Research On Legal Issues Of Cram-Down Of Corporate Debt-to-Equity Reorganization Plan

Debt-to-equity is a favorable tool for reducing the corporate's debt ratio,and it is applied regularly in the corporate reorganization process.But,there are issues arose from where the court execute a cram-down on the debt-to-equity reorganization plan.This causes the cram-down system to lose its function and poses threat to the creditor's interests and social interests.In addition to the pursuit of efficiency,the purpose of the cram-down is to show deterrence of punishment.On the basis of respecting the autonomy of will of creditor,cram-down can reconcile the difference of the parties of corporate organization,promote cooperation and consultation,and help to walk out of the prisoner's dilemma.The deterrence of punishment of cram-down requires the proper application of definite rules.However,in judicial practice,when the court applies the best interest rule,the absolute priority rule,the fair and equitable treatment rule to test debt-to-equity reorganization plan,there is a misunderstanding of the rules.And the court did not have sufficient knowledge of the particularity of the debt-toequity.This article has three parts,divided into four chapters.Chapter 1 aims to discover the legal issues of the court execute a cram-down on the debt-to-equity reorganization plan in judicial practice.This part is based on the reorganization of listed companies as a sample,and analyses the status quo and legal issues of the company's application of debt-to-equity as a settlement in reorganization process and the court's cram-down on the debt-to-equity reorganization plan.Chapter 2 and the chapter 3 mainly present the impact of the issues mentioned in the first part on the angle of creditor's interests and social interests,and then proposes the standard of the court's cram-down on the debt-to-equity reorganization plan.The particularity of debt-to-equity lies in the transform of the creditor's rights and the uncertainty of the value of equity.Then,the court execute a cram-down on the reorganization plan only containing debt-to-equity as the settlement is extremely detrimental to the creditor and the social order.Therefore,the settlement method of debt-to-equity reorganization plan should have diversity and should contain at least one settlement method of certain value in order to comply with the formal review requirements of cram-down.After formal examination,the court should use the specific rules of cram-down for substantive examination.The best interest rule is a deterministic comparison between the minimum settlement rate of one certain-value settlement methods of debt-to-equity reorganization plan and the liquidation settlement rate of the same credit.The key of the fair and equitable treatment rule is to examine the identity of settlement schemes and debt-to-equity option of the creditors in the same group.The absolute priority rule shall apply to the shareholders,and the shareholder may retain the share only if the dissenting creditor is fully settled in accordance with the certain-value settlement method other than debt-to-equity.Chapter 4 mainly demonstrates the rationality and legality of the equality swaping back to debt when the reorganization process turns to the liquidation process after the cram-down.This part demonstrates the rationality of the equality swaping back to debt from the perspectives of avoiding the excessive damage to creditor's rights,of the basic theory of investor's equity adjustment and of the applicability of debt-to-equity,and then examines the legality of the equality swaping back to debt by deconstructing the debt-to-equity theories of datio in solutuml and contribution by debt.