With the increasingly fierce market competition, every round of economic adjustment and industrial structure renewal, a large number of debts have become the burden of enterprises, financial institutions and even countries and regions. Some people say that contemporary society has entered the era of debt, and the extension and expansion of debt. The following is my research paper on corporate debt restructuring, hoping to help you!

In today's fierce market economy, some enterprises may be affected by poor management and external economic environment factors, resulting in a decline in profitability or losses, temporary shortage of funds, and it is difficult to repay debts on time, which leads to the increasingly frequent debt restructuring activities of enterprises in China. Debt restructuring has become an important phenomenon in China's economic life, which has aroused widespread concern in the economic circles.

Keywords: debt restructuring to pay off the fair value of debt

Debt restructuring refers to the matter that creditors agree to the debtor's modification of debt terms according to the agreement reached with the debtor or the court's ruling.

I. Background of debt restructuring

In today's increasingly fierce competition in the market economy, enterprises should be able to constantly change their business methods with the changes of various internal and external factors. Only by being good at economic management can enterprises be invincible in the fierce competition. Due to various changes in the internal and external environment, as well as some uncontrollable factors, enterprises may have difficulties in capital turnover and it is difficult to repay debts. According to the laws of our country, creditors have the right to apply for bankruptcy to the court when the debtor can't repay the due debts. As a debtor, they can ask the enterprise to go bankrupt through legal procedures to repay the debts. At this time, they can make some concessions through negotiation to reduce the burden of debtors, so debt restructuring came into being as a product of market economy.

Two. Overview of debt restructuring

1. Definition of debt restructuring

Debt restructuring refers to the matter that creditors agree to the debtor's modification of debt terms according to the agreement reached with the debtor or the court's ruling. In other words, as long as the original debt repayment conditions are modified, that is, the debt repayment conditions determined during debt restructuring are different from the original agreement, it is regarded as debt restructuring.

2. The main ways of debt restructuring

(1) Pay off debts with funds. The funds commonly used by debtors for bonds mainly include: cash, inventory, short-term investment, fixed assets, intangible assets, etc.

(2) Debt is converted into capital. Debt-to-equity swap is from the debtor's point of view, while creditors are debt-to-equity swaps; In the case of a joint stock limited company, it is converted into share capital; For other enterprises, it is converted into paid-in capital.

(3) Other debts. Such as reducing the principal of debt and reducing the interest on debt.

(4) Combination of the above methods. Such as transferring assets and converting debts into capital to pay off debts.

3. The principle of debt restructuring

(1) Neither the creditor nor the debtor can confirm the income from debt restructuring.

(2) The debtor repays the debt with cash assets lower than the debt payable, and the difference between the cash paid and the book value of the debt payable is included in the capital reserve. The difference between the cash assets transferred by the debtor and the book value of the creditor's rights receivable is included in the current profit and loss as a loss.

(3) If the debtor pays off the debt with non-cash assets, the difference between the book value of the non-cash assets used to pay off the debt and the book value of the debt payable shall be regarded as capital reserve or loss and included in the current profit and loss.

(4) The debtor whose creditor's rights are converted into capital shall take the difference between the book value of the debt payable and the share of rights and interests enjoyed by the creditor due to giving up the creditor's rights as capital reserve.

Third, the issue of debt restructuring.

(1) Debt restructuring does not consider the time value of funds.

In the new debt restructuring criteria, when debt restructuring is carried out by modifying other debt conditions, the debt repayment period is usually modified by modifying debt conditions, which involves "time". Funds have time value, and the value of funds is different at different times. Therefore, using fair value instead of present value in determining the value of debt restructuring will exclude those debts that are essentially within the scope of debt restructuring, making the recognition of debt restructuring gains and losses untrue.

(2) Misunderstanding of the role of debt restructuring

Many enterprises have a wrong task, thinking that debt restructuring can solve all the debt problems of enterprises, so many indebted enterprises have carried out debt restructuring one after another, because debtors can get more benefits and get rid of the debt burden through debt restructuring, and many enterprises have not carried out debt restructuring according to their own specific conditions.

