Qinghai Salt Lake Industry Co.,Ltd Bankruptcy Reorganization Plan Research

With the development of the bond market,bond defaults begin to appear and gradually increase,and the subsequent disposal of the defaulting subject has been the focus of investors and regulators.Bankruptcy reorganization is a relatively standardized and transparent method of subsequent default claim disposal.By the end of 2021,the subject of default disposal through bankruptcy reorganization accounts for 42.79% of all bond default subjects,which is widely used in the follow-up of bond default.Qinghai Salt Lake Industry Co.,Ltd was filed for bankruptcy reorganization by creditors due to the failure of diversified investment transformation and increased financial risk,resulting in substantial default of bonds.Its bankruptcy reorganization took a total of 8-9 months from court acceptance,reorganization plan proposal to execution,which was relatively smooth overall.And successfully divested the nonperforming assets through bankruptcy reorganization,the company achieved revenue of 14.778 billion yuan in 2021,an increase of 5.44% year-on-year;net profit attributable to the mother of 4.478 billion yuan,an increase of 119.58% compared with the same period of the previous year,the debt crisis was lifted,profitability gradually recovered,the overall level of operation improved,the financial situation was fundamentally improved,and the stock price rose sharply after resuming listing on August 10,2021.The cumulative excess return reached 317.53%,and the comprehensive financial performance indicators performed well.The case has certain typicality,and this paper analyzes the case.Based on financial distress theory,information asymmetry theory and stakeholder theory,we study the causes of the company’s bankruptcy restructuring and attribute them to external and internal reasons.External reasons include contraction of financing in the economic downturn,shrinking market prices and rising energy costs,while internal reasons include failure of diversified investment transformation,bond default problems and higher financial risks,and apply the KMV model to measure bond default and quantify the financial risk by applying the Z-Score model.By reviewing the bankruptcy reorganization history of Qinghai Salt Lake,the bankruptcy reorganization plan was investigated,and its debt-to-equity conversion plan was analyzed in depth and the reasonableness of the debt-to-equity conversion price was examined.The key factors for the successful implementation of Qinghai Salt Lake’s bankruptcy reorganization are summarized as the company’s great potential for core business development,the government’s active promotion of the bankruptcy reorganization,and the debt-to-equity conversion plan to improve the debt settlement rate.Finally,we evaluate the effects of the implementation of the bankruptcy reorganization.We use the event study method to analyze the impact of Qinghai Salt Lake’s bankruptcy reorganization,including short-term market reaction and long-term market reaction;we select comparable companies in the same industry and conduct comparative financial ratio analysis to test the impact of the bankruptcy reorganization on the company’s financial performance;we use the factor analysis method to reflect the medium-and long-term financial performance of Qinghai Salt Lake after the bankruptcy reorganization more intuitively;and finally,we summarize the effects of the bankruptcy reorganization in terms of corporate Finally,we summarize the improvement of capital structure,internal control and development strategy after the bankruptcy restructuring in terms of corporate governance effects.The successful bankruptcy reorganization of Qinghai Salt Lake provides a reference for other listed companies in similar situations to resolve their financial crises.Companies in financial distress should divest inefficient assets in a timely manner,initiate bankruptcy reorganization procedures if necessary,and formulate reasonable and sincere reorganization plans to help them get out of trouble.Suggestions are made for the deficiencies in the bankruptcy reorganization plan,including improving the legal system of debt-to-equity conversion,improving the evaluation mechanism of debt-toequity conversion price,improving the exit mechanism after debt-to-equity conversion,and fully implementing the relevant requirements of the information disclosure system also provide relevant suggestions for improvement.