According to the public information of Shanghai Stock Exchange and Shenzhen Stock Exchange, in the past year, a total of 33 listed companies achieved “self rescue” through bankruptcy reorganization. Compared with 2019 and 2020, the number of listed companies applying for bankruptcy reorganization and the number of listed companies accepted by the court in 2021 increased significantly.
Since this year, no listed companies have submitted bankruptcy reorganization applications. Qin Ruohan, general manager of Jinhua fund, told the Securities Daily that the surge in the number of bankruptcy reorganization reflects the accelerated survival of the fittest in the capital market with the slowdown of macroeconomic growth. In the future, with the gradual standardization of bankruptcy reorganization, it remains to be seen whether the overall number of applicants will increase.
surge in bankruptcy reorganization
According to the statistics of public data, looking at the number of listed companies applying for (being applied for) reorganization in recent three years, the overall trend shows a significant growth. There are 33 in 2021, 17 in 2020 and 14 in 2019.
“In recent years, double-digit bankruptcy reorganization has become the norm, which is one of the phenomena in the mature market. Bankruptcy is the death of enterprises in law. The purpose of enterprise bankruptcy reorganization is to give enterprises a new life.” Tian Yong, director of Guangdong Shengma law firm, told reporters.
Chen Li, chief economist of Chuancai securities, said, “Compared with bankruptcy liquidation and bankruptcy reconciliation, the advantage of bankruptcy reorganization is that bankrupt enterprises can choose diversified debt repayment methods, retain the main qualification and continue to operate. In addition, for creditors, it can improve the repayment rate and reduce losses. For listed companies, improving the bankruptcy reorganization system will give enterprises more flexible choices in the face of bankruptcy and make enterprises uncomfortable As for delisting and liquidation. “
On January 4, Shanghai Stock Exchange and Shenzhen Stock Exchange respectively issued the guidelines for self-discipline supervision of listed companies – the draft for comments on bankruptcy reorganization and other matters, which aims to enhance the timeliness and fairness of information disclosure of bankruptcy reorganization of listed companies, improve the quality of listed companies and protect the legitimate rights and interests of investors.
nearly 70% of the reorganization plan was approved by the court
According to the reporter’s statistics, 70% of the 33 listed companies applying for bankruptcy reorganization were approved by the court in 2021. It is worth noting that in the past three years, the proportion has shown a significant growth trend.
As of January 16, 2022, the reorganization plans of 92 listed companies with A-Shares have been approved by the court. Among them, there are 24 in 2021, 13 in 2020 and 6 in 2019; In 2021, the reorganization plan approved by the court accounted for 20.65% of the total.
On December 29, 2021, the bankruptcy reorganization plan of Kangmei Pharmaceutical Co.Ltd(600518) was completed. As the protagonist of the largest financial fraud case in the history of A-Shares that caused a sensation in the country, Kangmei Pharmaceutical Co.Ltd(600518) bankruptcy reorganization achieved the goal of reorganization and closed the case as scheduled.
On November 11, 2021, Guangzhou intermediate people’s court approved the Lonkey Industrial Co.Ltd.Guangzhou(000523) reorganization plan and terminated its reorganization procedures.
There are also listed companies that resolve the financial crisis of enterprises through bankruptcy reorganization, and even come back to life. On November 20, 2017, the court of Chongqing No. 1 middle school ruled to approve the Chongqing Iron & Steel Company Limited(601005) reorganization plan and terminate the reorganization procedures; On December 29, the ruling confirmed that the implementation of the reorganization plan was completed. According to the 2017 annual report released by Chongqing Iron & Steel Company Limited(601005) , through the successful implementation of the reorganization plan, the net profit attributable to the shareholders of the listed company in 2017 was 320 million yuan, realizing turning losses into profits.
A few are happy and a few are sad, and some reorganization plans of listed companies have not been passed. On December 15, 2021, Tempus Global Business Service Group Holding Ltd(300178) successively issued two announcements: the controlling shareholder’s application for reorganization by creditors was not accepted by the court and the company’s application for reorganization was not accepted by the court. According to the announcement, since Tempus Global Business Service Group Holding Ltd(300178) has not obtained the no objection letter issued by the CSRC and has exceeded the pre reorganization period, the Shenzhen intermediate people’s court ruled not to accept the bankruptcy reorganization application submitted by St tengbang; In addition, in view of the low reorganization value and feasibility of its controlling shareholder tengbang group, starting the reorganization procedure is not conducive to the protection of creditors, and the reorganization application put forward by tengbang group will not be accepted.
Qin Ruohan told reporters: “The main reasons for the failure of bankruptcy reorganization are as follows: first, during the reorganization period, the debtor’s business and property conditions continue to deteriorate and there is no possibility of rescue; second, the debtor has fraud, malicious reduction of the debtor’s property or other acts that are significantly detrimental to the creditor; third, the administrator is unable to perform his duties due to the debtor’s behavior; fourth, the debtor or the administrator Failing to submit the draft reorganization plan on schedule; Fifth, the draft reorganization plan was not adopted by the meeting of related parties and not approved by the court; Sixth, the draft reorganization plan was not approved by the people’s court after it was adopted; Seventh, the debtor does not execute or cannot execute the reorganization plan. “
Tian Yong reminded that “listed companies’ bankruptcy reorganization has great impact and complex situation. Some or out of control do not meet the minimum requirements of joint venture insolvency, and are often not accepted or passed. Therefore, listed companies should be cautious when proposing bankruptcy reorganization.”
“Investors need to focus on two points for the bankruptcy reorganization of listed companies: first, what is the real purpose of the reorganization applicant? Is it for hype or long-term development? Second, is there any new high-quality projects injected by the reorganization applicant in addition to funds? The legal and regulatory authorities have some mandatory requirements and index norms.” Tian Yong added.
Some enterprises not only adopt bankruptcy reorganization to bring the company back to life, but also adopt the way of asset reorganization.
“Bankruptcy reorganization is different from major asset reorganization. Major asset reorganization refers to the behavior that a listed company purchases and sells assets accounting for a certain proportion or more of the assets, income or net assets of a listed company. Bankruptcy reorganization refers to that a bankrupt enterprise can choose diversified debt repayment methods, retain its subject qualification and continue to operate.” Qin Ruohan said.
“When some listed companies are faced with major difficulties, it is generally a confident and positive signal to adopt the way of active asset restructuring rather than bankruptcy restructuring. In particular, major asset restructuring is not necessarily an option for enterprises when they are faced with difficulties. Sometimes it is even an active choice for better long-term development.” Tian Yong said.
