The connection between debt restructuring and bankruptcy restructuring;
According to the Accounting Standards for Business EnterprisesNo. 12-Debt Restructuring, debt restructuring refers to the matter that creditors make concessions according to the agreement reached with the debtor or the court's ruling when the debtor has financial difficulties. The main methods include: paying debts with assets, converting debts into shares, modifying other debt conditions such as reducing principal and interest, and the combination of the above three methods. According to this definition, according to different stages of legal procedures, debt restructuring can be divided into pre-bankruptcy restructuring and post-bankruptcy restructuring.
Bankruptcy reorganization is a means of debt restructuring, and debt restructuring is an important content of bankruptcy reorganization. When an enterprise goes bankrupt and reorganizes, it will comprehensively use the above methods to restructure its debts. Bankruptcy reorganization is a complex game involving many parties, and it is extremely difficult to succeed. Among them, the key elements of success are three aspects. First, the bankrupt enterprise itself should have the value of reorganization; Second, there must be professional and efficient court discretion; Third, it should have a diligent and skilled bankruptcy administrator. After the bankruptcy reorganization procedure is started, in order to get the debtor out of the predicament as soon as possible, it is necessary to protect and help the enterprise to continue to operate, so as to improve its viability, especially its refinancing ability. Because only by refinancing can the capital chain of the enterprise be smoothly connected and the subsequent restructuring plan be effectively implemented. In practice, the common bankruptcy reorganization modes are as follows.
(1) Debt-to-equity swap. That is, ordinary creditors replace their creditor's rights with the debtor's original investor's equity, and the debtor's original investor transfers its equity to the creditors who choose debt-to-equity swap for free (or at a low price). Debt-to-equity swap can immediately reduce the pressure of interest expenditure, turn huge debt burden into equity capital to support the company's development, reduce the asset-liability ratio and create conditions for refinancing. Of course, the key premise of debt-to-equity swap is that creditors recognize the basic value of the company, that is, under given circumstances, the company can be regenerated through debt-to-equity swap, and in the foreseeable future, the expected income from conversion value is higher than the liquidation income.
(2) Introduce strategic investors. That is, strategic investors invest in debtors and pay off debts according to the reorganization plan. New investors take over the enterprise by injecting capital to pay off debts, and the shares of the original investors are either greatly diluted or transferred at low prices or free of charge. This model is generally suitable for enterprises with relatively simple business, relatively transparent information and uncomplicated equity-creditor relationship. The advantage of this model is that the debt is repaid by cash injection from strategic investors, which greatly shortens the implementation cycle of the restructuring plan.
(3) Asset reorganization. That is, divest and sell businesses with poor profit prospects and weak competitiveness, and retain businesses with good profit prospects and strong competitiveness. Many enterprises go bankrupt because of the deviation of strategic positioning and the rapid expansion of the industry, and enter the fields that look promising but need a lot of investment but are not good at it. For such enterprises, it is necessary to divest high-input, low-output or even loss-making businesses by selling assets and equity in the reorganization procedure, so as to obtain cash flow and retain businesses with good development prospects.
For enterprises in trouble due to overcapacity, high inventory or excessive leverage, one or more of the above modes can be combined according to local conditions. For example, in industries with overcapacity caused by industry cycle factors, while striving for bank debt relief and extension, debt-to-equity swaps can be considered for restructuring, reducing corporate debt burden while deleveraging, thus gaining time for restructuring and integration. For some backward production capacity that needs to be eliminated, but has relatively good resources, such as land and factory buildings, we can divest backward production capacity, introduce strategic investors, develop production-oriented service industries, implement retreat into three, and change cages for birds for restructuring.
Legal basis:
Article 2 of the Enterprise Bankruptcy Law of the People's Republic of China. If an enterprise as a legal person is unable to pay off its debts due, its assets are insufficient to pay off all its debts or it obviously lacks solvency, it shall clear up its debts in accordance with the provisions of this Law. An enterprise as a legal person may be reorganized in accordance with the provisions of this law if it has the circumstances specified in the preceding paragraph or obviously loses its solvency.