China’s economy is entering an era with existing assets in the dominant position. As an important measure to revitalize assets in the era of existing assets, bankruptcy reorganization has gradually appeared advantageous with institutional optimization. As a subsidiary of Fehorizon specializing in revitalization of existing assets, Fehorizon AMC is currently increasing its efforts in the development of bankruptcy reorganization and investment business. So far, it has been engaged in multiple bankruptcy reorganization projects in many places across North China, East China and South China, with professional performance standing out among numerous institutions.

Bankruptcy Reorganization as an Important Measure for Revitalizing Existing Assets

Under the “new normal” pattern, China’s economy has ushered in a turning point for in-depth adjustment and optimization of its industrial structure. An increase in the number of dilemmas and bankrupt enterprises has given rise to more service needs concerning non-performing asset business.

On May 25, 2022, the General Office of the State Council issued Opinions on Further Revitalizing Existing Assets and Expanding Effective Investment to give opinions about optimizing and improving methods to revitalize existing assets and further revitalizing existing assets. Due to policy support and vast market space, the revitalization of existing assets in China has entered an “Golden Age” of development. To accelerate the revitalization of existing assets is not only conductive to solving the dilemmas and the contradictions between debts and claims of bankrupt enterprises and promoting harmonious development of the region, but also in favor of improving the use efficiency of construction funds, forming a virtuous circle of investment and promoting the endogenous growth of investment.

In the aspect of system perfection, the improvement of business environment has always been the fundamental premise for various governments to enhance the vitality of regional economic development. In addition to measures including establishing a credit system, perfecting the regulatory environment, expanding financing channels and government assistance, the development of judicial system for enterprise bankruptcy is also an important measure for improving the business environment.

In recent years, with the rapid development of the bankruptcy reorganization system, the importance of bankruptcy reorganization procedure to the relief of enterprise burdens, the improvement of industry level, the conversion from old to new impetus and the promotion of socio-economic development of high quality has become more prominent. On March 7, 2023, the Work Report of the Supreme People’s Court disclosed that in five years, China’s courts have tried and closed 2801 bankruptcy reorganization cases; with 3.4 trillion yuan of assets revitalized accumulatively, 3285 enterprises were lifted out of dilemma and 923,000 people managed to keep their jobs. Bankruptcy reorganization has become an important measure for revitalizing inefficient assets and improving economic vitality in the era of existing assets.

From the professional perspective, bankruptcy reorganization enjoys institutional advantages in three aspects:

First, high investment efficiency.

Bankruptcy reorganization is a legal procedure with explicit legal provisions for various steps. Usually it can be completed within a year. Even if it had failed, a bankruptcy liquidation procedure can be started quickly, so as to prevent a long-term fruitless stalemate and guarantee relatively high investment efficiency on the institutional level.

Second, diversity and innovation of reorganization modes.

At present, the mainstream modes of bankruptcy reorganization mainly include: existence-type reorganization, sale-type reorganization and liquidation-type reorganization, and among them sale-type reorganization can be further divided into various subtypes including sale of shares, divesture and reverse sale. Reorganization modes are continuously being formed and upgraded in practice.

Third, relative isolation of historical debts.

In an ordinary case of acquisition and reorganization, the target company’s exterior liabilities before reorganization will be inherited by the subject after reorganization, which makes them a “historical burden” for investors. However, in the bankruptcy reorganization procedure, such debts will be confirmed by the administrator through claim declaration and review first and then paid off all together during execution of the reorganization plan, so that the investor can move forward with the “historical burden” discarded when taking over the enterprise.

Fehorizon AMC Helps Enterprises to Reinvent Themselves

Since its establishment, Fehorizon AMC has been keeping up with the times to grasp market opportunities. It has carried out multiple bankruptcy reorganization projects one after another in North China, East China and South China, involving multiple asset types including industrial plant, logistics real estate and energy asset, helped thousands of creditors to recover debts successfully, and built up the ability of systematic operation of such business.

Then, how did Fehorizon AMC make its breakthrough and quickly grasp the hardcore skill of bankruptcy reorganization and investment?

1. Gene Advantage of “Finance + Industry”

Bankruptcy reorganization and investment is generally recognized as a sophisticated business in the field of investment in special opportunities. This unique type of business concerns both financial investment and industrial operation, and comes with procedural difficulties as well as systematic challenges. Therefore, general financial institutions without good industrial knowledge often flinch at it, and industrial companies also have no way to start due to a lack of professional techniques of financial disposal.

