Bankruptcy Reorganization Research Articles

How bankruptcy system innovation affects firm investment behavior: A quasi-natural experiment based on the establishment of bankruptcy courts in China

This study investigates the effects of bankruptcy system innovation on firm investment behavior. Taking the establishment of bankruptcy courts in China as a quasi-natural experiment and using the difference-in-differences method, we show a significant positive relationship between the bankruptcy system and firm investment in financial assets. Improving creditor protection, increasing firms' financing constraints and costs, and increasing the bankruptcy reorganization rate are the main mechanisms through which the establishment of bankruptcy courts promotes firm investment in financial assets. Moreover, the effects of bankruptcy court establishment on firm investment in financial assets are more significant for non-state-owned firms, firms with CEOs who do not have a financial background, and firms in regions with better institutional environments. Finally, we find that the increased investment in financial assets by firms after the establishment of the bankruptcy court balances the efficiency of investment in financial assets at the same time. The findings of this study can provide a reference for optimizing the allocation of market resources and improving the financial rules of the legal system.

Judicial Moderate Intervention in Information Disclosure of Bankruptcy Reorganization Plan Voting in China

Judicial Moderate Intervention in Information Disclosure of Bankruptcy Reorganization Plan Voting in China

Research on the Identification of Value in Corporate Bankruptcy Reorganization

Bankruptcy reorganization, as a crucial procedure for corporate regeneration and debt resolution, plays a significant role in the salvation of enterprises and the resolution of debts. The identification of the value in corporate bankruptcy reorganization is an extremely important prerequisite, as it is closely related to the initiation of the reorganization process, the smooth progress of the reorganization, and the ultimate success of the reorganization. From the current judicial perspective, Chinas Enterprise Bankruptcy Law does not provide explicit regulations on the identification of the value in corporate bankruptcy reorganization. This lack of clarity hampers the ability of various levels of peoples courts and bankruptcy administrators to address relevant issues in practice, thereby impeding the effective protection of the interests of corporate debtors and creditors. Therefore, improving the identification of the value in corporate bankruptcy reorganization holds significant practical and guiding significance.

An Examination of the Legal Application of Mutual Interest Debt Financing in Bankruptcy Reorganization

An Examination of the Legal Application of Mutual Interest Debt Financing in Bankruptcy Reorganization

Research on Property Trust Obligations in Business Bankruptcy Reorganizations

Research on Property Trust Obligations in Business Bankruptcy Reorganizations

The Decline and Reorganization of Hainan Airlines

At the beginning of 2020, the sudden new crown epidemic spread rapidly around the world, which had a huge impact on various industries. Especially in the air transport industry, the profit margins of various companies are gradually declining. The problems of Hainan Airlines have also gradually emerged. Due to the company's bond default and lack of internal control, it declared bankruptcy and reorganization. In this context, through research on Hainan Airlines' operating conditions and management strategies, it is proposed that the new crown epidemic is not the main factor affecting its bankruptcy reorganization. It is due to the continuous accumulation of various hidden dangers of the enterprise. And found that the main problems of Hainan Airlines are: (1) Insufficient profitability leads to the potential crisis of insufficient liquidity, and the company's assets cannot be effectively used, which drags down cash flow; (2) The transportation industry is under heavy competition pressure and there are diversions; (3) There are problems in internal management, and the excessive expansion in the early stage has led to the dislocation of Hainan Airlines' asset structure and the occurrence of insolvency. After a comprehensive analysis of the reasons for the bankruptcy and reorganization of Hainan Airlines, it is proposed to enhance the company's operational capabilities and conduct business in multiple ways to increase profits; to diversify financing and optimize the bond structure of Hainan Airlines; to further improve the internal control of the company to avoid further dictatorship. appear once.

Research on bankruptcy reorganization of township partnership enterprises under the background of common prosperity *

Township partnerships are one of the important driving forces for the development of mountainous counties. The existing bankruptcy reorganization system is mainly applicable to legal person enterprises, and township partnership enterprises cannot realize self-rescue through the reorganization system. To help rural coprosperity effectively, this paper analyses the practical difficulties of bankruptcy reorganization of rural partnership enterprises in 26 mountainous counties and proposes corresponding countermeasures and suggestions.

Application of Bankruptcy System of Rural Collective Economic Organizations

The Civil Code has established the special legal person civil subject status of rural collective economic organizations. Under the dual drive of reform and legislation, rural collective economic organizations are evolving towards market subjects, and the withdrawal mechanism of rural collective economic organizations should be constructed. The application of the bankruptcy system is an inevitable choice under the background of reaffirming the economic functions of rural collective economic organizations, and also meets the practical needs of rural collective economic organizations as special legal persons to withdraw from the market in an orderly manner. When applying the bankruptcy system, the conditions and subject of bankruptcy application of rural collective economic organizations should be clarified; Determine the responsible property, including but not limited to the usufructuary right used by members to exchange capital contributions for shares, and grant members the right to repurchase capital contributions; We will establish a simple bankruptcy procedure, a bankruptcy prevention system, a bankruptcy reorganization system and other supporting systems.

