Table of Contents
Section Ⅰ Core Philosophy System Section Ⅱ Common Situations and Problems of Distressed Enterprises Ⅰ. Retracing the Road of Distressed Entrepreneurs Ⅱ. Debt Dilemmas Ⅲ. Financing Dilemmas Ⅳ. Operational Dilemmas Section Ⅲ Major Strategies and Solutions Ⅰ. Equity Restructuring Ⅱ. Debt Restructuring Ⅲ. Asset Division Ⅳ. Lawful Debt Reduction Ⅴ. Debt-for-Equity Swap Ⅵ. Asset Repurchase Ⅶ. Bankruptcy Liquidation Ⅷ. Bankruptcy Reorganization Ⅸ. Bankruptcy Settlement Ⅹ. Debt Repayment by Asset Transfer Section Ⅳ Service Procedures Section Ⅴ Service Contents and List Ⅰ. Legal Due Diligence Service for Enterprise Bailout and Restructuring Ⅱ. Legal Service for Debt Restructuring Ⅲ. Legal Service for Asset Restructuring Ⅳ. Legal Service for Equity Restructuring Ⅴ. Legal Service for Operational Restructuring Ⅵ. Supporting Value-added Services for Restructuring Section Ⅵ Service Commitments Section Ⅶ Fee Models Section Ⅷ Successful Case Library Ⅰ. Case 1: Guangdong XX Construction & Decoration Company (Liabilities of Approximately RMB 600 Million) Ⅱ. Case 2: A Manufacturing Technology Enterprise (Debts of Approximately RMB 100 Million) Section Ⅸ Conclusion
01 Core Philosophy System
Section Ⅰ Core Philosophy System
Philosophy: Rescue high-quality private enterprises and uphold the entrepreneurial spirit Goal: Help entrepreneurs avert risks and resolve corporate debt crises Mission: Facilitate enterprise revitalization Path out of distress: Due Diligence & Risk Diagnosis → Risk Prevention & Loss Containment → Capital Injection & Liquidity Improvement → Operational Capacity Restoration & Value Enhancement → Enterprise Revitalization Tool: Seven-in-One Enterprise Bailout and Restructuring Model integrating Law, Finance, Accounting, Non-performing Assets, Commerce, Resources and Industries
02 Common Situations and Problems of Distressed Enterprises
Section Ⅱ Common Situations and Problems of Distressed Enterprises
Ⅰ. Retracing the Road of Distressed Entrepreneurs
Figure: Retracing the Road of Distressed Entrepreneurs
Ⅱ. Debt Dilemmas
Does the enterprise adopt the practice of short-term loans for long-term investment, i.e., investing short-term borrowings in long-term fixed assets, resulting in capital chain strain?
Does the enterprise have hidden liabilities, such as employee fundraising, crowdfunding financing and supply chain finance?
Is the enterprise facing or already experiencing defaults on multiple debts, including bank loans, payables to suppliers, unpaid employee salaries, etc., exposed to risks of collective litigation by creditors, batch property preservation and compulsory enforcement?
Has the enterprise been marked with "special mention" in credit reporting, listed as a person subject to enforcement or a dishonest person subject to enforcement due to debt defaults, or suffered frozen bank accounts, seized inventories, receivables subject to enforcement assistance applications, or corporate executives subject to consumption restriction measures?
After corporate debt default, have family members, relatives and friends of entrepreneurs incurred joint and several liability for repayment by providing guarantees?
Does the enterprise face risks of entering bankruptcy liquidation proceedings?
Could the corporate debt crisis trigger criminal risks for senior management (such as the crime of misappropriation of funds, crime of occupational embezzlement, crime of tax evasion, etc.)?
Is the enterprise exposed to risks of violent debt collection by creditors or third parties (such as illegal detention, threats, harassment and disturbances)?
Ⅲ. Financing Dilemmas
Does the enterprise face difficulties in financing with limited financing channels and unmet financing demands?
Does the enterprise suffer high financing costs (annual interest rates far exceeding reasonable market levels), leading to excessive pressure on interest repayment?
Ⅳ. Operational Dilemmas
Is the enterprise confronted with insufficient orders and fierce market competition, resulting in declining operating income and profits?
Has the upstream supply chain of the enterprise witnessed sharp rises in raw material prices, driving up the enterprise’s overall costs?
Does the enterprise encounter labor shortages (difficulty in recruitment) and rising labor costs, impairing production and operational efficiency?
