Research On The Legal Issues Of Financing In The Bankruptcy Reorganization

Financing is critical to restructuring a company,and it determines whether a company can restructure successfully.First,Article 75,paragraph 2 of the Bankruptcy Law of China stipulates a financing method of borrowing:the debtor or the administrator may set a guarantee for the financing loan.However,the provision lacks operability,such as on which kind of property,a guarantee can be established?What are the conditions?What are the priorities of multiple security rights?There is no sufficient protection for financing funds,making it harder for restructuring enterprises to attract investors.Second,Bankruptcy Law does not provide sufficient provisions for the financing models in reorganization.Restructuring enterprises are different from enterprises under normal conditions.There are many legal problems in the financing models in the reorganization procession.How to choose the financing mode is the key to whether the financing can be realized and the final success can be achieved.Bankruptcy Law needs to respond to the legal problems that exist in the financing models of the reorganization enterprises.Other departmental laws such as Company Law and Securities Law should also make exemptions for the reorganization enterprises.In addition,Bankruptcy Law does not classify investors into the subject of bankruptcy reorganization,and lacks provisions on the rights and obligations of investorsThis paper chooses several cases at home and abroad as the research focus and argumentation support.The introduction part combines the current provisions of the Bankruptcy Law and the current reorganization practice,summarizing three main legal problems in China's reorganization financing First,Bankruptcy Law has insufficient guarantee for the financing funds in borrowing modle.Second,Bankruptcy Law does not provide sufficient provisions for the financing models in reorganization.Third,Bankruptcy Law provides insufficient provisions on the rights and obligations of investors.The problems will be introduced separately in the first,second and third parts below.The first part introduces the financing priority system by referring to the DIP priority in the US Bankruptcy Law,rethinking China's financing priorities and proposing the priority level and conditions for financing priorities.The second part introduces other financing modes such as equity adjustment,securities issuance,debt-to-equity swap and asset sales,and explains the disputes and solutions for its application in practice Including the standard and proportional restrictions on equity adjustment in reorganization financing,the connection between the issuance of securities rules and the bankruptcy law,the principle of debt-to-equity swaps in reorganization financing and the discussion on the price of reorganization of corporate assets.The third part focuses on the obligation of information disclosure and the obligation of investors to inject funds on time to safeguard financing activities.In the reorganization financing,the game between the investors and the debtors often affects not only the interests of both parties,but also all the reorganization stakeholders and the reorganization activities;therefore,the bankruptcy law should be properly intervened.By standardizing the parties to properly fulfill their respective obligations,the financing activities can be guaranteed to proceed in an orderly and smooth manner.