Case Study On The 2011 Chaori Corporate Bond Default And Bankruptcy Reorganization Of The Issuer

On the March 4 2014, Shanghai Chaori Solar Energy Science&Technology Co.,Ltd(C.R.Corporation) announced that they can not afford the current interest of 2011 C.R. corporation bond on time anymore. It broke the record of “no-default” in Chinese bond market. Soon after that, this company has been applied for bankruptcy because of delaying to repay goods money. As the first default corporation bond in our bond market, it exists significant theoretical value to analyze this event. At the same time, it also has the realistic significance for the process of bankruptcy and reorganization case study.Debt crisis of C.R. Corporation brought this company into bankruptcy directly. On the other hand, this company has solved those disputes through the process of reorganization. This article revolves around two major topics in debt default and bankruptcy reorganization. And this paper will research this case based on the detailed introduction of PV industry, C.R.Corporation, 11 C.R. Bond and the process of bankruptcy and reorganization. First of all, we found the reason making this company bankrupted was the wrong strategy in wrong times.And the default of 11 C.R. Bond resulted from valueless collateral, unstuck guarantee measures and the deficiency of issuer conditions. Secondly, by using KMV model this paper measured the credit risk of the company. Measurement results show that the theory of anticipated probability of default(theoretical EDF) keep in a normal situation when the company listed, then it spiraled by the end of 2011. This predicted the credit risk of C.R.Corporation has been accumulating. Thirdly, because of the company going bankrupt, this text then evaluated the value of reorganization. Evaluation results show that the rate of return on the reorganization is far higher than the liquidation, and the ordinary debt repayment rate on the condition of reorganization is higher than on the condition of liquidation too. For bankruptcy reorganization rather than bankruptcy liquidation is a better and reasonable result.Finally, this paper analyzed the reasons about why C.R. Corporation could be reorganized smoothly,and compared the change of business performance, financial situation and credit risk between reorganized C.R. Corporation and not-reorganized. In terms of the current data,the conditions has been better than before.Based on above all research, the author offered some suggestions to companies, investors and supervisors at the end of this article.