Does the enterprise face the dual pressure of difficult recovery of accounts receivable and overdue payment of accounts payable, forming triangular debts?
Are there circumstances of confusion of finance, operation and personnel among affiliated enterprises, which may trigger risks of disregard of corporate personality (penetrating liability)?
03 Major Strategies and Solutions
Section Ⅲ Major Strategies and Solutions
Adopting a professional mindset of "preventing diseases before onset and curing existing illnesses", our team acts as an "enterprise physician". We diagnose corporate debt problems through comprehensive assessment and deliver targeted solutions. Relying on end-to-end services covering due diligence, risk diagnosis, scheme design and implementation, we apply the Seven-in-One Enterprise Bailout and Restructuring Model integrating law, finance, accounting, non-performing assets, commerce, resources and industries to customize bailout and restructuring strategies for enterprises. We avoid over-treatment or inadequate intervention to ensure the scientificity and feasibility of schemes.
Based on the severity of crises, timeline and survival value of troubled enterprises, we categorize them into four types:
Struggling Enterprises: Enterprises facing short-term liquidity pressure or operational setbacks, with profitable core businesses or core assets, sound asset quality and high survival value.
Distressed Enterprises: Enterprises trapped in severe debt or operational crises that require systematic intervention and comprehensive packages including major asset restructuring, debt restructuring, equity restructuring and operational restructuring to resume normal operations.
Desperate Enterprises: Enterprises on the verge of insolvency with stagnant core operational capacity. Emergency measures such as bankruptcy reorganization under judicial procedures and introduction of strategic investors are needed to avoid liquidation.
Enterprises for Exit: Enterprises with valuable core assets but no necessity for continuous overall operation, which need orderly exit through asset spin-off, merger, division or liquidation.
The above categories are progressive divisions according to crisis severity and timeline, collectively referred to as "distressed enterprises". For detailed content, please refer to works including Principles of Enterprise Bailout and Restructuring (Law Press) and Saving Distressed Enterprises: Restructuring and Breakthroughs (China Financial Press).
Figure: Core Strategies for Enterprise Bailout and Restructuring
Below is a systematic overview of ten major approaches for corporate debt and asset disposal, incorporating legal rules, procedural logic and rights and obligation frameworks:
Ⅰ. Equity Restructuring
Equity restructuring refers to legal acts where a company restructures its equity structure via equity transfer, capital increase and share expansion, equity swap and other methods in accordance with the Company Law of the People’s Republic of China, Securities Law of the People’s Republic of China and other laws, driven by capital operation and governance optimization. Essentially, it involves changes in equity ownership and reallocation of shareholders’ rights and obligations, aiming to optimize corporate governance, integrate resources or enhance debt-servicing capacity. In practice, procedural rules such as shareholder voting rights and preemptive rights shall be followed to guarantee transaction legitimacy and the legitimate interests of counterparties.
Ⅱ. Debt Restructuring
Debt restructuring is a legal mechanism under the Contract Part of the Civil Code of the People’s Republic of China, the Enterprise Bankruptcy Law of the People’s Republic of China and other laws, whereby creditors and debtors amend core terms such as debt repayment term, amount and performance methods. It falls into two categories:
Out-of-court restructuring: Creditors and debtors reach agreements autonomously to adjust debt performance (such as debt deferment, interest reduction and debt-for-equity swaps), premised on valid creditor’s rights and compliant negotiation procedures.
In-court restructuring: Debt adjustment implemented via reorganization plans or settlement agreements within bankruptcy proceedings, which shall take judicial enforcement effect upon adoption at creditors’ meetings and approval by people’s courts.
Its core logic is to mitigate debtors’ debt burden by balancing demands of all parties, restore debt-servicing capacity, and coordinate debt crisis resolution and sustainable corporate development.
Ⅲ. Asset Division
Asset division refers to acts where an enterprise splits its overall assets and allocates them to different legal entities in accordance with statutory or agreed terms, either through corporate division rules under the Company Law (surviving division and dissolution division) or liquidation procedures under the Enterprise Bankruptcy Law and Company Law (bankruptcy liquidation and dissolution liquidation).
Division scenarios: Obligations such as notifying creditors and providing debt guarantees shall be fulfilled to safeguard creditors’ right to know.
Liquidation scenarios: Asset division shall follow the principle of "repaying key debts first before distributing residual assets" to prioritize creditors’ interests.
