On The Default Disposal Mechanism Of Corporate Bonds In China

Since the first real corporate bond default of "11 super day bond" in 2014,the number of default events in China's corporate bond market has increased year by year,and corporate bond default has gradually normalized.The frequent occurrence of corporate bond default from zero to now represents that the rigid payment in China's bond market has been broken,which is of positive significance to promote the market-oriented and legal construction of bond market.However,we have noticed that there are many problems in the disposal mechanism of corporate bond default matching with bond default.How to improve the disposal mechanism of corporate bond default in China has become an important issue that must be studied and solved in the future.How to dispose of corporate bond default scientifically and reasonably is related to the healthy and stable development of bond market.Corporate bonds have dual attributes: "debt" and "bond".The nature of debt determines that the legal relationship contained in corporate bonds is a commercial debt relationship,which reflects the freedom of contract and autonomy of the will,and infers that investors need to bear their own responsibility for defaults on bonds selected based on autonomy of will.The bond nature reflects the stakeholder and inequality of corporate bonds as a kind of marketable securities.Investors are always in a weaker position than corporate issuers in corporate bond relationships.Therefore,it is necessary to invest in bonds when a bond default occurs.People give more protection.According to the statistics of the default disposal methods of China's bonds in the first half of 2019,there are two types of disposal models.The first is an independent negotiation model.After the default,the issuer communicates and negotiates with investors,and the issuer independently raises funds to realize bond redemption..The second is the arbitration judicial model,which seeks a third-party authority to handle bond default disputes,and the judicial approach can be subdivided into investor-sponsored litigation and bankruptcy proceedings initiated by investors.The main problems of the current corporate bond disposal mechanism are: the hidden shadow of the local government's implicit guarantee;the low level of relevant laws and regulations,and incomplete coverage,leading to lack of administrative supervision;and theissuer's lack of buffers and defaults when the bonds default.The rigid identification of default caused unnecessary pressure on the issuer;the issuer also lacked institutional buffers before entering bankruptcy proceedings,which is not conducive to companies with business prospects to resolve the crisis;bond investors cannot rely on bond trustees to obtain effective protection;bond investors ' litigation channels are limited.The reasons for these problems are the deviation of the government's positioning in the bond market,the misalignment of laws and regulations related to bond defaults,and the incompleteness of the relevant systems for the disposal of bond defaults.To improve the market-oriented and rule-of-law bond default disposal mechanism,first of all,at the institutional level,establish a coordinated and coordinated bond market legal system and establish the Securities Law as the basic law for corporate bond default handling.Secondly,optimize the functional positioning of the government and give full play to the advantages of administrative supervision.Finally,in the actual disposal of bond default,set the buffer period after bond default for the issuer and the out of court debt restructuring system before the bankruptcy procedure,relieve the pressure faced by the issuer when it defaults,in order to protect the bond issuer,and finally achieve the purpose of protecting bond investors;improve the bond trustee system,adjust the function of bond trustee,and let the bond trusteeship manager can play a better role in protecting the interests of bond investors,expand the litigation mode of bond default disputes,and provide investors with a variety of litigation paths.