The “finance + industry” strategy and the development thinking of serving real economy with finance advocated by Fehorizon over the years have endowed Fehorizon AMC with a natural gene advantage in this particular area.

2.Professional Background with “Rich Experience + Mature Techniques”

Since the very beginning of its establishment, Fehorizon AMC has been engaged in business like disposition of non-performing assets and revitalization of existing assets; with more than ten billion yuan of assets managed cumulatively, it has thus accumulated rich industry resources and operation experience in aspects such as asset transaction, operation and withdrawal. In addition to financial professionals, the team of Fehorizon AMC is also equipped with practicing lawyers, accountants and industry veterans, to guarantee smoothness and security throughout project reorganization, investment and operation. On the premise of financial compliance, it can also give professional advice on transaction structure, legal risks, finance and taxation, industry operation, etc., and make contingency plans targeting risks.

Through effective integration of various resources and flexible utilization of bankruptcy reorganization and investment techniques including debt-retaining reorganization, installment-sale reorganization, entrusted investment and investment-banking operation, Fehorizon AMC can realize orderly stripping of non-performing assets, reduce the transmission of contingent liabilities, or reduce the tax burden on subsequent enterprise operation through reasonable tax planning, to satisfy the individual needs of various interested parties at different stages.

3.Systematic collaboration thinking

Unlike conventional financial business, the reasons for bankruptcy are complicated, the difficulty of balancing interests of various parties is high, and bankrupt enterprises have many individual needs, all of which set high demands on the professionalism and decision-making efficiency of the team—it is required to make reorganization plans in line with local conditions, integrate the front, middle and back ends organically and respond quickly to the questions and demands of various parties.  

Having inherited the systematic collaboration mode of Fehorizon, the team of Fehorizon AMC can not only quickly identify the obstacles in projects and explore real problems, but also efficiently respond to the questions and needs of various parties to the transaction targeting specific scenarios and earn precious window time for advancing the project as well as praises from various sides.

4.Regional Layout

Considering the extensive influence of bankruptcy recognition projects, governments would introduce different policies and regulations based on local circumstances, which sometimes even differ in document type, submission time, submission method and precondition. Therefore, there isn’t a “comprehensive” operation manual to guide bankruptcy recognition projects, which poses an even higher challenge to relevant institutions. 

With a more down-to-earth operation mode, the regional layout of the team of Fehorizon AMC can enable quick response to client needs as well as timely and efficient communication with the local government, so as to increase the team’s understanding of regional asset market, judicial rules and tax policies.

Striving to Become an Importance Force of Revitalization of Existing Assets

In the ear of existing assets, Fehorizon AMC is deeply ware of the social responsibilities shouldered by itself as a professional institution engaged in bankruptcy reorganization ad investment. As the structural reform targeting excessive production capacity enters the important stage of “development in depth,” the complexity of bankruptcy reorganization cases has become increasingly prominent, and Fehorizon AMC’s controlling and resource integration abilities in the aspect of bankruptcy reorganization and investment will also be strengthened and verified in practice.

Meanwhile, with the continuous perfection of the bankruptcy reorganization system, participants continue to emerge in the field of bankruptcy reorganization. The participation of regional auction platforms, various asset management companies and widely distributed service providers of differing resources and sizes will promote the bankruptcy reorganization business to benefit more enterprises and creditors. Fehorizon AMC will keep enhancing communication and cooperation with local governments, courts, bankruptcy administrator associations of various provinces and cities, members on provincial or municipal bankruptcy administrator registers and other types of participants, integrate various resources to form a joint force, and contribute to the construction of bankruptcy reorganization and investment ecosystem.

In the future, in addition to maximizing the group’s gene advantage and the professional background of its team, Fehorizon AMC will keep strengthening its efforts in investment and resource allocation in the field of bankruptcy reorganization and investment, aim to create a “gold business card” for bankruptcy reorganization and investment with Fehorizon’s characteristics, devote itself to providing interested parties including creditors, debtors and local governments with comprehensive solutions related to existing assets, strive to become an important force of revitalization of existing assets in the era of existing assets, and contribute to the harmonious and healthy socio-economic development.