A Study On The Effectiveness And Limitations Of The Investor's Equity Adjustment Plan

The bankruptcy and reorganization procedures are a type of legal procedures required by law.Its aim is to relieve those companies that are unable or will not be able to repay their debts due.The purpose is to protect a series of related issues such as financially troubled enterprises,related creditors and corporate investors.The relevant human rights and interests ultimately enable the bankrupt enterprise to resume its ability to continue operations.According to incomplete statistics,China has added 920 new cases or adjudication documents related to bankruptcy and reorganization procedures in the past 10 years,an average of 92 new cases each year,and a total of 719 new cases and adjudication documents in the past three years.An average of 240 new additions are made each year.China's bankruptcy and reorganization cases show a rapid growth trend and the growth rate is increasing year by year.Bankruptcy and reorganization procedures have become one of the main mechanisms to help debtors out of financial crisis.In combination with bankruptcy cases in the past many years,most of China will use the means of adjusting the rights and interests of investors in the process of bankruptcy and reorganization cases.The adjustment is to adjust or optimize the equity structure of the enterprise,redistribute the equity of the enterprise and achieve the purpose of reorganization.The transfer of investor's rights and interests is a common method for investor adjustment.However,in specific judicial practice projects,we often see a situation where the equity of the shareholders is pledged or preserved.And the equity of the investor is adjusted simply by using equity transfer or transfer.Often affect the rights of the relevant rights holder or pledgee.Under such a contradictory reality,it is important to resolve the conflict and coordination.However,China's current bankruptcy law does not make clear provisions on this issue,even does not take this situation into consideration at all,creating huge problems for the settlement of the above problems and the smooth implementation of bankruptcy reorganization procedures.This article focuses on the pledge and preservation of the equity of bankrupted enterprises.The main research is the issue of the effectiveness of the investor's equity adjustment program in the bankruptcy process,including the performance of the investor's equity adjustment program's effectiveness and the effectiveness of the investor's equity adjustment program.The main reasons for sexuality and methods for further improving the effectiveness of the investor's equity adjustment plan.The formation of the investor's rights adjustment plan,the adjustment and the legal relationship are more complicated.The formation of an investor's rights adjustment plan often involves multi-party and multi-sector legal relations.The characteristics of the investor's rights adjustment program make it difficult for people to understand its essence.It seems a more effective way to study the nature of the investor's equity adjustment program from the perspective of compulsory approval and normal approval.Different approval procedures have given the investor's equity adjustment program different properties and effects.Once the investor's rights adjustment plan has passed the vote of the investor group,the effectiveness of its contract occurres.However,this effect is only valid between the creditor and the investor.The process of adjusting the investor's rights and interests involves multi-stakeholders,whether the equity can be transferred smoothly and the attitude of the relevant rights subject that is pledged or preserved.This is also the fundamental reason why the equity adjustment plan approved by voting cannot be implemented immediately and conflicts with the equity burden.Once the investor's rights adjustment plan is compulsorily approved by the court,it will have an effect that overrides the general autonomy of the will.In accordance with the powers granted by the Bankruptcy Law,the court made a compulsory approval decision on the investor's rights adjustment plan.It has dual legitimacy in law and jurisprudence.Once the investor's rights adjustment plan has been compulsorily approved by the court,it is considered to have fully protected the interests of all relevant rights holders.Whether it is the lifting of the pledge or the preservation,it has its rationality and legitimacy.Because of this,the relevant people's court or equity registration agency should cooperate with the implementation of the investor's equity adjustment plan to complete the equity transfer.The author recommends that the legislature should add the following provisions in the process of interpreting or revising China's "Enterprise Bankruptcy Law" in the future.That is,when the investor's equity adjustment plan has been approved but the reduced equity of the adjustment plan has been pledged or has been taken by the people's court.At the time of preservation,the equity registration authority shall cooperate with the reorganization of the enterprise to complete the adjustment of the investor's rights and interests.At the same time,the author also pointed out the ambiguity of the fairness and justice principle standards in the current Enterprise Bankruptcy Law and suggested that in the subsequent amendments,the judgment standards of fairness and justice principles could be further refined.In specific standards,the author believes in two grounds of which are "ensuring the rights and interests of equity holder-related rights holders from being damaged by the reorganization process" and "providing a path for equity holder-related rights holders to participate in the reorganization process" are indispensable in the process of elaborating fair and just standards.