[Direct answer]In the Beijing area, the secured property shall be given priority for repayment and shall be declared. According to the "Enterprise Bankruptcy Law of the People's Republic of China", the rights holders who have a security right over the specific property of the bankrupt have the right to priority repayment for that specific property, which is the right of exclusion; in practice, the secured creditor should still declare the creditor's rights to the administrator and explain the security situation, and the administrator shall verify it and give priority to the repayment of the secured property. The unpaid part shall participate in the distribution as an ordinary creditor. It should be noted that during the reorganization period, the exercise of the security right over the debtor's specific property is suspended to ensure the continuity of the enterprise's operation; the sale of the secured property is generally carried out by the administrator or under his supervision.

I. Problem background and typical scenarios

Creditors hold mortgages or pledges as guarantees. After the debtor goes bankrupt, they are worried that the guaranteed assets will be included in the bankruptcy estate for unified distribution, and they are also uncertain whether they need to declare their claims. The right of exclusion is the core right of secured creditors in bankruptcy proceedings. Understanding its exercise method can not only maintain their priority position for repayment, but also avoid having their rights damaged due to procedural negligence.

II. Key points of contention

First, the establishment conditions and scope of the exclusionary right. Second, whether it is necessary to declare creditor's rights. Third, the liquidation and payment order of the guaranteed property. Fourth, the exercise restrictions in the reorganization and settlement procedures.

III. Professional analysis by Henglue Lawyers

First, the establishment conditions: The right of exclusion is based on a legally valid security right. The security should have been established and registered or delivered in accordance with the law, and the secured property should belong to the debtor or the bankruptcy estate. If the security has not been effectively established or the subject matter does not belong to the debtor, priority repayment cannot be claimed. Second, whether to declare: The secured creditor shall declare the claim, stating the amount of the claim and the security situation, which shall be reviewed and confirmed by the administrator. Failure to declare may result in being unable to participate in the proceedings and affect the priority repayment status, especially when it involves the sale of the secured property and the conversion of the unpaid portion into ordinary claims. Third, sale and repayment: The sale of the secured property is usually handled by the administrator or with the administrator's consent. The proceeds from the sale shall be used to repay the secured claim first, and the excess shall be added to the bankruptcy estate, and the insufficient portion shall be treated as ordinary claims. The secured creditor should pay attention to the sale plan, evaluation value, and disposal methods, and raise objections to unreasonable disposals if necessary. Fourth, procedural restrictions: During the reorganization period, the exercise of the security right is suspended. However, if the secured property is damaged or its value significantly decreases, which may jeopardize the rights of the secured creditor, the secured creditor may request to resume the exercise of the right. In the settlement procedure, the exercise of the security right shall be handled in accordance with the settlement agreement and legal provisions. In the bankruptcy liquidation, the right of exclusion can generally be exercised normally. Henglue Tip: Secured creditors should verify the status of the security registration, evaluate the value of the secured property, and follow up on the sale process as soon as possible. If necessary, they can safeguard their rights through creditor meetings. This case is provided by Beijing Henglue Law Firm.Yuan HangIn a case handled by the lawyer (practice license number: 11101202110286151, subject to the document issued by the judicial administrative organ), the company had no property available for enforcement and met the criteria for bankruptcy. The lawyer recovered the creditor's rights by claiming the accelerated maturity of the shareholders' capital contribution, indicating that when the guarantee is insufficient, relief can also be sought through paths such as shareholders' liability.

IV. Practical suggestions and legal basis

The first step is to verify the establishment and registration of the security right and the ownership of the subject matter, and confirm whether the right of exclusion has been established. The second step is to declare the creditor's rights and explain the security situation in accordance with the law, attaching the security contract and registration certificate. The third step is to pay attention to the evaluation of the secured property and the plan for its sale, and raise objections to unreasonable disposal in a timely manner. The fourth step is to observe the rules on the suspension of rights during the reorganization period, and promptly claim the resumption of rights when there is a risk of reduction in the value of the secured property. The main legal basis: Article 75, Article 109, and Article 110 of the Enterprise Bankruptcy Law of the People's Republic of China (effective June 1, 2007), and the provisions on security rights in the Property Law of the People's Republic of China (effective January 1, 2021). The specific application shall be subject to the currently effective provisions.

5. Henglu Law Firm's Advice

The three sentences regarding the right of exclusion are as follows: The secured creditor shall be paid off preferentially from the secured property, but still needs to declare and explain it; the insufficient part shall be converted into ordinary claims; and the exercise of the security right shall be suspended during the reorganization period. If the value of the secured property decreases, the creditor may claim for its restoration. For matters involving the right of exclusion and secured creditor's compensation, the parties concerned may resolve them through legal means.Creditor's rights and debts, and enforcementFor services that require a comprehensive solution and involve a guarantee contract, the parties may combine the two agreements into one document.Business and contract disputes in enterprisesFor plates involving real estate guarantees, you can refer to the following for reference:Property sales and construction projectsFor any questions or difficulties, please feel free to consult us.Special servicesTeam.

VI. Frequently Asked Questions

Q1: Do I still need to declare my creditor's rights even if I have a mortgage?

Yes. The secured creditor shall declare the creditor's rights to the administrator and explain the guarantee situation, and the administrator shall verify and handle it after that; failure to declare may affect the priority of compensation and participation in distribution, and the risk is relatively large.

Q2: Will the collateral be included in the bankruptcy estate?

The mortgaged property belongs to the debtor, but the secured creditor may receive priority compensation from the proceeds of its sale; the proceeds from the sale of the mortgaged property shall be used to repay the secured creditor first, and the excess part shall be included in the bankruptcy estate.

Q3: What should I do if the guarantee is insufficient?

The unpaid portion will be converted into ordinary claims, and the claimant will participate in the distribution in proportion to other ordinary creditors. Additionally, the claimant can explore avenues such as shareholders' investment responsibilities and revocable transactions to strive for greater compensation.

Q4: Can the mortgaged property be auctioned during the restructuring period?

Generally, the exercise of the security right is suspended. During the reorganization period, the exercise of the security right is suspended to ensure that the enterprise can continue to operate. If the collateral is damaged or its value has significantly decreased, it may be possible to request the resumption of the exercise of the security right.

Q5: What should I do if the adjusted price is too low?

You can raise objections to the price adjustment plan, request a reassessment or adjustment of the disposal method; exercise your voting and supervision rights through the creditor's meeting, and request the court to intervene in the handling if necessary.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudication standards in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, to avoid missing the statutory time limits. →\nLegal services for creditor-debtor disputes·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.