The company is on the verge of collapse—how should debt restructuring be carried out?

To learn about distressed assets, enroll in Miduo Classroom! First move: Debt-to-equity swap Second move: Simultaneous剥离 of debt and assets Third move: Settlement with other assets or equity Fourth move: Discounted cash buyout First move: Debt-to-equity swap In simple terms, this means bringing creditors into the company as shareholders—transforming ‘creditors into owners.’ Not only does it reduce the enterprise’s debt burden, but it also turns investors into insiders, injecting fresh capital and social resources—and may even serve as a beacon of hope to revitalize the business. It’s like two people fighting: neither gains anything. But if you punch me and I then invite you for drinks, you’ll likely stop hitting me—and might even try to protect me from being hit by others. Core principle: You must sacrifice something to attract major investors. Second move: Simultaneous剥离 of debt and assets In simple terms, this involves promptly auctioning off mortgaged or multi-encumbered assets through judicial sale—or negotiating their transfer to third parties via agreement with creditors—to repay debts. Do not cling rigidly to asset ownership. It’s like having cancer: although all the affected tissue belongs to you, early surgical removal undoubtedly lightens the body’s burden—and the benefits clearly outweigh the drawbacks. Core principle: Balance between ownership and usage rights. Third move: Settlement with other assets or equity In simple terms, this uses third-party assets or equity to achieve the objectives of the first and second moves. Crucially, when settling debts with alternative assets, you must communicate clearly with creditors that such settlement inevitably entails some loss—either in interest, or again in interest (the exact extent of loss must be negotiated case-by-case).

Deconstruct Country Garden’s offshore debt restructuring plan.

On November 5, 2025, Country Garden’s offshore debt restructuring plan was approved by an overwhelming majority at the creditor meeting, successfully resolving over USD 14 billion in debt. The primary method of debt resolution was debt-to-equity conversion; however, treatment varied across creditor classes, with conversion prices ranging from HKD 0.6 to HKD 10 per share (the closing price on November 14 was HKD 0.54)—a difference of more than tenfold. Moreover, compared to the initial proposal, the final approved plan underwent significant revisions. After all, creditors have their own demands—and relatively ‘stronger’ creditors secured greater benefits through negotiation and bargaining. Nonetheless, even the strongest creditors still suffered substantial losses; they simply incurred proportionally smaller losses than other creditors. The specific debt-to-equity conversion plan comprises six categories: 1. Mandatory Convertible Bonds Series A Conversion price: HKD 2.6 per share; maximum principal amount: USD 7.51477 billion—substantially higher than the original proposal of USD 2 billion. This category consists of three components: (1) Up to USD 7.5007 billion serves as consideration for this restructuring plan, i.e., creditors may exchange this amount of principal debt for Mandatory Convertible Bonds Series A. (2) Up to USD 11,293,612 will be paid as the ‘Restructuring Support Agreement Consent Fee’ The ‘Restructuring Support Agreement Consent Fee’—commonly known as the ‘early-bird consent fee’—derives from the term ‘early-bird discount.’

Braskem Details $11B Debt Restructuring Proposals

6 days ago

Braskem, Latin America's largest petrochemical producer, disclosed details of an $11 billion debt restructuring proposal. Despite sharing updated business plans, no agreement has been reached yet amid industry downturns and operational challenges.

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