The Application Of Debt-to-Equity Swap In Enterprise Bankruptcy Reorganization And Analysis Of Its Legal Issues

In recent years,the leverage ratio of Chinese enterprises is high,the scale of debt is expanding rapidly,and the debt burden of enterprises continues to increase.Under the background of the increasingly complex international economic environment and the downward pressure of China's economy,some enterprises are facing more and more difficulties in operation,even some of them emerge debt risks.In October 2016,the State Council issued The Opinions of the State Council on Actively and Steadily Reducing the Leverage Ratio of Enterprises and The Guiding Opinions on Debt-to-equity Swap of Market-oriented Banks to encourage enterprises to carry out market-oriented debt-to-equity swap in order to reduce the leverage ratio of enterprises.It is an innovative choice to introduce the market-oriented debt-to-equity swap into the bankruptcy reorganization procedure,which promotes the diversity of enterprise bankruptcy reorganization methods.At present,many enterprises in our country have carried out market-oriented debt-to-equity swap in the bankruptcy reorganization procedure,but due to the lack of relevant legislation,there are many problems to be solved in the implementation process of debt-to-equity swap.In the process of writing,this paper combs the relevant theories and plan designs of debt-to-equity,puts forward the legal issues involved in the implementation of debt-to-equity in bankruptcy reorganization,and proposes corresponding solutions to these problems,in order to help the successful implementation of debt-to-equity in enterprise bankruptcy reorganization from the perspective of practice.The first part of this paper introduces the basic theories of bankruptcy reorganization system and debt-to-equity swap,including their concepts,significance and the new characteristics of this round of market-oriented debt-to-equity swap.Secondly,the paper discusses the significance of debt-to-equity in bankruptcy reorganization from theory and practice.The second part deals with the relevant issues in the design of debt-to-equity swap plan,including explaining the legal character of debt-to-equity swap in bankruptcy restructuring,clarifying the conditions and scopes of the enterprises,determining the pricing of debt-to-equity swap and controlling the number of shareholders after the swap,so as to ensure the feasibility and implementation effect of the debt-to-equity swap planThe third part summarizes the current situation of legislation and practice of debt-to-equity swap in the bankruptcy reorganization procedure in China,and focuses on a series of problems existing in the implementation of debt-to-equity swap in the bankruptcy reorganization procedure in China.First of all,due to the particularity of commercial banks,the existing legislation of our country has made many restrictions on their debt-to-equity swap,which leads to the lack of enthusiasm of commercial banks for the implementation of debt-to-equity swap;secondly,the corporate governance structure is not perfect after the swap,which makes it difficult for small and medium-sized shareholders to participate in corporate governance.In addition,the compulsory approval of debt-to-equity swap in bankruptcy reorganization also has some problems,such as the lack of relief channels for dissenting creditors' rights,which may damage the interests of some creditors.Fourth,there are certain risks in the withdrawal of equity after the swap.The fourth part puts forward corresponding suggestions to solve the problems in the third part,so as to promote the orderly process of debt-to-equity swap in the bankruptcy reorganization procedure.First of all,it is necessary to regulate the bank's participation in debt-to-equity swap,which can allow the bank to hold shares directly,but the shareholding ratio should be appropriately restricted,so that the bank can better realize the creditor's rights.Secondly,we should improve the cumulative voting system to help small and medium-sized shareholders elect directors to represent their interests,so as to protect the interests of them from infringement.The court should prudently apply the power of compulsory approval,improve the information disclosure system,and set up the relief procedures for the dissident stakeholders,so as to protect the rights and interests of the dissident stakeholders from being infringed.Finally,we need to improve the equity exit mechanism,including setting different equity exit schemes according to the different nature of debt enterprises,to ensure the exiting channels work wellThe introduction of market-oriented debt-to-equity in the bankruptcy reorganization process is not only conducive to solving the current economic difficulties,but also to promoting the sustainable,stable and prosperous development of China's economy Moreover,the application of debt-to-equity swap in the bankruptcy reorganization procedure enriches the implementation modes of the bankruptcy reorganization,effectively promotes the enterprises to actively and steadily reduce the leverage ratio,and promotes the enterprises to rebirth.