Application Of Pre-packaged Bankruptcy In The Marketization Of Debt-to-equity Swaps

In the modern free market economy,the survival of the fittest is a natural phenomenon.Facing the increasing downward pressure on economic,to promote the supply-side structural reform,to adjust the economic structure,to transform the pattern of economic development,to carry out the "three to one drop",and to help difficult enterprises to achieve "authors efficiency" has been on the agenda.Issued by the State Council on October 10,2016,the State Council's Opinions on Actively yet Prudently Reducing the Leverage Ratio of Enterprises,and its attachments on the Guidance of Marketization of Bank Debt to Equity,marks the marketization of debt-for-equity swaps.However,according to current disclosed data,the amount of signing the market debt-to-equity swaps project was nearly 1.3 trillion Yuan,the actual landing project was only 10% as of the end of 2017.Rethinking several existing problems in bankruptcy reorganization system,this paper probes into utilizing pre-packaged bankruptcy in the marketization debt-to-equity swaps with referring to the experiences from practice in several places such as Zhejiang province and Shenzhen,aiming to perfecting this system.Besides,Chinese double bonds convertible project has also put the pre-packaged bankruptcy system in practice and succeeded.By sorting out basic pre-packaged bankruptcy and debt-to-equity swaps theory,analyzing current problems of marketization of debt-to-equity swaps in out-of-court reorganization and judicial reorganization,this paper utilizes the pre-packaged bankruptcy to solve them.Combining with existing problems occurring in practice of pre-packaged bankruptcy in our country,anddrawing on the experience of the United States,Portland,Japan and South Korea's,this paper put forward suggestions and opinions on operating pre-packaged bankruptcy system in the marketization of debt-for-equity swaps.In the chapter one,this paper introduces the basic theory of pre-packaged bankruptcy and marketization of debt-for-equity swaps.First of all,the application of pre-packaged in favor of cost saving and respect freedom of contract from the sociology of law and law contract science.On the one hand,during the judicial restructuring process,the legal period of the reorganization plan that debtor submitted is too short,which does not adapt to the dual attribute of the marketization of debt-for-equity swaps.On the other hand,in the outside of the court phase,there may occur an obstacle to the convergence of the plan of marketization of debt-for-equity swaps with full negotiation and the reorganization plan.The advantages of the pre-packaged bankruptcy system are shortening the time,reducing the negative effect on the debtor daily operations,and giving full efficiency private autonomy negotiation.Besides,this paper analyzes the double bonds convertible for China project case-the project using a plan like "an out-of-court restructuring agreement + judicial reforming" attempt,transforming the out-of-court restructuring program to the reorganization system in the court.With better convergence,it provides the most cost-effective solution to solve the debt crisis in pluralistic ways.In the second chapter,this part introduces the problems encountered in the market debt-to-equity swaps.First of all,the body of the leading pre-packaged bankruptcy procedure is not clear.In practice,the creditors' committee usually controls the negotiation between the creditors and the debtors before the judicial restructuring.But in places like Shenzhen,the court tries to dominate pre-restructuring,which leads to a conflict with the practice.Theoretically,the body of the subject should be professional and neutral but the creditors in the bankruptcy always protect their own interests.In addition,financial creditors' committee is different with the creditors in the court such as their nature of the organization,producing way,voting rules and the rights.Secondly,the rules of the marketization debt-to-equity are controversial,and there still exists the debate between the "consistent" and "majority" of voting rules.In the author's opinion,in the pre-packaged bankruptcy stage,the marketization of debt-for-equity swaps should be subject to the general rules of the bankruptcy procedure and adopt the majority rule.The court lacks a unified review standard,and the core information disclosurestandard is also blank.At last,lacking information disclosure is another problem.An out-of-court debt restructuring process is different with the restructuring procedures in court.The consultation may not be recognized in the court so that it does not have any legal effect.The most important thing is that the standards of the information disclosure are not clear.The opaque environment results that the company must renegotiate a new plan under the leadership of the bankruptcy in the court.The third chapter is the reference of the outside pre-packaged bankruptcy system.First of all,this paper introduces the pre-packaged bankruptcy system in America.Introduces the American bankruptcy debt convertible and emphatically introduces the right to claim compensation claim,in pre-reforming stage can effectively solve the problem of individuals "containment".Secondly,this paper introduces the