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1、Application of “Deep Rock” Doctrine and Its ReferenceAbstract: With the deepening of the economic globalization, corporation plays a more and more important role in the world. Corporation as a great invention owns an independent personality, which brings us booming economy. But once abused intention
2、ally, it will degenerate into an instrument to defraud the creditors or the public. In order to decrease its negative effects and sustain the booming market, “Deep Rock” doctrine as well as the Disregarding of the Corporate Entity, is firstly used in the Anglo-American legal families to regulate the
3、 corporation, although China accepted the institution of disregarding of the corporate entity in the new Company Law of the Peoples Republic of China, “Deep Rock” doctrine is still neither embraced in it or in the newly enacted Law of the Peoples Republic of China on Enterprise Bankruptcy. This arti
4、cle especially presses on the comparison between the tow foresaid doctrines and aims to give the practical method to apply it in China.Key words: “Deep Rock” doctrine; Disregarding of the Corporate Entity1Introduction of “Deep Rock” doctrine Corporation is the product of the mature economy. Once bor
5、n, this great invention shows its amazing power in the development of market and soon becomes the engine of the economy. All its advantages can be attributed to its two footstonesindependent personality and limited liability, however, every coin has two sides; every business company is organized and
6、 carried on primarily for the profits of the shareholders which conflicts the public interest, and its merits also can be perverted as an instrument for approving the evils which impair the interests of the creditors and the public. In the developed countries, especially in the U.S.A., the dilemma p
7、roved itself more and more obviously. Therefore, the Disregarding of the Corporate Entity was confirmed by a series of judgment, subsequently some important principles and doctrines developed, deep rock doctrine is one of them. “Deep Rock” doctrine is a rule of bankruptcy law in the United States, w
8、hich is developed by the U.S. Supreme Court in the case of Taylor v. Standard Gas Co., 306 U.S. 307 (1939). The rule requires that, where a subsidiary corporation declares bankruptcy and an insider or controlling shareholder of that subsidiary corporation asserts claims as a creditor against the sub
9、sidiary, loans made by the insider to the subsidiary corporation may be deemed to receive the same treatment as shares of stock owned by the insider. Therefore, the insiders claims will be subordinated to the claims of all other creditors, i.e. other creditors will be paid first, and if there is not
10、hing left after other creditors are paid then the insider gets nothing. This also applies (and indeed the doctrine was first established) where a parent company asserts such claims against its own subsidiary. The insider or controlling shareholder of the subsidiary corporation usually owns more info
11、rmation and is easier to transfer the capital than the other creditors. The application of “Deep Rock” doctrine changes the unequal condition. Since the establishment of the doctrine, it has been widely used to avoid the abuse of the equitable rights of the creditors when it is added the existence o
12、f a “planned and fraudulent scheme”, the doctrine is also called “Equitable Subordination Rule” or “Subordination Rule”.2Application of “Deep Rock” doctrineActually it is a breach of the traditional redress procedure in bankruptcy, and exists as an exception of the law. It can not be perverted in th
13、e judgment, otherwise the advantages of the corporate will be drained and the country will lose a booming market. To handle it, find a proper test in the judgment becomes necessary, for the absence of reasonably objective tests in this area has led to considerable confusion and some inconsistency in
14、 results. The secular world is complex; the texts for subordination under the Deep Rock doctrine differ in degree or kind from the tests applicable to Piercing the Corporate Veil. In its original U.S. Supreme Court case of Taylor v. Standard Gas Co., 306 U.S. 307 (1939), the test is whether the subs
15、idiary was undercapitalized at the time that it was established, and can thereby be shown to have been mismanaged for the parent corporations benefit , while in the case Pepper v. Litton, it changed into whether the “planned and fraudulent scheme” exits or not.3 Comparison between the “Deep Rock” do