The economics of prepackaged bankruptcy

The economics of prepackaged bankruptcy

Prepacks as a mechanism for resolving financial distress: The evidence

Prepacks as a mechanism for resolving financial distress: The evidence

Initiative for China to establish a dual model of mixed corporate governance on bankruptcy reorganization: An empirical analysis based on 93 listed companies

Corporate governance in reorganization is an important guarantee for the success of troubled firms' rescue. Using a dataset of 93 listed companies in reorganization in China over the last 16 years and through a binary division of decision making in reorganization, the paper presents the first empirical study of governance in the manager management model and the debtor’s own management model during reorganization, found that the manager governance was plagued by the manager’s insufficient ability of business decision-making, which was difficult to improve the operating value of the enterprise; Under the self-management of the debtors, they were vulnerable to the manipulation of the controlling shareholder, and the allocation of losses from reorganization decision was unfair. This paper proposed to change the current model of the manager or debtor fully implementing the reorganization decision and business decision during the bankruptcy reorganization, and construct the dual model of mixed corporate governance for the manager to execute the reorganization decision and the debtor to implement the operation decision separately. The study provides a novel model for corporate governance in bankruptcy reorganization.

Research on the Protection of Creditors' Rights and Interests in Bankruptcy Reorganization Procedures

Bankruptcy reorganization is one of the important procedures for enterprises to maintain operational value and realize the hope of regeneration. The effective application of the reorganization system is of great significance for debtors to complete debt repayment and safeguard the legitimate rights and interests of creditors. However, in practice, the information asymmetry among stakeholders, the lack of creditor protection mechanism, and the conflict of interests of multiple subjects damage the legitimate rights and interests of creditors, and are not conducive to the bankruptcy and reorganization system to play its due role. In order to protect the legitimate rights and interests of the creditors of bankrupt enterprises and optimize the business environment, this paper puts forward targeted suggestions from the aspects of establishing an information disclosure system, improving the creditor protection mechanism, and improving the judicial active response mechanism, so as to help protect the rights and interests of creditors in the bankruptcy reorganization process. , so as to promote the further development of my country's economy.

实质合并重整程序适用的视角矫正与标准再造

To achieve Pareto optimality and substantive fairness, the practice of substantive consolidation in bankruptcy reorganization in China is needed. However, after analyzing the legal documents and judicial cases in the past three years, it can be seen that there are problems in the application, such as cognitive dislocation and theoretical conflicts. Moreover, there are deficiencies in the standard for judging whether the proceeding is applicable or not, such as vague meaning and unclear relationship, and there is a relative lack of systematic thinking. Therefore, on the one hand, a clear conceptual distinction should be made between the substantive consolidation from the perspective of bankruptcy law and the corporate merger in the field of company law. Besides, the contradictions between substantive consolidation and the traditional theoretical principles like bankruptcy petition doctrine, creditor’s reliance interests, and corporate personality independence should be resolved through methods which contain interest measurement and perspective shifting. On the other hand, it is necessary to construct a standard system with objective mode and subjective mode for determining whether the proceeding should be applied, so as to respond to different judicial needs. Furthermore, the objective mode should be detailed and strict, and it can be refined into three parts: formal requirement, necessity requirement and feasibility requirement. The subjective mode is based on the unanimous and real volition of the relevant stakeholders, which fully respects the freedom of the parties to dispose of their rights.

TPC files for bankruptcy

After a rough few years, TPC Group has filed for Chapter 11 bankruptcy protection. The company, which processes crude C4 streams into butene and butadiene and makes other C4 derivatives, had an explosion at its Port Neches, Texas, facility in November 2019. It also experienced outages related to severe cold in Texas in early 2021. TPC’s bankruptcy reorganization will resolve its liabilities from the Port Neches incident and will remove $950 million in debt from its balance sheet.

Mechanism Analysis of Strategy Choice of Bankruptcy Reorganization Participants under Government Incentive Mechanism

This study constructs an evolutionary game model of government, creditors, investors, and enterprises participating in bankruptcy reorganization, analyzes the strategy selection mechanism of the four parties under the government incentive mechanism, systematically analyzes the strategy selection process of each participant, discusses the effectiveness of government incentives in promoting the bankruptcy reorganization process, and finds out the stable point in the replication dynamic system. Finally, MATLAB 2018 software is used to numerically model the influence of key elements of the system. The research shows that under the government’s incentive mechanism, creditors participate in bankruptcy reorganization in the form of debt‐to‐equity swaps, investors participate in bankruptcy reorganization in the form of providing high‐quality assets, and enterprises participate in bankruptcy reorganization in the form of reform and transformation which is a stable strategy to replicate the dynamic system; the strategy of the enterprises will affect the strategy choice of creditors and investors; the completion of bankruptcy reorganization is inseparable from the government’s incentives, and the government’s strategy will directly affect the strategic choice of enterprises; and the government’s support and constraint strength satisfy the following quantitative relationship: when M1>S3–C1 and L1>B1–C1, it can better promote the bankruptcy and reorganization process.