Essentially, it is a mechanism for redistribution of asset ownership upon corporate organizational change or termination, based on clear asset ownership and procedural compliance.
Ⅳ. Lawful Debt Reduction
Lawful debt reduction refers to a mechanism where debtors reduce or exempt partial debts through judicial confirmation under the Enterprise Bankruptcy Law and other laws, such as debt exemption clauses in bankruptcy reorganization and statutory debt write-off scenarios (bankruptcy proceedings serve as the core channel in commercial areas). Diversified out-of-court debt restructuring approaches may also be adopted to cut or waive debts.
Legal logic: Centered on statutory reduction of total debt, subject to dual conditions of adoption by creditors’ meetings and court approval.
Legal effect: The enterprise’s total liabilities match its debt-servicing capacity. Debts not fully repaid shall be lawfully exempted and no longer legally binding.
Ⅴ. Debt-for-Equity Swap
A special form of debt repayment governed by the substitution of performance rules under the Civil Code or debt-for-equity arrangements in bankruptcy proceedings. Debtors settle corresponding debts by transferring equity held by them (including capital contribution interests) to creditors.
Constituent elements: Clear equity ownership, fair valuation and explicit consent from creditors to accept equity.
Legal effect: Corresponding debts are partially or fully extinguished. Creditors obtain equity and derivative rights, transforming creditor-debtor relationships into equity investment relationships. Widely applied in bankruptcy reorganization and corporate debt resolution.
Ⅵ. Asset Repurchase
Asset repurchase covers acts where enterprises or individuals repurchase assets to be disposed of (such as sold or mortgaged assets) with self-owned or financed funds, in compliance with share repurchase rules under the Company Law (e.g., market value management and equity incentive repurchases for listed companies) and sales contract rules under the Civil Code.
Scenarios involving security interests: If repurchased assets are mortgaged assets, security interest realization procedures under the Civil Code shall be followed, including negotiation, monetization and priority compensation.
Core requirements: Clear reverse transfer of asset ownership. Attention shall be paid to performance of contractual obligations such as repurchase payment and asset status recovery to protect interests of both parties.
Ⅶ. Bankruptcy Liquidation
Bankruptcy liquidation is a statutory procedure initiated strictly under the Enterprise Bankruptcy Law, with specific workflows as follows:
Creditors or debtors file bankruptcy liquidation applications with people’s courts.
After courts rule to accept applications, administrators are appointed to take over enterprises (including corporate property, seals, account books and other materials).
Administrators fully sort out creditor’s rights and liabilities, compile creditor right lists, and monetize corporate assets through auctions, private sales and other methods.
Creditors’ meetings conduct verification. Administrators formulate bankruptcy property distribution plans, which take effect upon adoption by creditors’ meetings and court approval, and distribute bankruptcy property in statutory repayment order.
Upon completion of bankruptcy property distribution, administrators apply to courts for termination of bankruptcy proceedings, followed by deregistration of corporate legal person status.
Legal nature: A general enforcement procedure for termination of corporate legal persons adhering to the principle of fair liquidation of creditor’s rights and liabilities.
Repayment order: Differentiating secured creditor’s rights, employee claims and ordinary creditor’s rights strictly. Unpaid debts are lawfully exempted upon termination of corporate legal personality, and debtors bear no further repayment obligations.
Ⅷ. Bankruptcy Reorganization
Bankruptcy reorganization is an enterprise revitalization procedure established by the Enterprise Bankruptcy Law, with specific workflows as follows:
Creditors, debtors or investors holding not less than 10% of the debtor’s registered capital file reorganization applications with people’s courts.
After courts rule to launch reorganization, administrators are appointed.
Debtors or administrators formulate Reorganization Plans (covering debt adjustment, business restructuring, asset disposal, etc.).
After group voting at creditors’ meetings, adopted plans are submitted to courts for approval and implementation. Enterprises restore operational value by introducing strategic investors, granting debt relief and carrying out operational innovation.
Substantive prerequisite: The enterprise must have salvage value to initiate proceedings.
Core logic: Distinct from the termination procedure of bankruptcy liquidation, bankruptcy reorganization aims to preserve enterprise operational value. After completion of reorganization plan implementation, corporate debts shall be reduced or performed in line with the plan while the corporate legal person status remains valid.
