Wintime Energy Debt Default Case Study

Since 2014,China's economy has changed from high speed growth to medium-to-high speed growth.Since 2015,with the successive issue and implementation of supply-side structural reform policies and measures,resources have been reorganized and optimized.The financing environment is no longer the same as the past,and corporate financing activities are restricted,resulting in tighter cash flow of enterprises.And the tighter cash flow further leads to the rigid redemption of the bond market becoming a thing of the past.The increased pressure on financing has led to an increase in the risk of debt default,and corporate debt defaults occur frequently,showing a normalization trend.Debt default has become a hot topic in the China's economy.In order to explore the root causes of frequent corporate debt default events,this paper mainly uses the case study method,selects the typical and specific debt default event of Wintime Energy as the research object,analyzes the reasons for its debt default,and finally proposes targeted suggestions,in order to provide some reference for the management of the coal enterprises and other enterprises in the new environment.This paper first intrcoduces the case background about Wintime Energy's basic situation,debt situation,debt default process,etc.,and then combines the external environment analysis of the enterprise,to focus on the causes of Wintime Energy,s debt default.The research in this paper finds that Wintime Energ's debt default is mainly attributed to the following two aspects:First,external environmental changes have caused Wintime Energy production and operation to be limited,strategic transformation and financing to be blocked.Second,the internal environment of Wintime Energy has inherent defects.Firstly,the diversified strategic transformation fails to achieve economies of scale,and the profitability of the new business sectors is poor,damaging the overall profitability of the enterpri;se.Secondly,the large amount of funds raised for diversification strategy implementation has caused the enterprise's huge debts to increase the enterprise's debt payment pressure and financial risks,At the same time,the high financial costs brought by huge debts further reduce the enterprise's profitability.Thirdly,Wintime Energy has a long-term situation of short-term debt for long-term investment.The investment strategy is too radical,with high risk of capital chain breakage,Fourthly,the mortgage ratio and pledge ratio of Wintime Energy are too high.When the external financing environment changes,corporate financing restrictions lead to the transfer of financing pressure to default risk.Finally,Wintime Energy borrows new debts to repay old debts,which has high financial risks.The failure of new debt issuance directly leads to the occurrence of debt default.According to the above reasons,this paper puts forward specific suggestions from the perspective of enterprises:First,enterprises should actively adapt to the external environment,including the macro environment and industry environment.Second,enterprises should continuously optimize the internal environment of the enterprises*Firstly,develop a suitable strategy.Enterprises should conduct comprehensive investigation and research,fully consider the external environment and the capital needs of strategic implementation,and formulate strategies based on their own advantages,Secondly,improve the financial situation of the enterprises.The scale of corporate debt should be reasonable,avoiding large-scale expansion leading to huge debts,The corporate debt structure should be reasonable,and try to avoid the situation of short-term debt for long-term investment.Enterprises should maintain appropriate mortgage ratio and pledge ratio,leaving room for future financing.The use of corporate debt funds should be tested by feasibility analysis to avoid the occurrence of borrowing new debts to repay old debts.Finally,enterprises can establish appropriate financial early warning mechanisms by adopting a financial early warning model to prevent debt default.