Bankruptcy reorganization means that when an enterprise is insolvent, the management can apply to the court for bankruptcy reorganization. Once the application is approved, the creditor cannot force the bankrupt enterprise to pay its debts. The law allows the management of the same enterprise to propose a reorganization plan to creditors, postpone the repayment of debts, stop paying dividends, suspend the payment of debt capital, only pay interest, and reduce unsecured claims. Bankruptcy reorganization, in the broadest sense, includes enterprise bankruptcy and liquidation. Liquidation refers to declaring the company to sell all assets and pay off debts according to law. Therefore, there will be asset reorganization in the way of enterprise elimination. Bankruptcy is not only the closure and liquidation of enterprises, but also the reorganization and adjustment according to law. In a narrow sense, bankruptcy reorganization means that an enterprise can survive after financial reorganization according to law. Adjustment is a settlement reached by creditors and debtors out of court. It can be seen that restructuring and adjustment are both insolvent enterprises that need assets. After the financial merger, they realized capital reorganization, and after the leadership adjustment, their production and business plans changed.

The functions of bankruptcy reorganization and adjustment are:

1 helps creditors avoid losses due to insolvency in bankruptcy liquidation;

2. It is helpful for employees to prevent a large number of unemployment caused by the dissolution of enterprises and the social shock it brings;

3. It is beneficial for enterprises to avoid reputation damage due to bankruptcy.

Legal basis: Article 70 of the Enterprise Bankruptcy Law of the People's Republic of China

The debtor or creditor may, in accordance with the provisions of this Law, directly apply to the people's court for reorganization of the debtor.

Where the creditor applies for bankruptcy liquidation of the debtor, after the people's court accepts the bankruptcy application and before declaring the debtor bankrupt, the debtor or investors whose capital contribution accounts for more than one tenth of the registered capital of the debtor may apply to the people's court for reorganization.