Ⅸ. Bankruptcy Settlement
Bankruptcy settlement is a procedure under the Enterprise Bankruptcy Law whereby debtors apply to courts to resolve debt crises through negotiated settlement agreements with creditors. Specific workflows are as follows:
Debtors file settlement applications with people’s courts and submit draft settlement agreements.
After courts rule to launch settlement, creditors’ meetings are convened to vote on draft settlement agreements.
Voting adoption criteria: Approved by more than half of voting creditors present at the meeting, representing no less than two-thirds of the total amount of unsecured creditor’s rights.
Settlement agreements take effect upon court recognition, and debtors perform debt obligations as agreed.
Legal characteristics: An in-court negotiated restructuring mechanism focusing on creditor autonomy and debt concessions.
Legal effect: Upon entry into force of settlement agreements, debtors fulfill obligations such as debt relief and deferment to avoid bankruptcy liquidation. Proceedings will shift to liquidation if debtors fail to perform agreements.
Ⅹ. Debt Repayment by Asset Transfer
Debt repayment by asset transfer refers to legal acts where debtors settle debts with self-owned property, divided into voluntary transfer and compulsory transfer:
Voluntary transfer: Based on substitution of performance consensus under the Civil Code. Debtors transfer movable property, real estate or other property rights to creditors to settle corresponding debts.
Compulsory transfer: Within enforcement procedures under the Civil Procedure Law of the People’s Republic of China, assets unsold after auction or private sale are valued and transferred to creditors to settle debts upon consent of applicants and respondents or court ruling.
Constituent elements: Clear ownership of repaid assets, fair valuation and creditor consent.
Legal effect: Original creditor-debtor relationships terminate within the scope of repayment. Ownership of assets transfers to creditors upon delivery (movable property) or registration (real estate and equity). Risks such as fluidity clauses under security contracts and false asset-for-debt arrangements shall be prevented.
In summary, the ten major approaches center on the relationship between debts and assets, running along two main lines: proactive optimization (equity and asset restructuring) and passive resolution (bankruptcy proceedings). Through equity structure adjustment, amendment of debt terms, reconstruction of asset ownership and statutory debt reduction, the legal objectives of sustaining enterprise operation or enabling orderly exit can be achieved. Implementation shall strictly comply with legal requirements and procedural rules stipulated in the Company Law, Enterprise Bankruptcy Law, Civil Code and other regulations.
04 Service Procedures
Section Ⅳ Service Procedures
Enterprise Demand Diagnosis and Preliminary Assessment
Feasibility Screening for Enterprise Bailout and Restructuring, and Consensus Building on Bailout Objectives
Cross-team on-site due diligence upon contract signing
Establish cross-disciplinary expert teams (specialists in law, finance, accounting, non-performing assets and other sectors) for joint consultation and design systematic customized enterprise bailout and restructuring schemes
Refinement, overall arrangement and implementation of equity restructuring, asset restructuring, debt restructuring, operational restructuring and other schemes
Implementation of legal and accounting compliance schemes
Completion of debt restructuring via diversified channels
Corporate credit repair and acquisition of diversified financing channels
05 Service Contents and List
Section Ⅴ Service Contents and List
Ⅰ. Legal Due Diligence Service for Enterprise Bailout and Restructuring
Service Contents
Debt sorting and classification: In accordance with the Civil Code, Enterprise Bankruptcy Law and other laws, classify and verify financial creditor’s rights (bank loans, bonds), operational liabilities (accounts payable, advance receipts) and contingent liabilities (external guarantees, pending litigations). Sort debt categories (bank loans, private lending, payables, etc.), amounts, terms, guarantee methods and judicial status (non-litigated, under enforcement), and establish debt ledgers.
Investigation of asset ownership and disposal restrictions: Core asset ownership confirmation: Obtain real estate registration transcripts for immovable assets to verify mortgage registrations, seizure records, advance notice registrations and opinions of co-owners. For movable assets, inquire about equipment mortgage and equity pledge filings through multiple channels including National Enterprise Credit Information Publicity System and National Movable Asset Financing Registration System. Asset transfer restrictions: Identify assets subject to transfer limits (e.g., allocated land, franchise rights) and disposal restrictions on jointly-owned assets (written consent of other co-owners required).
Comprehensive scanning of legal risks: Progress of pending litigations or arbitrations (cause of action, subject amount, competent court). Administrative penalty records (environmental protection, taxation, labor sectors) and rectification status. Compliance of connected transactions (fair pricing, complete information disclosure). Verification of external guarantee risks.
