Research On The Application Of The Combination Model Of Debt-to-equity And Asset Restructuring In Corporate Financial Distress

With the slowdown of macroeconomic growth,China has entered a new era of economic restructuring and industrial restructuring.The debt scale of industries with overcapacity has increased sharply,and the asset-liability ratio of enterprises has remained high.There have been large-scale debt defaults and large numbers of corporate losses.Some companies are in financial distress and need to seek a path to get out of trouble.The research of China on financial distress started late,starting in the late 1990 s,and is more concentrated in three aspects: basic theory,early warning system and enterprise management.There are few studies on specific path to get out of financial distress.What kind of recovery path the enterprise chooses and how to carry out the path directly affect the relief effect of the enterprise.This paper selects the case that Haotian ship adopts the combination model of debt-to-equity swap and asset restructuring to innovatively resolve financial distress.Firstly,It analyzes the operation process of the combination model.Then it discusses the advantages of the combination model and the relief effect.Lastly,the experience of Haotian ship getting out of the financial distress is summarized,and it can provides the experience and case reference for other financial distressed enterprises.The content of this paper can be divided into the following five parts: The introduction part expounds the background and research significance of this paper.On the basis of combing the related literature review,the innovation points and deficiencies of this paper are put forward.The first chapter defines the concept of financial distressed enterprises,expounds the modes of debt-to-equity swap and asset reorganization,and analyzes the necessity and applicable characteristics of the combination model.The second chapter summarizes the basic situation of Haotian ship,analyzes the reasons for financial distress and elaborates the operation process by using the combination model to solve financial distress.The third chapter examines the effect of Haotian ship getting out of the financial distress.Firstly,It analyzes the advantages of the combination model from a qualitative perspective.Then,from the quantitative perspective,the financial indicators method is used to compare the changes of financial indicators before and after the application of the combination model.Lastly,the factor analysis method is used to compare the relief effect between Haotian ship and other enterprises.The last part is the conclusion and revelation of this paper.The debt-to-equity swap and asset restructuring complement each other and premise each other,which is not only more efficient but also conducive to minimize losses.Haotian ship's profitability,solvency,growth ability and operational capability have been improved dramatically after implementing the combination model.And it also draws three revelations:(1)Cracking financial dilemma is a difficult process,so companies need to strengthen risk management to avoid financial distress;(2)The government's promotion will accelerate the recovery of enterprises;(3)Financial distressed enterprises should make good use of the combination model based on their actual situation.Haotian ship is the first enterprise that innovatively adopts the combination model of debt-to-equity swap and asset restructuring to solve financial distress.After implementing the combination model,Haotian ship has restored its ability of sustainable operation and avoided bankruptcy.In theory,it enriches the research on the recovery path of financial distress,and also increases the related literature on debt-to-equity swap and asset restructuring.In practice,under the background of serious debt default and corporate losses,it provides some guidance and reference for enterprises to choose the way to resolve financial distress.