Research On The Bond Default And Creditor Protection Of The Parent Company Of The "Strong Subsidiaries And Weak Parent" Group ——Taking The Example Of Brilliance Group’s Bond Default

In recent years,there have been frequent risk events in the bond market.The bond default event of Brilliance Group and the bond default event of Peking University Founder Group,have caused varying degrees of damage to the interests of creditors.Most of these risk event subjects have the characteristics of "strong subsidiary and weak parent",which has aroused investors’ concerns about the investment risks of such enterprises.So how does the parent company of the "strong subsidiary and weak parent" group as a debt issuer cause damage to the interests of creditors? How to strengthen and improve the creditor protection mechanism of this type of enterprise? The existing literature has not been able to study or comment on it.In order to solve the above problems,this paper selects the bond default event of Brilliance Group for analysis and research.At first,this paper summarizes and reviews the relevant literature,and establishes the research foundation of this paper by combining relevant theories.Secondly,this article combines existing research and the actual situation of the case company,and in-depth analysis concludes that there are four reasons for the damage to the creditor’s interests:（1）The bond issuer（Brilliance Group）defaulted on the bond.The solvency of the debt servicing entity（parent company）under the characteristics of "strong subsidiary and weak parent" was beautified by the consolidated financial statements,the parent company’s insufficient control over core subsidiaries,and the poor profitability of non-core subsidiaries led to the final default of the bonds.（2）The creditor’s own reasons.Creditors pay too much attention to the consolidated financial statements,state-owned enterprises have heavy beliefs and fail to effectively pay attention to the disclosure of information,resulting in damage to their interests.（3）The creditor protection system is invalid.The creditors’ meeting failed to be held effectively,and the trustee failed to fulfill the fiduciary duties due diligence.（4）Inflation of credit ratings.Credit rating agencies have mismatched debt repayment entities（parent companies）and rating entities（groups）,and have over-rated the issuers and bonds.Finally,this article proposes a targeted creditor’s interest protection mechanism construction plan based on the reasons for the damage to the creditor’s interest.The construction content mainly includes the following four aspects:（1）Reduce the default risk of the issuer;（2）Strengthen creditor education;（3）Improve the system for protecting bondholders;（4）Improve bond rating methods.The research contribution of this article lies in the establishment of a targeted creditor protection mechanism of Brilliance group,bond creditors,creditor protection related systems,and bond rating agencies through the analysis of the reasons for the damage to creditors’ interests.The creditor protection mechanism constructed in this article can strengthen bond issuers’ attention to their own potential default factors,increase creditors’ risk awareness when choosing bond-issuing companies,and propose improvements and improvements to existing creditor protection related systems and bond rating agencies.Improve the plan so that creditors can better protect their rights and interests in future investment activities.