Research On Debt-to-Equity Swap In Bankruptcy Reorganization And The Protection Of Creditors’ Interests In China

During the development of the company,the limited liability system of shareholders has gradually been established.Although this system has greatly improved the social economic benefits,it also poses multiple threats to creditors’ interests.Since the 1970s,in order to overcome the negative impact of a large number of enterprise bankruptcies on society,the United States,Britain,France,Germany,Japan and other countries have launched a reform movement in the field of bankruptcy law.Its core content is to establish and improve the bankruptcy reorganization system.Debt-to-equity swap in bankruptcy reorganization plays an important role in protecting creditors’ interests.At the end of the 1990s,China established four assets management companies to activate banks’ non-performing assets and defuse financial risks to implement policy debt-to-equity swap.Since the Guiding Opinions on Transforming Creditor’s Rights into Equity Rights of Marketized Banks was issued in 20 1 6,commercial debt-to-equity swaps with the core of reducing enterprise leverage and adhering to the principles of marketization and rule of law are also in full swing.However,there are also some problems and hidden dangers in the process of implementation,such as the lack of legal system,the lack of jurisprudence research,the single exit way,the existence of moral hazard and so on.Therefore,in order to make the marketization debt-to-equity swap of commercial banks in China have better legal system guarantee in practice,this paper starts from the background and current situation in legislation of debt-to-equity swap by using literature search and other methods,and then identifies its legal nature,analyses the feasibility of debt-to-equity swap in practice,evaluates the risk of protecting creditors’ interests,puts forward suggestions on debt-to-equity swap in China by drawing on the experience of bankruptcy-type debt-to-equity swap in the United States,and finally expects to establish and improve the mechanism of debt-to-equity swap so as to better protect creditors’ interests in bankruptcy reorganization.Firstly,this paper compares the similarities and differences between the two rounds of debt-to-equity swap by introducing the origin background of policy debt-to-equity swap and commercial debt-to-equity swap in China in order to understand the significance of restarting the new round of debt-to-equity swap.Secondly,the legitimacy of debt-to-equity swap is analyzed in terms of its legal basis,the commonality of creditor’s rights and equity,the nature of debt-to-equity swap’s liquidation behavior and investment behavior,legal relationship and legal effect.Then,the risks faced by creditors’ interests protection in the process of debt-to-equity swap are listed and analyzed in detail,which include macro-market economic risks,legal policy risks,reform risks mainly based on the difficulty of matching supply and demand,game risks caused by information asymmetry,operational technology risks such as difficult to price and withdraw from stock market.Furthermore,the feasibility of debt-to-equity swap is analyzed from the aspects of market demand,breaking legal barriers,and win-win benefit redistribution.In addition,the experience of American bankruptcy debt-to-equity swap is emphasized.It is a model of commercial debt-to-equity swap,innovatively transforming creditor’s rights into claims for compensation that can be freely circulated in the secondary market,expanding the subject scope of debt-to-equity swap,making full use of the market mechanism to solve the enterprise debt problem,re-integrate the allocation of social resources and inject new vitality into the rebirth of enterprises.Finally,in order to better implement the commercial debt-to-equity swap,the author puts forward some suggestions,we can build a perfect debt-to-equity swap system by defining the starting conditions,standardizing the operation procedures,optimizing the evaluation mechanism,innovating the debt-to-equity swap mode and enriching the withdrawal mechanism.And supplemented by appropriate supporting measures,such as perfecting the connection of legal system,improving the information disclosure system and other related systems,then deepening the reform from within the enterprise,establishing a modern enterprise system as well as improving the internal management of the enterprise.We should focusing on strengthening the protection of creditors’legitimate interests in order to make debt-to-equity swap a real expression of the will of each creditor at the micro level as well as a consensus of all stakeholders at the macro level.