Study On The Causes Of Financial Distress Of Letv And The Countermeasures For Getting Rid Of It

Letv,which listed on the gem in 2010,until 2016,has grown to become China's largest Internet portal for film and television drama,at a rate of almost double the annual growth rate.In the Internet film and television industry,Letv quickly occupied the leading position.However,from 2016 to 2017,Letv was in financial distress.After two years of operating losses,Letv are facing with the stock exchange ST treatment of the dilemma.On the basis of the definition,causes and countermeasures of financial distress,this paper discusses the current situation of Letv net.The main reasons of falling into financial distress and the countermeasures to get out of difficulties are studied and analyzed.The following conclusions are drawn: Letv net is still in the risk of being unable to pay its debts due to maturity at present,and its profitability and debt paying ability continue to decline;Sun Hongbin's management took the following measures to extricate Letv from difficulties: first,by way of equity trading and capital increase to restructure,then,To cut related transactions,unifying management aims to physically cut related transactions and pushing related companies to repay their debts with assets,while also providing guarantees to Letv to finance their return to production.There are three internal reasons leading to its financial distress: the failure of diversified investment,unreasonable financing design and poor operating conditions.The main reason for Sun Hongbin's failure to extricate himself from the difficulties of Letv is that the capital investment is too much and the improvement effect is not obvious.In response to the above two points,This article puts forward the possible effective suggestion to Letv in two aspects of management and reorganization in the future.Through the case study of Letv,this paper puts forward some possible and effective suggestions for enterprises and capital markets.It is suggested that similar enterprises such as Letv,which are in the rapid development stage,should control the speed and scope of diversified development,reasonably design financing methods and financing ratios,know about the reorganization projects in detail and take into account a number of factors before implementing the reorganization measures.The paper also put forward some recommendations for investors and regulators in capital markets.Investors should particularly be alert to the reduction of the holding of the chairman of the board of directors of a "one-share company" whom also is the chairman of amulti-functional listed company,and pay attention to the related party transactions of the listed company and the transfer of the interests of the listed company by the major shareholders.The regulatory authority is suggested that it be restricted with the chairman of the board of directors as "one share alone" in a listed company.Be careful for him cashing out,harming the interests of the minority shareholders,disturbing the regulation of the capital market.The regulatory authority should develop the relevant system,restrain or punish the bad behavior in time,and protect the interests of the minority shareholders reasonably.