Research On Debt Default And Disposal Of Chinese Zombie Enterprises

As Prime Minister Li Keqiang proposed in December 2015 to deepen the reform of state-owned enterprises and clean up zombie enterprises,the new term “zombie enterprises” is gradually known.Zombie companies refer to those who are poorly managed and have fallen into or are in a state of insolvency,but they can still get credit from the government and banks to help them survive.Zombie companies have high asset-liability ratios,frequent debt default problems,and difficulties in capital turnover.They also use a lot of resources for the society but cannot produce corresponding economic benefits,distorting the normal market order of competition.In the face of all kinds of debt defaults by the zombie companies,how to choose the disposal method according to the specific situation and properly balance the interests of all parties is a difficult problem facing the enterprise,the government and the society.Zombie companies frequently have debt default problems,and there are three main types of default settlements: bankruptcy liquidation,bankruptcy reconciliation,and reorganization.Each method has its own applicable conditions and advantages and disadvantages.In general,most of the companies that choose the reorganization model are Because the advantage of reorganization is that it gives the troubled company a chance to regenerate,and uses a variety of measures to maximize the proportion of repayment to creditors,and is welcomed by debtors,creditors,shareholders,investors,government,etc..However,not all companies are suitable for the reorganization process.They must be analyzed according to the specific conditions of the company.For those who have the value of saving lives,their own advantages are obvious,but they are not well managed and are not as good as the external environment and the supply and demand situation has deteriorated rapidly.For bankrupt companies,it is more appropriate to adopt a reorganization system.This article takes Yunwei shares as an example to analyze its debt default and its disposal mode,and analyzes the current status,causes and reorganization details of the breach,providing reference for related companies.After making the determination of Yunwei shares in a zombie company,this article first analyzes the current status of Yunwei shares’ debt default,and it has the characteristics of high debt scale,deterioration of debt repayment ability,and complex debt structure.Second,analyzing the causes of debt defaults from the perspective of the external environment and the company itself,we found that the deterioration of the financial status of the coal chemical industry such as overcapacity,government intervention,banks’ long-standing loans,blind expansion of corporate investment,and profitability is the main reason for them to become zombie enterprises.Then from the perspective of macroeconomic policies,the resources of the company itself,the proportion of repayments,and the economic and social impact,the reasons for the reorganization of debt default disposal methods were analyzed.Afterwards,the five major measures and results of reorganization were specifically analyzed,and relevant inspirations were proposed,including a variety of debt repayment models,orderly liquidation,and stripping of inefficient assets to help remove production capacity.Finally,the relevant suggestions and conclusions are given on the whole.First,the management of the zombie enterprises is strengthened;the second is the transformation of the government’s “intervention” approach.The government not only has to define the company’s positioning in advance,but “intervenes,” and it must also use itself afterwards.Resources and platforms help companies get out of trouble;Third,they follow the principle of “giving policy to enterprises”.All of these provide better experience for dealing with the debt default events of zombie companies in the future,and provide new solutions to resolve the overcapacity and supply-side structural reforms in China.