16、ctrine and the Disregarding of the Corporate Entity As is said in the foregoing statementindependent personality and limited liability are two footstones of the modern company, but as the CummingBruce LJ said: “The court will use its power to pierce the corporate veil if it is necessary to achieve j
17、ustice irrespective of the legal efficacy of the corporate structure under consideration.” His words can be a kind of description of the Disregarding of the Corporate Entity which means in order to achieve justice, the court sometimes will take the corporate as some partners business and call them t
18、o pay off the loans instead of the corporate. Both of the two doctrinesthe “Deep Rock” doctrine and the Disregarding of the Corporate Entityare developed by the U.S. Supreme Court case and then enacted in the statute law. They are used to avoid the abuse of the corporate entity and protect the credi
19、tors. The basis of the “Deep Rock” doctrine is internally same with the Disregarding of the Corporate Entity, and the difference only exits in the extent. Both of them starts from four moral obligations which is confirmed on legal level honesty, fairness, legal obligation comes first and no intentio
20、nal obstruction on the payment for the creditors. However, the two doctrines are independent and their differences are as follows:3.1 Different Ways in ApplicationThe theory of the “Deep Rock” doctrine relies on the Act of Fraudulence Property Diversion which adjusts the relationship between the ord
21、inary creditor and obligor. It allows the creditor withdraw the diversion the obligor made on his property. Before the invention of the “Deep Rock” doctrine, the court intends to solve the problem by adoption of the Disregarding of the Corporate Entity. It denies the subsidiary corporation as an ind
22、ependent entity, so the parent corporation should commit responsibility of its corporation. However, the “Deep Rock” doctrine does not have to disregard the corporate entity. It achieves just between the parties by making the insider inferior to the other creditors.3.2 Different Spheres in Applicati
23、on The “Deep Rock” doctrine is mainly used in the bankruptcy procedure while the Disregarding of the Corporate Entity is not only applied in the bankruptcy but also in the torts, tax and contract. The later is much wider then the former.3.3 Different Punitive Degrees The Disregarding of the Corporat
24、e Entity not only denies the credits the corporate owed the insiders or the parent corporate but forces them to commit joint and several liabilities when the corporate capital is not enough to refund the other credits. On this point, it is a punitive legal doctrine. But only on terms of just does th
25、e “Deep Rock” doctrine apply, and the insider or the parent corporate is subordinated to the other creditors. It merely strips their privilege on the refund. Therefore the “Deep Rock” doctrine is less punitive than the Disregarding of the Corporate Entity.3.4 Different Onus Probandi Whether the Disr
26、egarding of the Corporate Entity is applied or not is a matter of fact which is left to the jury. The court should take these essences into accountundercapitalization, fraud, commingling of asserts, failure to follow the corporate formalities and the control in order to decide whether the corporate
27、is a instrument, dummy or the other ego of other people or corporate. The unjust is so terrible that the court has to denies the entitys existence. The plaintiff often should prove that the behavior of the shareholders shows nothing about the corporate as an independent entity but to indicate that i
28、t is totally an instrument of them. Whereas when it comes to the “Deep Rock” doctrine bases on the ordinary doctrines such as equity and honesty. Technically, the plaintiff just needs to prove that there is cheat and dishonesty on the whole.4 The Reference of the “Deep Rock” doctrine for ChinaGenera
29、lly, in the U.S.A. there are only some fundamental regulations scattering in some state legislation about the Disregarding of the Corporate Entity, such as Tex.BCA, 1997. In practice, the judges especially the Supreme Court judges decide how to apply it. Compared with the U.S.A., we have been somewh
30、at prior to it, for in the new Company Law of the Peoples Republic of China , the Disregarding of the Corporate Entity principle is clearly listed in Article 20 but the “Deep Rock” doctrine is not clearly alleged in the law, neither does the Bankruptcy Law. Since we belong to the civil law legal fam
