Research On The Financial Performance Of Debt Restructuring Of LTH Company

As the deepening and reform of market economy,the competition among industries and enterprises is increasingly fierce;this increases the operational risks of companies.In order to gain a foothold in the industry,seize more market share and gain scale benefits,many enterprises are willing to operate with high debts.However,not all enterprises are as lucky as Alibaba and can become the unicorn in the industry.Due to poor management and high debt,they fall into financial crisis and have to resort to debt restructuring to save them.For debtors,the main purpose of debt restructuring is to get rid of debt burden,optimize the allocation of resources,better play the role of financial leverage,improve the company’s economic efficiency,and achieve the effect of capital appreciation.For creditors,the main purpose of debt restructuring is to withdraw funds more quickly,reduce losses on bad loans,and thus improve the use efficiency of funds.In this paper,by analyzing the debt restructuring of Sichuan LTH co.,ltd.Due to the excessive guaranteed loans of LTH group and its subsidiaries to develop new business and set up new subsidiaries and also affected by the economic depression of the whole chemical industry,the Company is struggling in high loan interest and principal payments.LTH is warned of the risk of delisting for many times,which push it to the verge of bankruptcy.Before the debt restructuring,LTH had tried several times through restructure assets to reverse the crisis but failed until the one-year suspension of stock trade for the restructuring.Thanks to the government’s strong support,multilateral negotiations constantly modify the restructuring conditions,this one-year long debt restructuring finally successful.After the completion of the debt restructuring,LTH successfully took off the star,got rid of the debt crisis,and gained breathing time for the enterprise technology innovation and reform and development model.Taking LTH co.,ltd.as an example,this paper starts from the perspective of the impact of debt restructuring on the financial performance and market value of enterprises.Firstly,this paper introduces the background and theoretical significance of debt restructuring,analyzes the research status of this theory at home and abroad,and also introduces the research methods,contents and innovations of this paper.Then introduce the theory of debt restructuring,including the definition of debt restructuring,the choice of motivation and method,and the description of the feasibility of debt restructuring.According to the theory of the previous two chapters,The author analyze in details with the specific cases of LTH in chapter 3,chapter 4 and chapter5.gical structure from LTH the debt restructuring of the early stage of the background,process and after the restructuring of financial performance has carried on the detailed analysis,first introduced the LTH debt restructuring is in front of the background,difficulties and feasibility,and then using the method of financial indicators,EVA analysis and value analysis method of the debt restructuring has carried on the analysis and evaluation;Furthermore,it draws some relevant conclusions from this debt restructuring,and obtains some enlightenment and Suggestions to provide some experience and direction for the subsequent debt restructuring of enterprises.There are three features and innovations in this paper: firstly,there is innovation in the content of the analysis.This paper studies the impact of debt restructuring on financial performance by combining cases.Most previous studies have focused on the accounting treatment of debt restructuring and its impact on earnings management.Secondly,this article selects the innovation case object,LTH,as old state-owned enterprises,is a domestically,outside the creditors,apply to the court for bankruptcy liquidation within mismanagement loss serious,facing delisting,under the government and the court’s intervention passive choice of debt restructuring,the parties are not willing to see a roots go deep veteran star company so disappear,this is also the general corporation without treatment.In the end,LTH has made some innovations in the choice of debt restructuring.The combination of asset restructuring and debt restructuring can make up for the short-term effect of debt restructuring,fundamentally optimize the allocation of resources and remove bad assets.