Protection Of The Interests Of Creditors In Bankruptcy "Debt-to-equity"

Debt-to-equity swap is an auxiliary distribution measure to "pay off" creditor’s rights by distributing debtor’s property from the investor’s equity.In the reorganization process,Chinese courts actively practice debt-to-equity swaps in the bankruptcy law to adjust the investor’s rights and interests with the debtor’s property(capital reserve fund or liquidation value)and distribute them to creditors.The BANKRUPTCY Law provides a standard basis for the protection of creditors’ interests in the debt-for-equity swap of bankruptcy restructuring with the specific institutional instruments of "creditor’s rights adjustment","creditor’s rights repayment" and "investor’s rights adjustment".But the key is how to better protect the interests of creditors through debt-equity swap in bankruptcy reorganization.The main controversy is : Should the protection of creditors’ interests be included in the scope of bankruptcy law or the company law.It is not clear that the creditor’s right of bankruptcy reorganizes the creditor’s right to turn into equity or the nature of creditor’s right to make contribution or the nature of debt repayment.The majority rule of the creditors’ meeting is not in line with the principle of voluntary creditors for the debt-for-equity swap in bankruptcy reorganization;However,it is not efficient to exchange debt for equity only with the consent of each creditor.Without the consent of individual creditors,it is unfair to the converted creditors to apply debt-for-equity swap by invoking the court arbitration method in bankruptcy law;In the reorganization plan can not be executed and transferred to the bankruptcy liquidation procedure,the practice of equity conversion can not be restored.At the same time,there are also some problems such as simple pricing method of debt-for-equity swap in bankruptcy,unclear pricing standards,opaque pricing procedures,insufficient disclosure of corporate information of debtors,and insufficient business ability of debtors after restructuring.The interests of creditors are easy to suffer secondary damage in the restructuring procedures.The relationship between "debt" in the debt-to-equity swap is mainly regulated by the bankruptcy law,while the relationship between "shares" is mainly adjusted by the company law.Legal relationships of different natures require different legal adjustments,and these two legal relationships intersect through the institutional tool of bankruptcy reorganization of an enterprise,and involve the issue of avoiding contradictions and jointly handling in the swap.The key to solving the problem lies in clarifying that the legal nature of the debt-to-equity swap has both the attributes of debt repayment in the bankruptcy law and the investment attribute of creditor’s rights and capital contributions in the company law.Based on the special position of creditors in the "debt-to-equity swap" of enterprise bankruptcy reorganization,on the basis of following the principle of creditors’ voluntariness,the feasibility and rationality of the "debt-for-equity" plan should be taken into account,and the frequency of application of "minority obeying the majority decision" should be reduced.Conversion creditors should not be subject to the reorganization plan and court approvals,including mandatory rulings on the reorganization plan.The interests of the creditors who have transferred to equity are protected by formulating a reasonable and feasible debt-to-equity swap plan,including the pricing of the debt-to-equity swap,the basic information disclosure of the enterprise and the operation and governance plan of the enterprise after the equity conversion.When the creditor does not obtain a considerable benefit from the "equity",the creditor may restore its original creditor’s nature to avoid the conversion of the debt to be inferior to the ordinary creditor’s right.The rules of the creditor interest protection system in China’s bankruptcy debt-to-equity swap should be improved from these aspects:on the basis of asset management companies,the efficiency of protecting the interests of creditors who transfer shares should be improved,the path of protecting the interests of shareholders who transfer shares should be expanded with the guidance of improving group voting,the fairness of the protection of the interests of creditors who transfer shares should be improved on the premise of restricting the compulsory adjudication of the court,and the protection of the interests of creditors who transfer shares should be implemented with the focus on optimizing procedures.