Since 2015,Beijing Gaopeng(Hangzhou)Law Firm has provided legal services and issued a series of co beneficial debt investment income rights products in the Zhejiang Financial Assets Trading Center,which have attracted widespread attention and heated discussion from the legal and financial circles inside and outside the province.In the context of adapting to and leading the new normal of economic development,promoting supply-side structural reform,and accelerating economic transformation and upgrading,Beijing Gaopeng(Hangzhou)Law Firm has assisted in the issuance of co beneficial debt investment usufruct products.Through the market-oriented operation mode of securitization of non performing assets,it has innovated the asset disposal methods of bankrupt enterprises,effectively promoting the bankruptcy trial of"zombie enterprises"in real estate,Assist Zhejiang Province in accelerating supply side structural reform.

1、Bankruptcy of real estate enterprises,financing difficulties for continued construction

Zhoushan Zhongheng Mutual Benefit Investment Return Right is the first mutual benefit debt investment return right product undertaken by Beijing Gaopeng(Hangzhou)Law Firm.It is also the first case in Zhejiang Province and even the country to use market mechanisms to continue building financing projects for bankrupt real estate enterprises,achieving good economic and legal results.

In November 2014,the capital chain of a real estate development enterprise in Zhoushan,Zhejiang Province was broken,and the People's Court of Dinghai District,Zhoushan City ruled that the enterprise was bankrupt and liquidated in accordance with the law,while appointing a bankruptcy administrator.After the bankruptcy administrator takes over the enterprise,after investigation and analysis,it is estimated that the real estate project invested and constructed by the real estate development enterprise can be fully constructed with an additional investment of about 50 million yuan.

Cancelling a house purchase contract and auctioning and transferring uncompleted residential buildings are traditional approaches adopted in the bankruptcy liquidation model,but this approach can easily lead to the devaluation of the assets of bankrupt enterprises,causing trouble and petitions by house buyers,and thus affecting social harmony and stability.The bankruptcy administrator believes that in order to maximize the interests of creditors and maintain social stability,it is necessary for the bankrupt enterprise to finance its continued operation and continue construction and completion acceptance.However,for this company,which is mired in huge debts and multiple lawsuits,traditional financing channels such as bank loans are almost impossible.Against the backdrop of the downturn in the real estate industry at that time,it was not only difficult for bankrupt real estate companies to continue construction and financing on their own,but also difficult to find strategic investors to take over the uncompleted residential buildings.This was also a common problem faced by bankrupt real estate companies.

2、Carry out securitization of bad assets to help bankrupt real estate enterprises solve financing difficulties

Zhejiang Financial Asset Trading Center(hereinafter referred to as"Zhejiang Financial Center")is a comprehensive professional trading platform for financial assets and related products established under the guidance and strong support of Zhejiang Provincial Party Committee and Government.Beijing Gaopeng(Hangzhou)Law Firm is the earliest law firm in Zhejiang Financial Center,providing legal services for a series of financial products issued by Zhejiang Financial Center platform,such as"Five Water Governance","Secure Housing Project",and"Characteristic Town".Through the financial innovation platform of Zhejiang Financial Center,it has effectively served the economic development of Zhejiang.

After contacting with the bankruptcy administrator,Zhejiang Financial Center organized an investigation and concluded that the bankrupt enterprise still had tens of millions of yuan in accounts receivable for houses sold,and the value of unsold houses amounted to hundreds of millions,which is of great value.Subsequently,Zhejiang Financial Center entrusted Beijing Gaopeng(Hangzhou)Law Firm to conduct relevant due diligence on the enterprise and its real estate project in Zhoushan.According to the business model of"investment income right"of Zhejiang Financial Center,lawyer Gao Peng designed a financing plan and product transaction structure,which ultimately led to the successful issuance of Zhoushan Zhongheng Gongyi investment income right.

In the product design of Zhoushan Zhongheng Mutual Benefit Investment Return Rights,lawyer Gao Peng innovatively introduced the concept of"mutual benefit debt"after repeated argumentation.The provision of follow-up project construction funds by third-party investors to bankrupt real estate enterprises is a debt formed for the benefit of all creditors,belonging to a common interest debt.According to the relevant provisions of the Enterprise Bankruptcy Law,it has a priority right to receive compensation.Therefore,the introduction of social capital to invest in the follow-up construction of bankrupt real estate enterprises has legitimacy and operability.

After the financing plan for Zhoushan's bankrupt real estate enterprise was issued,it was immediately recognized by the bankruptcy court and the creditors'meeting,and successfully attracted third-party investment institutions to participate in the investment.The third-party investment institution establishes a special purpose company("SPV"),which raises bridge funds and serves as an investment entity to provide loans to bankrupt enterprises for subsequent construction of real estate projects.Subsequently,SPV took the creditor's rights enjoyed by the bankrupt enterprise as the basic asset,and as the issuing entity,it issued investment income right products in Zhejiang Financial Center,which were highly recognized and enthusiastically subscribed by investors,and successfully recovered the bridge funds.Currently,the uncompleted real estate of the bankrupt enterprise has been successfully closed,and the investment income right of Zhoushan Zhongheng Gongyi has been fully cashed.

