What is the recovery rate of creditors? Comparative analysis of Sunac, Greentown, and Jinke (00884).

Recently, the intensive breakthroughs of debt-to-equity conversion of distressed real estate companies have occurred. On October 16th, Sunac (00884) released an announcement disclosing the detailed plan of its overseas debt restructuring and the measures the company will take, including issuing Mandatory Convertible Bonds (MCB), converting shareholder loans, and implementing a long-term team equity incentive plan. These plans will seek approval at a special shareholders' meeting on October 31st. Two days earlier on October 14th, Sunac announced the progress of its second round of overseas restructuring plan, stating that the plan has received approval from 94.5% of creditors and will be heard in the Hong Kong High Court on November 5th. Earlier on September 24th, Jinke announced that it had signed a bankruptcy reorganization special service trust contract with CITIC Trust Co., Ltd., marking the completion of the key debt repayment mechanism and entering the substantial implementation stage. At the same time, after completing the injection of 2.628 billion investment funds, the reorganization investor became Jinke's largest shareholder. Comparing the debt restructuring plans of the three companies mentioned above, debt-to-equity conversion is a commonly adopted debt restructuring method. All three companies are implementing debt-to-equity conversion through issuing new shares, which can increase the company's equity while restructuring the debts. Additionally, all three companies have set certain clauses in their plans to ensure that controlling shareholders maintain control over the company, thus aligning the long-term interests of the controlling shareholders and creditors. Debt-to-equity conversion is crucial for determining the recovery rate, which largely depends on the stock price. The future performance of the companies' stock prices will greatly impact the recovery rate for creditors. Only through sustainable operation and gradual recovery of profits and market valuation can more benefits be gained for creditors. Setting mechanisms to ensure the control of the major shareholders and aligning their interests with the creditors is important. The plans of all three companies guarantee the single largest shareholder status of the company's actual controller or reorganization investor. This alignment of future income with the company's stock price growth is beneficial for motivating the controlling shareholders to focus on the company's operation and profitability, thus ensuring the consistency of interests between the controlling shareholders/reorganization investors and the creditors and minority shareholders. In conclusion, the subsequent performance of the companies' stock prices will have a significant impact on the recovery rate for creditors. It is essential for companies to continue operating sustainably, gradually recover profitability, and improve their market valuation to secure more benefits for creditors.