Assessment of creditor structure and bargaining power: Classified by nature of creditor’s rights: Priority creditor’s rights (secured claims, tax claims) and ordinary creditor’s rights. Classified by bargaining position: Powerful creditors (banks, asset management companies and other financial institutions) and vulnerable creditors (small-sum creditors, suppliers). Analyze potential cross-default clauses that creditors may invoke and conditions for exercising set-off rights (Article 568 of the Civil Code).
Feasibility study on judicial intervention: Verify whether the enterprise meets statutory bankruptcy grounds: "The debtor is unable to repay mature debts, and its assets are insufficient to cover all liabilities or it is obviously lacking solvency". Evaluate reorganization value (ongoing operation value) and the difference from liquidation value.
Supporting Tools
Enterprise Due Diligence Questionnaire
Report on Enterprise Due Diligence, Risk Prediction and Strategic Objectives
Ⅱ. Legal Service for Debt Restructuring
Service Contents
Restructuring scheme design: Develop diversified combined strategies including debt settlement (partial exemption, deferment), debt-for-equity swaps, debt transfer and non-performing asset spin-off based on enterprise asset scale, operation prospects and shareholder structure. For financial creditor’s rights, formulate implementation paths for debt-for-equity swaps guided by the Guiding Opinions on Market-oriented Bank Debt-for-Equity Swaps issued by the State Council. For private lending, adjust interest rate caps and repayment cycles in accordance with the Judicial Interpretations on Private Lending. For litigated debts, study feasibility of enforcement settlement and debt adjustment under bankruptcy reorganization, ensuring schemes comply with procedural requirements for shareholder meeting resolutions and creditors’ meeting voting under the Company Law and Enterprise Bankruptcy Law.
Tiered negotiation with creditors and construction of agreement systems: Adopt differentiated negotiation strategies prioritized as secured creditor’s rights → employee claims → tax claims → ordinary creditor’s rights: For secured creditors (e.g., banks): Negotiate loan extension, interest relief and adjustment of security interest priority. Draft Loan Extension Agreements and Security Interest Modification Agreements embedded with supervision measures during grace periods (e.g., capital co-management). For ordinary creditors (e.g., suppliers): Design packages including debt discount, installment repayment and additional credit enhancement (equity pledge / real estate mortgage). Draft Debt Restructuring Agreements specifying conditions for debt exemption (e.g., reaching operating revenue targets) and rules for liquidated damages (restrictions on compound interest for overdue payments). For employee claims: Coordinate supplementary payment of wages and social insurance and installment payment of economic compensation. Assist enterprises in filing records with labor authorities to avoid risks under the Labor Contract Law. Build a complete document system consisting of master agreements, supplementary agreements and performance memorandums, specifying triggering conditions for debt restructuring (e.g., completion of asset sales, financing arrival) and backstop liability clauses (e.g., right to accelerated maturity).
Full support in judicial procedures: If debt restructuring involves litigation, provide full representation in pre-litigation mediation (cooperate with court pre-litigation mediation centers and submit legal opinions on debt restructuring feasibility to obtain judicial confirmation), court hearings (defending on authenticity, legality of debts and validity of guarantees) and enforcement objections (raising objections on auction with lease retention and priority of asset-for-debt transfer for collateral). If bankruptcy reorganization is initiated, assist enterprises in submitting Reorganization Applications to courts, draft draft Reorganization Plans (covering debt adjustment, operation plans and investor interest adjustment), cooperate with administrators in creditor right declaration review, organization of creditors’ meetings and supervision over reorganization plan implementation.
Post-restructuring performance risk control and compliance closure: Establish a debt repayment ledger and cash flow early warning mechanism to track repayment progress and warn of capital gaps 30 days in advance. For enterprises conducting debt-for-equity swaps, assist in completing industrial and commercial registration of equity changes and revision of shareholder registers, and draft shareholder voting agreements and dividend clauses to protect equity rights of creditor investors. For cross-border debt restructuring, assist in external debt registration and guarantee performance approval under the Cross-border Guarantee Foreign Exchange Administration Rules to prevent foreign exchange compliance risks.