3、Innovate the asset disposal model of bankrupt enterprises,and promote the elimination of production capacity and inventory in Zhejiang

Economic transformation and upgrading cannot be separated from reform and innovation.In April 2016,the People's Government of Zhejiang Province issued the"Opinions on Accelerating Supply-side Structural Reform",which proposed that we should adhere to key breakthroughs.Conscientiously implement the central government's overall plan for promoting supply side structural reform,strengthen system planning and overall design,actively promote capacity reduction,inventory reduction,deleveraging,cost reduction,and weaknesses,accelerate the cultivation of new growth points,increase efforts to comprehensively deepen reform,and ensure the steady and orderly progress of all work.Adhere to reform and leadership.Give full play to the decisive role of the market in resource allocation,actively utilize market mechanisms,and strive to solve structural issues at the industrial level and efficiency issues at the enterprise level.At the same time,we should better play the role of the government,strengthen policy guidance,and focus on addressing policy issues at the government level and the allocation of elements at the institutional level.

The disposal of"zombie enterprises"is a major measure of supply-side structural reform.Zhejiang Province's Guiding Opinions on the Disposal of"Zombie Enterprises"pointed out that:firmly establish the five development concepts of innovation,coordination,green,openness,and sharing,follow the principles of"classified disposal,coordinated disposal,legal disposal,orderly disposal,and territorial disposal",use legal thinking and methods to actively and steadily dispose of"zombie enterprises",effectively reduce ineffective low-end supply,and accelerate the revitalization of existing assets;Effectively resolve the risks of"capital chain and guarantee chain",and repair the driving force of economic development;Establish and improve a long-term market-oriented exit mechanism to lay the foundation for promoting full market competition and promoting economic transformation and upgrading.

The series of mutual benefit debt investment income rights products provided by Lawyer Gao Peng with legal services are precisely implementing the spirit of the above guidance,giving full play to the decisive role of the market in resource allocation,breaking the traditional liquidation mode of auctioning and transferring assets of bankrupt enterprises,supporting the disposal of non-performing assets through innovative financial service models,using market-oriented operating mechanisms,and expanding financing channels for bankrupt enterprises with legal thinking and methods,Successfully revitalized the uncompleted real estate projects of bankrupt real estate enterprises,maximizing the asset value of bankrupt enterprises,promoting local real estate enterprises to reduce production capacity and inventory,promoting the stable and healthy development of the local real estate market,and making contributions to maintaining social stability and economic development,which has been highly recognized by local courts and governments.

4、Call for the establishment of a corporate restructuring fund to assist in industrial restructuring and economic transformation and upgrading

Zhejiang is a pioneer in China's market economy,and its bankruptcy trial work is also at the forefront of the country.After the successful issuance of Zhoushan Zhongheng Gongyi Investment Return Right in Zhejiang Financial Center,Beijing Gaopeng(Hangzhou)Law Firm has successively accepted the entrustment to provide legal services for the continuation and financing of bankrupt real estate enterprises in Anji,Changxing,and Yuhuan,Zhejiang.The successful model of Zhejiang Financial Center's co beneficial debt investment right of return has attracted the attention and recognition of more and more bankruptcy administrators in the province.

While the above professional legal services have achieved success,Beijing Gaopeng(Hangzhou)Law Firm,based on the practical experience of bankruptcy trials in Zhejiang Province,and in accordance with the deployment of the Supreme People's Court and the Zhejiang Provincial High Court on market-oriented,legalized,and normalized bankruptcy trials,calls on Zhejiang to accelerate the establishment of enterprise restructuring funds,especially small and medium-sized enterprise restructuring funds.

In Zhejiang,capital chain rupture is a common cause of enterprise bankruptcy.If appropriate financial instruments can be used to invest in enterprises with restructuring value and to renew the capital chain,the successful bankruptcy and reorganization of enterprises is conducive to improving the repayment rate of creditors,not only resolving social conflicts,but also achieving economic benefits.The establishment of enterprise restructuring funds is an important financing model for the bankruptcy and reorganization of enterprises in developed countries such as Europe and the United States.The establishment of a corporate restructuring fund is conducive to resolving the risks of the"capital chain and guarantee chain",solving the"difficult financing"and"expensive financing"problems,and establishing a market-oriented long-term mechanism to support the restructuring of enterprises,especially small and medium-sized enterprises.At the same time,it is also suitable for the policy guidance of the national development industry fund,which is conducive to promoting the innovative development of Zhejiang's finance,promoting the industrial restructuring and economic transformation and upgrading of Zhejiang,In the market economy under the new normal,we should face the rising tide,bravely stand at the forefront,and lead the trend.

This article is translated by software translator for reference only.