO UNDERSTAND ARTICLE 56 OF THE "PROVISIONS OF THE SUPREME PEOPLE'S COURT ON SOME ISSUES CONCERNING THE TRIAL OF ENTERPRISE BANKRUPTCY CASES"

	(Letter 46 [2003] of the Supreme People's Court September 9, 2003)


SUBJECT : LEGAL INTERPRETATION; ART 56
ISSUING DEPARTMENT : THE SUPREME PEOPLE'S COURT OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 09/09/2003
IMPLEMENT DATE : 09/09/2003
LENGTH : 395 words
TEXT :

The letter of your Ministry dated December 15, 2002 for soliciting opinions on the relevant issues in the implementation of Article 56 of this Court's "Provisions on Some Issues Concerning the Trial of Enterprise Bankruptcy Cases" (hereinafter referred to the Provisions) has been received. Upon research, we hereby give our reply as follows:

I. Article 56 of the Provisions does not apply to the enterprise bankruptcy cases under State planning. This type of enterprise bankruptcy cases shall be governed by the relevant provisions in the "Notice on the Relevant Issues Concerning Experiment of Bankruptcy of State-Owned Enterprises in Some Cities" (No. 59 [1994] Promulgated by the State Council) and the "Supplementary Notice on the Relevant Issues Concerning Experiment of Merger and Bankruptcy of State-Owned Enterprises as well as Reemployment of the Employees Thereof in Some Cities" (No. 10 [1997] Promulgated by the State Council). After the placement fees and economic compensations have been paid to the employees of bankrupt enterprises in accordance with the relevant provisions, no more compensations need to be paid due to cancellation of the labor contracts.

II. The expression "in accordance with the law or pursuant to the labor contract" in Article 56 of the Provisions means: Firstly, the amount of compensations shall be made in compliance with the stipulations in the labor contracts; where the is no such amount stipulated in the labor contracts, the compensations shall be made in accordance with the relevant provisions in laws and regulations, and with reference to the relevant provisions in ministerial rules. Secondly, if the amount of compensations stipulated in the labor contracts or determined in the relevant provisions are too little or too much, the liquidation team make adjustment in accordance with other relevant provisions. For the purpose of calculating the amount of compensations, the rates for adjustment shall be based on the monthly average wages of the employees during twelve months of the bankrupt enterprise's normal production and operation. Thirdly, if, after the adjustment by the liquidation team, the trade union of the enterprise or any individual employee considers the compensations still too low, it/he may apply to the people's court that accepts the bankruptcy case for modification; if the creditors' meeting has any objection against the amount of compensations determined by the liquidation team, the matter shall be handled according to the procedures prescribed in Article 44 of the Provisions.