Study On Legal Issues Of Debt-to-Equity Swap In Bankruptcy Restructuring Procedure

The implementation of debt-to-equity swap in bankruptcy reorganization procedure is helpful to improve the success rate of bankruptcy reorganization for saving enterprises in debt distress,and enhancing the vitality of socialist market economy.After the publication of Opinions of the State Council on the Active and Prudent Reduction of Corporate Leverage Rate,the theoretical circles have made a heated discussion on debt-to-equity swap in bankruptcy reorganization.There are great disputes on the legal attributes,applicable objects and implementation process of debtto-equity swap.Debt-to-equity swap can be simply defined as a legal act in which creditors convert their legally enjoyed creditor's rights into debtor's equity.There are disputes about the legal nature of debt-to-equity swap among the theorists about the offsetting of creditor's rights,the liquidation of goods on behalf of others and the attributes of procedural law,which are represented by Professor Wang Xinxin,Professor Han Changyin and Professor Zou Hailin respectively.Although there are overlaps between market-oriented debt-to-equity swap and debt-to-equity swap in bankruptcy reorganization process,market-oriented debt-to-equity swap can be used as the implementation method of debtto-equity swap in bankruptcy reorganization process.At present,54 listed companies in China have carried out bankruptcy reorganization,of which 24 companies' reorganization plan involves debt-to-equity swap scheme.The debt-to-equity creditor's rights are mainly guaranteed creditor's rights and ordinary creditor's rights.The stock that pays the debt mainly comes from capital company's increasing,shareholder's transferring,shrinking and so on.The debt-toequity swap price generally adopts weighted average valuation,closing valuation and valuation.The principle of voluntariness,selectivity and certainty are adopted in the debt-to-equity swap scheme design,and the principle of majority and compulsory approval by court are adopted in the voting and approval procedure.In view of the legal problems found in the empirical analysis of debt-to-equity swap,the author believes that the creditor's rights of debt-to-equity swap should be limited to the ordinary creditor's rights in bankruptcy reorganization,and should not be converted to secured creditor's rights,employee's creditor's rights and tax creditor's rights without the consent of creditors.According to the distribution rules of the bankruptcy reorganization system,the adjustment of the investors' rights and interests is legitimate,in order to balance the interests of all parties.Because the debt-to-equity swap scheme is based on its indivisibility with the reorganization plan,it does not need to adopt a special voting method,and the court can also compulsorily approve the reorganization plan under legal conditions.If the creditors have not been liquidated in the restructuring plan,they may recover from the joint and several debtors on the basis of the pricing of the debt-to-equity swap stocks.Finally,it is should be clarified in the legislation that the preconditions for the implementation of debt-to-equity swap,the target enterprises and the scope of creditor's rights,the source of debt-paying stocks,the way of debt-to-equity swap,the voting and approval of the scheme,and the effectiveness of relevant guarantees should be clarified in the legislation.At the same time,to ensure the implementation of debt-to-equity swap in bankruptcy reorganization procedures in judicial practice,we should pay attention to the connection between judicial trial and administrative management,reorganization rules and listing rules,as well as the connection between bankruptcy reorganization and major asset reorganization.