Case Analysis Of Financial Distress Company's Restructuring Failure

In recent years,mergers and acquisitions as an effective means of improving the quality of listed companies and support of the transformation and upgrading of the real economy have been developing rapidly in China.Listed companies are faced with financial risks due to various reasons.In serious cases,the companies may be mismanaged,the cash flow become difficult,then get into financial distress,and they could bear huge risk of delisting,so those companies have strong motivation to get rid of financial difficulties.This leads to mergers and restructuring are common among ST listed companies.ST companies can divorce non-performing assets through mergers and acquisitions,inject quality assets and businesses,resolve corporate debt,preserve the qualifications of listed companies,improve company performance,and add vitality to the company's sustainable development.However,the failure of mergers and acquisitions and restructuring in recent years still continues to occur.In China's capital market,ST companies have always been the object of market attention due to their particularity.The hype surrounding corporate restructuring has been one after another.In 2016,there were202 restructuring events of ST companies ended.The problems of speculative in the“shell”,“fraudulent”,“following style”and blind cross-border restructuring are endless.Diversified mergers and acquisitions can diversify risk for the company.Many listed companies in financial difficulties specialize in speculative hotspots in order to get rid of the title of“ST”.Most of these industries are not related to the main business of the company itself.The good news of restructuring may be short-term.The company has a certain stimulative effect on the stock price of the company.However,for ST companies that are financially distressed,poorly financed,and financially strained,the funds required to support new business development can bring heavy burdens to the company.In addition,listed companies were often backdoored by other companies because of their precious shell resources.With the tightening of regulatory policies,the difficulty of backdoor listing has increased.In recent years,many companies have tried to avoid backdoors.When the restructuring plan was designed,it played a“three-way deal”restructuring,in the hope of deceiving the supervisory level.All kinds of behaviors that do not pay attention to the development of the company's strategy and take the“risk”are all incentives that lead to restructuring failure.This is worth our attention.This article takes the company restructuring and financial distress as the basis and starting point,uses the literature method and case analysis method,combines the actualsituation of the *ST YunWang for case analysis and research.Based on this,it further refines and supplements the theory of financial distress company restructuring.The article is mainly divided into five parts.The first part reviews relevant literature at home and abroa,proposes relevant research methods,and constructs the framework of the article;the second part summarizes the theory of corporate restructuring for financial distress;the third part introduces the case.It mainly includes the background of corporate restructuring;restructuring reasons,reorganization plan,reorganization process and results.The fourth part is the analysis of the causes of the failure of corporate reorganization.This part is analyzed from the company and the external two levels;The fifth part proposes to promote the success of financial distress company restructuring.Through the research and analysis,the author concludes that: After *ST companies' financial distress,their own main business have poor profitability and weak financing capabilities.It blindly speculates on hot industries many times,resulting in decentralized investment and lack of funds.At the same time,due to the asymmetry of market information and the dereliction of duty of intermediaries,in the event of policy changes and tightening of policy supervision,the reorganization of *ST Yunwang failed to escape failure.The company should strengthen its prior investigation to obtain more full information,correct restructuring motivation,formulate reorganization strategy from the long-term development of the company,and should also pay attention to its own corporate governance and financial management.The external regulatory agencies and intermediary agencies should also strengthen their own functions to reduce the occurrence of such events.