Polish "bank reconciliation agreement",and confirms the legal effect of the debt transfer in the settlement of the bank.In the end,this paper introduces the pre-packaged bankruptcy system of Japan and Korea.In Japan,the rules named "Business Regeneration ADR System ",there is an institution named "Association of Business Regeneration Practitioners " which consists of experts who has rich experience in bankruptcy cases.Japan's pre-packaged bankruptcy mainly involves financial creditors,but not suppliers and small creditors.South Korea's system named "Common Management Program" is stipulated in the Enterprise Construction Promotion Law.The principle creditor bank controlling the system is similar with our current financial creditors' committee.South Korea's voting rules are different with Japan's consistent decisions,which use "credit + number of majority " rules,they add rights of acquisition to dissenting creditors and gives them rights to bring up a law suit that can veto the effectiveness of a resolution,in order to protect the rights of the dissenting creditors.In the chapter four,this paper introduces the path selection of the pre-packaged bankruptcy system in the marketization of debt-to-equity swaps.First of all,points out the dominant subject in pre-packaged bankruptcy and makes the roles definition of all parties in every pre-reorganization stages clearly.Governments should give it full play to its coordination function,cooperate with the decisions made by debt commission,and provide policy support for difficult enterprises in terms of capital and tax.Give debt commission prominence to play its role and to take its professional advantage,and communicate with debtors in time in order to grasp the best time of transferring bonds into stocks.Establish the information communicationsharing mechanism and dynamic borrowers' evaluation mechanism to understand their management and financial situation,which will improve the corporate governance structure fundamentally and contribute to the rebirth of enterprises.Introducing the bankruptcy counselor system,and using the experience of Career Regenerative Practice Association of Japan,we should attempt to set up a bankruptcy counselor institution which applies to the whole country under the support of China Banking Regulatory Commission and China Insurance Regulatory Commission.Not only its expert members experienced in bankruptcy practice but also the third party bodies guarantee the impartiality and neutrality of the pre-packaged bankruptcy procedure.As an expert committee,the bankruptcy counselor needs the support from strengthen legal environment,improves relevant system actively,establishes the authority and expert roster,adds the managers' association,and assesses whether the certified public accountants and lawyers have the ability to serve as managers.Besides,clarify rules for formulation of the marketization of debt-to-equity swaps,determine the majority of voting rules.With drawing lessons from South Korea giving the dissenting creditors the right of buy back claims,avoid the court imposes debt-to-equity swaps.Last but not least,establish the censorship mechanism of the marketization of debt-to-equity swaps scheme,and the core is to establish a perfect information disclosure system on the basis of bankruptcy law,to clarify the information disclosure items,and disclosure information specifically in the form of enumeration on the basis of non-disclosure,adequacy and appropriateness;bring the debt enterprise personnel into the information disclosure obligor,and expand the scope of the subject of information disclosure;in order to improve the construction of the bankruptcy information disclosure platform in China,divide the bankruptcy information into three levels:parties disclosure,public disclosure,and disclosure interior of the court.According to the time period of bankruptcy cases,creditors can only consult debtor information through the court on the information platform disclosed by the parties at the stage of pre-court negotiation.and the court supervises the authenticity and timeliness of information as the subject of censorship.And when the pre-packaged bankruptcy turns to the judicial reorganization stage,the public can supervise through the bankruptcy information disclosure platform of the court.This method of classification enhances the transparency of negotiation in pre-packaged bankruptcy stage.What's more,after entering the stage of judicial reorganization,it alsoguarantees the public's right to know,participation and supervision of the work of bankruptcy reorganization,effectively safeguards the legitimate rights of creditors and debt enterprises,promotes the quality and efficiency of the court work,and lead the case of bankruptcy reorganization to run fairly and efficiently.In summary,this paper analyzes the method of utilization of pre-packaged bankruptcy system in the application of marketization of debt-to-equity swaps from determining predominant main body of pre-packaged bankruptcy,clarifying the rules for the formulation and censorship of the transfer of bonds to the stocks scheme these three aspects,which is a beneficial supplement to the current judicial reorganization,and has value of research on improving the trial system of bankruptcy reorganization cases in our country.