31、ily, judicature should follow the legislation, and the judges power can not be expanded as wide as their counterparts in the U.S.A. Although it is unnecessary to totally follow the U.S.A., the doctrine is a practical one, with reference to the foreign legislation, wed better enact rules or something
32、 else in the form of the secondary law to guide the exerciser. Meanwhile, it can be taken into consideration to embody it into the procedure of the bankruptcy, and then embrace it into the Bankruptcy Law. In conclusion, the solutions to embrace the “Deep Rock” doctrine into our existing system are a
33、s follows: Firstly, clarify it in a special charter in the Company Law of the Peoples Republic of China, as the basic legal premises for the application of the “Deep Rock” doctrine; secondly, considering the unity of the bankruptcy procedure, the main procedure regulations should be embodied in the
34、Bankruptcy Law, along with the other subordinate law to form a regulation system.生命列车The Train Of Life1. 不久以前，我读了一本书。书中把人生比作一次旅行。2. 人生一世，就好比是一次搭车旅行，要经历无数次上车、下车; 时常有事故发生; 有时是意外惊喜，有时却是刻骨铭心的悲伤 3. 降生人世，我们就坐上了生命列车。我们以为我们最先见到的那两个人-我们的父母，会在人生旅途中一直陪伴着我们。 4. 很遗憾，事实并非如此。他们会在某个车站下车，留下我们，孤独无助。他们的爱、他们的情、他们不可替代的陪
35、伴，再也无从寻找。 5. 尽管如此，还会有其他人上车。他们当中的一些人将对我们有着特殊的意义。 6. 他们之中有我们的兄弟姐妹, 有我们的亲朋好友。我们还将会体验千古不朽的爱情故事。7. 坐同一班车的人当中，有的轻松旅行。8. 有的却带着深深的悲哀 还有的,在列车上四处奔忙，随时准备帮助有需要的人 9. 很多人下车后，其他旅客对他们的回忆历久弥新 但是，也有一些人，当他们离开座位时，却没有人察觉。10. 有时候，对你来说情深义重的旅伴却坐到了另一节车厢。你只得远离他，继续你的旅程。11. 当然，在旅途中，你也可以摇摇晃晃地穿过自己的车厢，去别的车厢找他 12. 可惜，你再也无法坐在他身旁，因为
36、这个位置已经让别人给占了 .13. 没关系。旅途充满挑战、梦想、希望、离别 就是不能回头。因此，尽量使旅途愉快吧！14. 善待旅途上遇见的所有旅客，找出人们身上的闪光点。15. 永远记住，在某一段旅程中，有人会犹豫彷徨，因为我们自己也会犹豫彷徨。16. 我们要理解他人，因为我们需要他人的理解。17. 生命之谜就是：我们在什么地方下车？坐在身旁的伴侣在什么地方下车？我们的朋友在什么地方下车？我们无从知晓 18. 我时常这样想：到我该下车的时候，我会留恋吗？我想我还是会的。和我的朋友分离，我会痛苦。让我的孩子孤独地前行，我会悲伤。 我执著地希望在我们大家都要到达的那个终点站，我们还会相聚 19.
37、我的孩子们上车时没有什么行李，如果我能在他们的行囊中留下美好的回忆，我会感到幸福。20. 我下车后，和我同行的旅客都还能记得我，想念我，我将感到快慰。21. 献给你, 我生命列车上的同行者, 祝您旅途愉快!1. Not long ago, I read a book, in which a mans life was compared to a journey.2. The life of a man is just like a hitchhiking，during which many times we go up and down. Now and then things will ha
38、ppen accidently, some of which are to be unexpected excitement，while some heart-breaking sorrows. 3. When first embraced the world，we are already on the train of life. We take it for granted that the first two persons, our parents, whom we are encountered with, will accompany us all the way.4. Sadly
39、，things do not go on as we thought.Our parents will get off the train at a certain station，leaving us, bereft and helpless.Their love and emotion to us and their irreplaceable company can be found in nowhere.5. However，there will be somebody else who will get on the train. Some of them will have spe
40、cial meaning to us.6. Some of them may be our siblings , relatives and friends, and we will also expereince the imperishable love.7. Some of our travelling companions are quite light-hearted on the way.8. While some may bear immense sorrow.Still some ,back and forth, are ready to hold out their hand
41、s for others who need help.9. Some people alight off the train, yet they are still kept in the mind of the other passengers for long;some, to the opposite, leave their seats without being noticed.10. Sometimes, the one,who is dear to your heart, has huddled into another carriage. Nothing but one you
42、 can do is just to keep on going, far away from him.11. Of course, during the journey, you may stagger to another carriage to look for him.12. Its a pity that you will never seat yourself beside him because the seat has been engaged by others. 13. Never mind. The journey is full of challenges,dreams
43、, hopes and departures- but only one thing is that you cant turn back. So, have a good journey with heart and soul.14. Show your good-will to all the passengers you are encountered with, and find the merits of theirs.15. Remeber that someone may oscillate just as we do in the journey.16. We should u
44、nderstand others just as we need others understanding.17. The enigma of life is：Where shall we get off the train of life?And how about the companions beside us?And our friends?We dont know.18. Sometimes I think：When my time comes to get off the train，shall I miss it？I think I will.It is a suffering
45、when I part with my friends.I will be sorry for leaving my kids going alone.I firmly hold that when we get to the terminal，we will have another reunion.19. When my kids get on the train of life, they have only little luggage in their travelling bags. However,if I can leave the beautiful memory in them,I will be happy. 20. After getting off the train of life, I will be content if my fellow passengers will remember me and miss me.21. To you , the companions on my train of life.May you have a good journey!