The so-called debt-to-equity swap refers to the establishment of financial asset management companies by the state, the acquisition of non-performing assets of banks, and the transformation of the original creditor-debtor relationship between banks and enterprises into the holding (or shareholding) and controlled relationship between financial asset management companies and enterprises. After the creditor's rights are converted into equity, the original principal and interest will be paid out in shares. In fact, the national financial asset management company has become a phased shareholder of the enterprise, exercising shareholder rights according to law and participating in the company's major affairs decision-making, but not participating in the normal production and operation activities of the enterprise. After the economic situation of the enterprise improves, the funds will be recovered through listing, transfer or enterprise repurchase.
Therefore, enterprises can convert debt into equity after bankruptcy acquisition.