Jilin Province makes good use of bankruptcy and reorganization procedures in accordance with the law to reduce development burdens and optimize resource allocation
The road to relief for an enterprise (focus on the rule of law)
Our reporter Zhu Dawei
"People's Daily" (11th edition on July 23, 2020)
Editor's note: The bankruptcy system promotes the survival of the fittest by market players, resolves local financial risks, and maintains social harmony and stability. In recent years, courts at all levels across the country have properly concluded bankruptcy and reorganization cases, promoted the smooth and orderly clearing of zombie companies, and allowed companies with development prospects Get out of trouble through reorganization. Jilin Province has rejuvenated a group of companies that had been in difficulties by exploring legal innovations in bankruptcy trials.
In the first half of this year, the Jilin Province state-owned enterprise Haorong Group, which has a history of more than 60 years, had a production profit of nearly 300 million yuan, completely turning losses into profits. Yu Ranbo, chairman of Haorong Group, couldn't help lamenting the difficulty of bringing the company back to life.
In 2017, the 28 zombie companies under the Haorong Group, behind the company's emergence from the predicament, benefited from the innovative exploration of the rule of law in Jilin Province to help build a rule of law government and promote bankruptcy trials.
Save the business
Business restructuring, debt adjustment, coordinate the participation of all parties, and resolve related risks
Haorong Group is a well-known non-ferrous metal enterprise in Jilin Province. Once, at the peak of development, the company's global market share of nickel sulfate products reached 52%, and sales of high-quality electrolytic nickel accounted for 25% of high-end market demand.
In the past 10 years, affected by factors such as the continuous decline of nickel prices, large debts, and blind investment, Haorong Group has fallen into a serious debt, operation and credit crisis. Jien Nickel, the core subsidiary of Haorong Group, has suffered losses for 4 consecutive years, with a debt-to-asset ratio of 100.7%, and it has been delisted.
The future is unclear, and business conditions are getting worse and worse. At one time, only about 30% of the company's production capacity was in operation, and the market share of its products also dropped significantly. "Enterprises turn into a big health industry." Once, in order to save the enterprise, a plan for enterprise transformation and reorganization was in front of Ranbo. Seeing the plan, Yu Ranbo took a picture of the table at the time, "What about my 8,000 workers and more than 300 technical elites who are engaged in nickel mines? The old company's nearly 60-year-old "family property" has been thrown away?"
"In enterprise reorganization, if the interests are not together, there will be less than one piece." Yu Ranbo said. Due to complex interest relationships and huge debts, corporate restructuring has been repeated and failed.
In 2018, Haorong Group ushered in a turning point. After the creditors submitted a request for bankruptcy and reorganization of the company to the court, the State-owned Assets Supervision and Administration Commission of Jilin Province respected the opinions of the creditors, actively coordinated the participation of all parties, and opened the prelude to the revival of the Haorong Group.
Reorganization, business reorganization and debt adjustment of Haorong Group, which is on the verge of bankruptcy, closely integrated debt clearing with rescue of the enterprise, so Haorong Group embarked on a road of mixed ownership reform and debt risk resolution. "Bankruptcy reorganization is a judicial procedure, and it has played an important role in the rescue of distressed enterprises." said Zheng Zhibin, vice president of the Beijing Bankruptcy Law Society.
Rule of law
Maintain fairness, guarantee efficiency, and streamline the process within the legal requirements
In April 2018, the Intermediate People's Court of Jilin City, Jilin Province ruled that the parent company of Haorong Group and its subsidiary Jilin Daheishan Molybdenum Co., Ltd. entered the reorganization process in accordance with the law. In November, the subsidiary Jilin Jien Nickel Industry Co., Ltd. entered the reorganization process in accordance with the law.
The Intermediate People’s Court of Jilin City went deep into enterprises and creditors, listened to opinions from multiple parties, used a coordinated review mechanism in procedures, implemented the overall reorganization of Haorong Group, implemented equity reorganization of high-quality subsidiaries that were not included in the scope of reorganization, and dealt with loss-making and inefficient assets. Carry out divestiture and bankruptcy liquidation of subsidiaries with no development potential.
In order to work hard to protect the interests of all parties, the court decided in accordance with the law that during the reorganization period, Haorong Group will manage its property and business affairs on its own and continue to operate. "This maintains fairness, guarantees efficiency, and ensures the stability of enterprises and society." Yu Ranbo said.
"Judicial reorganization must respect the interests of related parties, and safeguard fairness and efficiency." Zheng Zhibin said that the courts must straighten out procedures and balance rights and interests within the legal provisions, and also from the perspective of social value, give full play to judicial initiative and integrate into the market. Improved thinking, strengthened the function of judicial regulator, and escorted the successful reorganization.
In June last year, Haorong Group's reorganization plan was approved by the Jilin City Intermediate People's Court and the reorganization procedure was terminated.
"Employee representatives, tax representatives, property guarantors and creditors voted by four parties, among which employee representatives and tax representatives support 100%." Yu Ranbo said that everyone's interests were integrated and the reorganization plan was passed with high votes. This is a national reorganization. It's rare in cases.
"The rule of law is the best business environment." Yu Ranbo sighed. After the bankruptcy and reorganization, Hao Rong Group successfully introduced the private enterprise Zhongze Holding Group Co., Ltd. as a strategic investor, opening a new path for the group's mixed-ownership reform, moving lightly and entering the market again.
Give a hand
Explore the linkage between the government and the court to help the reorganized enterprises develop smoothly
"Corporate reorganization must always adhere to the principle of "three satisfactions" for creditors, investors and employees. The smooth implementation of the bankruptcy and reorganization of Hao Rong Group has benefited from the coordination of the government and the court's lawful handling of cases." Jilin Provincial SASAC Deputy Director Li Bishu analyzed and said.
At the same time, the local government has also provided taxation and other preferential policy support to the reorganized Haorong Group to help enterprises study follow-up development and resolution of remaining problems.
"The rescue of some enterprises affects the stability of the local economy, finance and society, and directly affects the vital interests of the people. It needs to be actively coordinated and promoted through the government's "visible hands"." Zheng Zhibin said.
Following the reorganization of Haorong Group, in December last year, the Tonghua Iron and Steel Group Co., Ltd. and other 14 corporate reorganization cases accepted by the Intermediate People's Court of Tonghua City, Jilin Province passed smoothly. It took only 38 days for the bankruptcy and reorganization of Tonggang Group to create the fastest record from acceptance to approval of bankruptcy and reorganization cases nationwide in the past 10 years. Zheng Zhibin believes that "government and court linkage" uses "visible hands" to solve market deficiencies and will play an important role in promoting the marketization of the bankruptcy law.
In January this year, the Jilin Provincial Government and the Jilin Provincial Higher People's Court jointly issued the "Opinions on Establishing a Linkage Mechanism between Government and Courts", making arrangements in five aspects, including helping the construction of a legal government and advancing the work of bankruptcy trials, and comprehensively promoting the construction of the rule of law in Jilin.
Bankruptcy and reorganization will rejuvenate companies that are temporarily in trouble but still have development prospects and salvage value. "The successful reorganization of Haorong and Tonggang is the concrete practice of Jilin Province to continuously deepen the supply-side structural reforms and realize the clearing of the zombie enterprise market, properly dissolving regional financial risks, and deeply promoting the reform of mixed ownership." Li Bishu said. .