(3) Debt restructuring provides conditions for the greed and failure of enterprise management.

In the process of restructuring, due to the defects in the internal management system of some enterprises at present, from the signing of the debt restructuring agreement to the organization and implementation on the restructuring day, the managers are in charge of selling off the debt-paying assets to collect some improper expenses, and even some creditor enterprises treat the recoverable creditor's rights as debt restructuring, which hinders the economic development of enterprises and even China to a certain extent.

(4) Debt restructuring has become a means of whitewashing statements.

Many enterprises exploit legal loopholes and use debt restructuring to whitewash statements, resulting in information asymmetry. Make the report users suffer losses, and can't accurately grasp the actual economic situation of the enterprise, which will lead to the report users' decision-making mistakes and cause unnecessary losses.

(5) Laws and regulations related to debt restructuring need to be improved.

China has not yet established a set of laws and regulations to regulate enterprise restructuring, which makes many enterprises take advantage of the loopholes and use debt restructuring as an excuse to evade a large number of debts.

Fourth, improve the measures of debt restructuring in China.

(1) The time value of funds should be considered when using fair value.

The definition of fair value is "refers to the amount of assets exchanged or debts paid off voluntarily by two familiar parties in a fair transaction." According to the principle of prudence, non-cash assets with active market and reliable fair value and transactions with commercial substance are measured at fair value. The difference between the book value and the fair value of debt restructuring is recognized as the profit and loss of debt restructuring, and the time value of funds should be considered and measured at the present value.

(2) Reasonably determine the object and scope of debt restructuring.

Some enterprises have temporary low economic benefits or financial difficulties due to poor management or the influence of some external factors, but their industries are sunset industries with good prospects, and they can get rid of difficulties with external help, so they are the targets of debt restructuring.

(3) Strengthen supervision.

The debtor can obtain the benefits of debt restructuring by implementing debt restructuring, or manipulate profits, so as to achieve the purpose of sending wrong information to the report users. Therefore, it is necessary to have a sound supervision and management mechanism to prevent enterprises from engaging in related transactions and false restructuring for improper purposes.

(4) Improve the accounting management system and strengthen accounting supervision.

Reform the current accounting personnel management system and implement the appointment system for unit accounting personnel. Accountants can get rid of the interest relationship with their units to a great extent and form a relatively independent working environment. So as to ensure the fairness of accounting information in the process of debt restructuring.

(5) Adjust the enterprise accounting supervision policy.

At present, China has accounting supervision requirements for company issuance, rights issue and convertible bonds in the securities market, in which the return on net assets is the only core indicator to determine the qualification of listed companies to issue new shares. Therefore, companies often manipulate the numerator or denominator of the return on net assets to issue additional shares or rights issues to achieve their goals. From many cases of profit manipulation, it can be found that it is difficult to manipulate operating profits, but it is common to manipulate non-operating profits through debt restructuring. In this regard, we should adjust the accounting supervision policies of listed companies to avoid corporate profit manipulation.

Verb (abbreviation of verb) The development prospect of debt restructuring

After China entered the capital market, the components of bubble economy are increasing day by day. With the increasingly fierce market competition, every round of economic adjustment and industrial structure renewal, a large number of debts have become the burden of enterprises, financial institutions and even countries and regions. Some people say that contemporary society has entered the era of debt, and the extension and expansion of debt. People's understanding of debt has also undergone fundamental changes, so in economically developed western countries. Debt restructuring has become a new industry. Debt is no longer a burden, but can also be packaged as a commodity to enter the capital market. We can use all kinds of common debts to restructure, and we can look for financial and commercial opportunities and development space in debt. With the increasing development of China's economy, debt restructuring has gradually become popular.

References:

Chen Haiqing. On the definition of debt restructuring, Financial News1999 (9) 42-43;

[2] Zhou Yan. Enterprise debt restructuring and cooperative economy and technology under the new accounting standards (11);

[3] Xiangrong letter. The application of fair value in the new debt restructuring standards. Management observation 2010 (1);

[4] Yunlong He. On the problems existing in the accounting treatment of debt restructuring [J], Friends of Accounting 2007(9).

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