Supporting Tools
Checklist for Design and Implementation of Enterprise Self-rescue Restructuring Consultation Scheme
Template of Debt Restructuring Agreements (containing extension and debt-for-equity clauses)
Creditor Communication Guide (including negotiation script library)
Legal Opinion on Debt Restructuring
Ⅲ. Legal Service for Asset Restructuring
Service Contents
Asset diagnosis and classification: Evaluate market value, liquidity and importance of corporate assets (real estate, equipment, accounts receivable, equity, etc.), identify inefficient and non-performing assets (idle factories, overdue receivables) and non-performing assets awaiting revitalization (repossessed real estate, overdue receivables).
Restructuring strategy design: Develop diversified schemes including spin-off of inefficient assets, injection of high-quality assets and asset swap based on corporate objectives (focusing on core businesses, divesting non-core businesses or introducing high-quality assets).
Transaction structure design: Design asset transaction paths (direct sale, equity swap, lease-for-debt, asset-for-debt, etc.) in line with asset types and objectives, clarify transaction pricing (market approach, income approach evaluation), payment methods (cash, equity) and risk control clauses (representations and warranties, liability for breach of contract).
Assistance in approval and registration: Support enterprises in convening shareholders’ meetings or board meetings to complete internal decisions for asset transfer, as well as industrial and commercial registration and real estate registration changes.
Post-transaction integration support: Assist operational connection after asset delivery (personnel resettlement, business adjustment) and provide suggestions for asset operation optimization (leasing, redevelopment of inefficient real estate).
Supporting Tools
Asset List and Realizable Value Analysis Form
Preliminary Asset Restructuring Transaction Scheme
Template of Asset Transaction Contracts (containing delivery condition clauses)
Ⅳ. Legal Service for Equity Restructuring
Service Contents
Equity structure diagnosis: Analyze current equity status (controlling persons, nominee shareholding, shareholder disputes, etc.), assess risks including equity concentration, liquidity risks, unpaid capital contributions and governance defects (excessive controlling power or overly scattered equity), and enhance control security of the enterprise and its affiliated entities.
Restructuring strategy design: Develop schemes including equity transfer (introduction of strategic investors), equity financing (VC/PE capital injection) and equity incentive (employee stock ownership plans) based on enterprise demands (introducing strategic investors, implementing employee incentives).
Transaction negotiation and agreement signing: Support negotiations with strategic investors and employees, draft Equity Transfer Agreements, Capital Increase and Share Expansion Agreements, Equity Incentive Agreements, etc., clarify enterprise valuation (net asset value, price-earnings ratio), valuation adjustment clauses (performance commitments) and exit mechanisms.
Compliance review: Ensure equity restructuring complies with the Company Law, Securities Law and articles of association, and prevent risks arising from nominee shareholding restoration and horizontal competition.
Industrial and commercial & tax support: Assist in diversified capital contribution fulfillment, equity change registration and tax declaration (individual income tax, stamp duty), and provide tax planning suggestions (optimizing tax burden via holding platforms).
Supporting Tools
Template of Connected Enterprise Equity & Asset List and Valuation
Preliminary Equity Restructuring Transaction Scheme
Preliminary Equity Structure Design Scheme
Ⅴ. Legal Service for Operational Restructuring
Service Contents
Legal review of business structure: Evaluate legality of business spin-off and integration under the Company Law and Anti-monopoly Law. Design holding structures (VIE structures, limited partnership structures) according to business demands, draft firewall clauses for nominee shareholding to prevent risks facing actual controllers.
Strategic compliance schemes: Formulate compliant paths for business transformation (exit mechanism for overcapacity industries), draft suspension notices or business termination agreements to clarify performance of statutory obligations including staff resettlement and customer data migration.
Confirmation of high-quality asset ownership: Consolidate asset ownership via property registration and intellectual property pledge registration (patents, trademarks), design asset income right trust schemes for risk isolation.
Disposal of inefficient assets: Develop bulk transfer schemes for non-performing assets, clarify disposal approaches and workflows (evaluation, auction, negotiated transfer), and prevent risks of transaction revocation caused by low-price transfer.
Financing structure design and cash flow supervision: Formulate financing planning schemes and provide risk suggestions based on operational demands; revitalize accounts receivable; establish co-managed accounts to supervise restructuring funds and draft Capital Use Supervision Agreements restricting fund misappropriation risks.
Supporting Tools
Operational Restructuring Transaction Scheme Report, etc.
Ⅵ. Supporting Value-added Services for Restructuring
Introduction of strategic investors: Connect industrial capital and financial institutions (AMCs, private equity funds), assist in due diligence, valuation negotiation and investment agreement signing, and propose legal risk prevention suggestions.