Problem sintetizacije finansijskih izveštaja u reorganizaciji prilikom vođenja procesa stečaja

The subject of the paper is solving the problems arising from the use of highly synthesized financial statements. The paper presents a model by which highly synthesized financial data can be used for the needs of reorganization in bankruptcy management. Financial and accounting data are frequently synthesized, i.e. organized in such a way that they largely hide the details of the business. The act of synthesis is needed in order a general picture of a company's business to be created. Financial statements such as balance sheets and income statements represent typical examples. In the paper, there are used several research methods to formulate the models for the efficient use of highly synthesized financial statements. The basic method used in the research was the case study method, then the modelling method, and, as an auxiliary method, there was used the documentation analysis method. The case study analyzed the main indicators being important for the bankruptcy. We analyzed six companies which were in the process of reorganization in bankruptcy, and the analysis identified common characteristics served as the starting points for the next method. The next method used was the modelling method. This method was a logical continuation of the previous method by which a new model was formulated. As a tool in modelling, there were used the block diagrams, which graphically showed all important elements and relations. The auxiliary method used was the documentation analysis method. It is a historical method and an integral part of the previous two methods. The aim of the paper is to increase the efficiency of the use of highly synthesized financial statements in bankruptcy management.

Measuring the ex-ante incentive effects of creditor control rights during bankruptcy reorganization

A large theoretical literature studies the effects of creditor control during bankruptcy proceedings on firm outcomes. Empirical work in this area mainly examines reforms to creditor control rights during liquidation. In this paper, we use administrative microdata and exploit a legal reform in Denmark to provide the first causal estimates of creditor empowerment in reorganization-the complementary bankruptcy procedure to liquidation. We find that the Danish reform led to a sharp decline in liquidations. Although few insolvent firms make use of the new reorganization procedures, we show that solvent firms improved their financial management and increased employment and investment. The findings illustrate the empirical importance of reorganization rules on the incentives of stakeholders outside of bankruptcy.

Creditor Voting and Time Constraints in Bankruptcy Reorganizations

We analyze how creditors behave in corporate renegotiations, constructing a novel database containing 11,388 claim-level votes across 200 bankruptcy reorganization filings in Brazil. We document several regularities in the data and analyze the role played by an important constraint: the time available for negotiations, which we proxy by the duration of the court process. Using random assignment of bankruptcy cases across judges with heterogeneous tendencies to delay, we find that each additional month of court delay increases the probability of approval votes from banks and accounts receivable owners by 0.05, or 6.3% relative to the average. This increases the probability of plan approval. Consistent with the notion of time constraints reducing the ability to reach many creditors, we show that these effects are driven by companies with high debt dispersion. Our results suggest that reforms expediting bankruptcy cases could undesirably increase the number of liquidations.

Creditors, Plan Confirmations, and Bankruptcy Reorganizations: Lessons from Slovenia

Creditors often critically shape the fate of bankruptcy reorganizations, yet the drivers and implications of creditors’ reorganization plan confirmations are still not completely understood. Exploring micro-level data on bankruptcy reorganization proceedings in Slovenia, we find that creditors, above all, demand a credible change in the exercise of control rights. The prospects of plan confirmation are positively associated with debt-to-equity conversion as well as those majority ownership changes that occur during the proceeding and feature a domestic incoming owner. In contrast, we find no evidence that plan confirmation is related to management turnover, majority ownership transfers involving a foreign incoming owner, pre-bankruptcy financial indicators other than leverage, the number of creditors, the value of different types of claims, and even the contractual details for the repayment of claims. The incidence of creditor-induced socially costly filtering failures is quite high, with estimates ranging between 41 and 78% based on the ex-post approach and between 40 and 61% based on the ex-ante approach. Confirmations of plans from non-viable businesses are more prevalent than rejections of plans from viable businesses. Our results provide a novel perspective on the creditors’ role in the resolution of business bankruptcy.

Reorganizacija poslovanja kao način rešavanja insolventnosti

A long-term insolvency period usually precedes commencement of bankruptcy proceeding, by which time a debtor has already used up most of their assets. Such company has already lost its place on the market, been abandoned by the company's best workers, and has not maintained or renewed the equipment. These are all indicators of the company's need of fresh capital required for effective reorganization. Reorganization provides the debtor with an opportunity to ''revive'', provided that reorganization has to be cost-efficient for the creditors, who will make decision on the course of action, toward insolvency or bankruptcy. Bankruptcy proceeding should be completed with as low costs as possible, as soon as possible and as effective outcomes as possible in order to ensure a regular economic course. The legal system can generate fundamental risk factors for bankruptcy, whereby not only regulations but rather implementation of the law are involved. Duration and costs of a bankruptcy proceeding, and sometimes incompetent bankruptcy administrators and other people involved in the proceeding can add to the debtor's bad position and further deepen insolvency of the business entities involved. Bankruptcy reorganization also affects existing agreements between the debtor and creditors but measures affecting rights of the owner of all the debtor's assets may also apply, which essentially includes their private property. The aim is to sustain functioning of the business entity as a unit including all its business relationships and employees because this can assign the business entity the value higher than the value of individual sales of the debtor's assets.