Study On Legal Issues And Improvement Of Debt-to-equity Conversion Of Commercial Banks In Enterprise Bankruptcy Reorganization

Debt-to-equity swap is an important means to solve the financial crisis of enterprises.Commercial banks are usually the biggest creditors of reorganization enterprises.If the market-oriented conversion of commercial bank’s claims is made,it means that restructuring companies will greatly reduce capital pressure,and the chances of successful restructuring will also increase significantly.At present,China is at an important stage of economic transformation.A large number of enterprises are faced with huge financial pressures while facing transformation and upgrading.If they are slightly careless,they will face the embarrassing situation of insolvency.In order to alleviate the financial pressure of enterprises,and more importantly,to reduce the non-performing assets of commercial banks in China,on October 10,2016,the State Council issued the “Opinions on Actively and Firmly Reducing the Leverage Ratio of Enterprises”,and at the same time,as the supporting documents,“The Guiding Opinions on Converting Debt-to-equity Rights into Banks” was also announced,which marked the launch of a new round of “debt-to-equity swaps”,which also means that there is a more sufficientbasis for commercial bank debt-to-equity swaps in the reorganization of bankrupt enterprises.This paper consists of three parts: introduction,body and conclusion.The text is divided into four parts to explain the problem.The first part of the text firstly gives a rough statistics on the current status of the implementation of debt-to-equity swaps in China’s current bankruptcy reorganization procedure.Secondly,the article takes "Northeast Special Steel Reconstruction Case" as the entry point,which further leads to a series of problems in the implementation of debt-to-equity swaps in the bankruptcy and reorganization of commercial banks in China.Finally,the author briefly introduces the legal nature of debt-to-equity swaps in bankruptcy and reorganization and the particularity of commercial bank debt-to-equity swaps in the bankruptcy reorganization process.The second part of the text raises a series of questions for the current debt-for-equity swaps of commercial banks in corporate bankruptcy reorganization.First,China’s current legislation is lacking in the debt-to-equity swap of commercial banks in the process of bankruptcy reorganization;Secondly,the theoretical circle has a big controversy over whether the debt-to-equity swap should apply to the majority decision of the creditors’ meeting and whether the court can forcefully approve the reorganization plan including the debt-to-equity swap plan;Thirdly,in the process of implementing debt-to-equity swaps,the scope of implementing institutions is large,it is difficult to determine,and it also hinders the standardized management of commercial bank debt-to-equity swaps;Fourthly,there is a lack of valuation of debt-to-equity swaps.The implementation of the operating rules,the price of debt-for-equity swap may not be able to follow the principle of marketization;Fifthly,after the completion of the reorganization procedure,the withdrawal of commercial bank’s conversion of creditor’s rights lacks corresponding policy measures.The third part of the text provides a certain idea for the improvement suggestions in the following article by learning from the successful experience of commercial banks in the United States in implementing debt-to-equity swaps in bankruptcy reorganization.By learning the successes and failure experiences of other countries,China can make fewer detours in the practice process,so as to better carry out the debt-to-equity swap of commercial banks in the enterprise reorganization process.The last part of the text is to propose a series of solutions to the problems raised in the second part and combined with the extraterritorial experience of the third part,so that we can make good use of commercial bank debts in the reorganization process.The conversion of this remedy will enable more companies to avoid entering the bankruptcy liquidation process while protecting the interests of creditors to the greatest extent.