Creditor coordination: Support negotiations with creditors (banks, suppliers, etc.) on debt relief, deferment and debt-for-equity swaps, provide support for formation and operation of creditor committees, and act as agent for creditor communication.
Employee resettlement: Develop compliant staff diversion schemes (job transfer training, early retirement compensation, etc.) based on restructuring demands and core employee appeals, coordinate trade unions and labor authorities to prevent labor arbitration risks, and act as agent for labor arbitration cases.
06 Service Commitments
Section Ⅵ Service Commitments
Professional Team: Set up special teams composed of senior lawyers, non-performing asset specialists, ex-financial institution practitioners, accountants, financial investors and industrial investors to provide full-cycle follow-up.
Customized Schemes: Deliver tailor-made one-case-one-policy solutions based on enterprise specifics including industry scale and crisis types.
Risk Review: Provide legal compliance review to prevent legal risks during restructuring (recognition of debt evasion, occupational embezzlement, misappropriation of funds, tax inspection risks, etc.).
Full-cycle Tracking: Regularly report progress from diagnosis to implementation and dynamically adjust schemes.
07 Fee Models
Section Ⅶ Fee Models
Due diligence and overall scheme design phase: Fixed fee ranging from RMB 200,000 to 500,000.
Implementation phase of equity, asset and operational restructuring schemes: Fixed fee ranging from RMB 300,000 to 500,000.
Legal and accounting compliance phase: Fixed fee ranging from RMB 200,000 to 500,000.
Implementation phase of debt restructuring schemes: Variable fee charged at 8% to 10% of restructuring proceeds.
08 Successful Case Library
Section Ⅷ Abstracts of Selected Successful Cases
Ⅰ. Case 1: Guangdong XX Construction & Decoration Company (Liabilities of Approximately RMB 600 Million)
Strategies
Cut off guarantee liabilities of the entrepreneur’s children and realize risk isolation between family assets and corporate property.
Establish a new operation platform to plan new business growth paths and financing channels.
Realize phased monetization of bulk assets, revitalize core assets, divest inefficient assets, and replace debts to lower interest rates below 3%.
Reach restructuring agreements with banks and other creditors.
Design firewall equity structure for the enterprise.
Timely adjust irregular accounting records for compliance.
Outcomes: Sharp reduction of interest expenditure and rapid loss containment, lower comprehensive costs, shifting the enterprise from insolvency and sustained cash outflow to positive cash flow; protection of actual control over the enterprise; preservation of operational cash flow and profit-generating capacity; retention of core assets; risk isolation between the enterprise and the controlling family; expected substantial restructuring proceeds in the future; acquisition of non-performing assets by the new operation platform and access to new financing support, etc.
Ⅱ. Case 2: A Manufacturing Technology Enterprise (Debts of Approximately RMB 100 Million)
Strategies
Clarify value expectations of affiliated companies, spin off core subsidiaries and inject bailout funds.
Inject liquidity into hotel-type assets to acquire partial core assets and complete asset separation and protection.
Fully settle corporate debts via judicial channels.
Repurchase core assets through SPV funds to repay debts gradually and release guarantors from guarantee liabilities.
Outcomes: Rapid loss containment and positive cash flow; prioritize core asset separation to preserve profit-generating capacity and operational cash flow; revitalize core assets with limited capital injection to realize asset protection, laying foundations for substantial restructuring proceeds in the future; nurture new operation platforms, and achieve rapid financing through diversified approaches including business injection and non-performing asset acquisition; assist the new platform in building digital asset capabilities, develop new-generation ERP systems and plan future RWA issuance; continuous integration of core assets of other distressed enterprises by the new platform, accelerating capitalization through mergers & acquisitions or IPO, etc.
09 Conclusion
Section Ⅸ Conclusion
Enterprise bailout and restructuring is far more than simple debt reduction. It relies on systematic reconstruction including equity restructuring, asset restructuring, operational restructuring, debt restructuring and introduction of capital and expertise to return enterprises to their intrinsic value. We reject impractical theoretical plans and only design and execute implementable solutions!
We conduct comprehensive and in-depth analysis on troubled private enterprises covering financial status, operation models, market strategies and legal risk prevention, and then formulate highly targeted, operable integrated systematic bailout and restructuring schemes for implementation.