Case Study On Bankruptcy Reorganization Of Tianyu Digital Technology

Many listed firms have encountered strong competition and overcapacity in recent years,despite the rapid rise of the domestic economy,due to complex factors such as the global market environment,resulting in financial and operational problems and even delisting.With the continuous improvement of the bankruptcy laws in 2007,the emergence of the bankruptcy reorganization system provides a new way out for the domestic listed companies that still have operational value but are in the debt crisis.Enterprises get new life through self-help,and also promote the development of the domestic economy.However,in comparison to Western countries,my country’s bankruptcy reorganization system was not only introduced later,but it also lacked essential actual experience.In recent years,an increasing number of publicly traded corporations have used the bankruptcy and reorganization approach.Summarizing important experience from research and analysis of the path and impacts of bankruptcy and reorganization can be used as a reference for businesses contemplating bankruptcy and reorganization.This paper takes Tianyu Digital Technology,an asset-light game enterprise,as the selection object.It focuses on the analysis of the reasons,path selection,and effects of its bankruptcy reorganization,and then summarizes the critical factors for its successful bankruptcy reorganization.When the reasons were examined,it was discovered that the game industry’s effect was the primary cause of the company’s losses for two years in a row.This sector is characterized by a high demand for research and development expenses,quick technical progress,growing demands for gaming content,and numerous changes in player preferences,as well as intense competition.Through mergers and acquisitions,many firms have quickly acquired high-quality corporate assets and high-tech staff in order to expand their game markets.In the game industry,mergers and acquisitions are widespread.They are characterized by high valuations,performance commitments and overconfidence of management.They believe that the synergy effect of the target of mergers and acquisitions will accomplish the projected effect,resulting in high premiums,a substantial amount of goodwill impairment,and massive debts,which have led to Tianyu Digital Technology’s delisting issue.It focuses on the overall strategy and particular implementation plan of the company’s reorganization based on an analysis of the company’s reorganization path.The corporation is thought to have a higher operating value and restructuring capability.Compared to liquidation,reorganization was able to increase the liquidation rate,resolve debts by hiring a team of professional managers to fully convert debts into equity,actively revitalize inventory and develop incremental growth in operations,eliminate marginal assets,bring into play resource advantages and reduce operational burdens,and finally remove the delisting risk warning in May 2021,which shows that the bankruptcy reorganization of Amusement Digital is successful.From the perspective of restructuring effects,mainly from two perspectives of financial effects and market effects,it is found that after the restructuring,the company’s financial performance has improved,its capital structure and efficiency of asset use as well as cash flow and growth capacity have been effectively restored,and financial risks have been mitigated,while earnings are still deficient in the short term and still need further improvement.Through the analysis of the motivation,path selection and effect of Tianyu Digital’s bankruptcy reorganization,four critical factors for its successful restructuring can be summarized,including the cooperation of the government and courts,a joint governance of minority shareholders,the appointment of professional managers,and full debt swap.Shares to resolve debt and equity incentives to increase employee confidence.The summary of these reorganization success factors not only provides relevant references for the reorganization of asset-light enterprises,but also enriches and improves the relevant theories of bankruptcy reorganization.