Recently, Evergrande, a leading Chinese real estate company, has become the overwhelming focus of hot news, with all parties in the capital market focusing their attention on Evergrande.

Just over a month ago, Evergrande Group Co., Ltd. (hereinafter referred to as Evergrande Group) announced on August 2 that Evergrande Group ranked 122nd among the world's top 500. The announcement states that "Fortune 2021" Evergrande Group ranked 122nd among the world's top 500, up 30 places from last year, and has been on the list for six consecutive years. The high growth of sales and revenue is the key to Evergrande's six consecutive years on the list. According to data, from 2015 to 2020, Evergrande's sales increased from 2013 billion yuan to 723.2 billion yuan, and its operating revenue increased from 133.1 billion yuan to 507.2 billion yuan. Since this year, Evergrande's performance has continued to maintain steady growth. As of the end of June, the company had achieved a cumulative contract sales of 356.79 billion yuan, with a cumulative sales collection rate of 321.19 billion yuan, exceeding 90%. "At the same time, Evergrande's interest-bearing liabilities have decreased to about 570 billion yuan, and its net debt ratio has decreased to below 100%. The three red lines have successfully achieved one turning green." On

August 20, 2021,

Evergrande Group announced that "On August 19, 2021, Evergrande Group accepted an interview with the People's Bank of China and the China Banking and Insurance Regulatory Commission. Evergrande Group will fully implement the interview requirements, unswervingly implement the central government's strategic deployment for the stable and healthy development of the real estate market, effectively fulfill the main responsibility of the enterprise, spare no effort to ensure the construction of the project, and complete the delivery of the property with quality and quantity guaranteed. Evergrande Group will resolutely disclose information on major issues in accordance with laws and regulations, and will never disseminate and Clarify untrue information in a timely manner; "We will maintain the company's operational stability with the greatest determination and effort, resolve debt risks, and maintain the stability of the real estate market and finance." On

the same

day,

Evergrande Group issued a statement saying, "In response to the recent online news that 'China Evergrande Group is negotiating with Xiaomi Group to sell 65% of Evergrande Auto's shares', our company hereby declares as follows: Evergrande Auto has had preliminary exchanges with Xiaomi Group during the introduction of strategic shareholders, but has not conducted in-depth discussions to promote." On August 31, 2021, Evergrande Group released a news release, Expression in the text "On August 31, China Evergrande Semiannual Report released: In the first half of 2021, Evergrande recorded sales of 356.79 billion yuan, received payments of 321.19 billion yuan, and made a net profit of 10.5 billion yuan, including losses in the real estate development business. Market analysis believes that last February, when the epidemic broke out, Evergrande launched a 75% discount nationwide. Subsequently, in order to vigorously recover funds and reduce liabilities, it repeatedly introduced phased and extraordinary preferential measures targeting specific products, resulting in: The main industry lost 4.1 billion yuan. "According to the semi-annual report, Evergrande has fully implemented the new strategy of 'high growth, scale control, and debt reduction' since March last year. As of the end of June this year, Evergrande's interest-bearing liabilities have decreased by about 300 billion yuan compared to the end of March last year, and the net debt ratio has decreased to below 100%, realizing a red line turning green." On

September 10th, 2021, at the

beginning of September, there was a market rumor that the mature wealth products under Evergrande suffered from the problem of overdue payment. An employee who has purchased Evergrande Wealth Management has publicly stated that the Evergrande Wealth Management product he has purchased has encountered a situation where it is overdue and cannot be redeemed.

"The Shenzhen Municipal Local Financial Supervision and Administration Bureau issued a notice on its Weibo official website saying, 'Recently, the notice on periodic compensation matters for' Evergrande Financial Services' circulated on the internet has been verified to be counterfeit and not issued by our bureau. Our bureau has reported the case to the public security organ. '" On

the same day, According to a report from the Securities Times, "Evergrande's liquidity shortage has reappeared, and Evergrande Wealth has been exploded and cannot be redeemed. Xu Jiayin made a bold statement, 'I can have nothing, but Evergrande Wealth's investors cannot have nothing!'" On September 10th, Xu Jiayin, Chairman of the Board of Directors of Evergrande Group, stated at the Evergrande Wealth Special Meeting that it is necessary to ensure that all mature wealth products are fully redeemed as soon as possible, and that no penny can be lost. " On

September 13, 2021,

Evergrande Group issued a statement on its official website stating that "the statements about Evergrande's bankruptcy and reorganization that have emerged recently on the internet are completely untrue. The company has indeed encountered unprecedented difficulties, but the company resolutely fulfills its corporate main responsibility, goes all out to resume work and production, ensure the delivery of buildings, and do everything possible to restore normal operations, fully protecting the legitimate rights and interests of customers." On

September 15, 2021

, the Information Office of the State Council held a press conference. Fu Linghui, a spokesman for the National Bureau of Statistics, gave a briefing on the operation of the national economy in August 2021 and answered questions from reporters. Phoenix Satellite TV reporter asked, "Recently, Evergrande's debt default risk is increasing, causing widespread concern in the market. How should we evaluate the impact of this event on the real estate industry and how should we judge the future trend of the industry?"? Fu Linghui replied that he had also noticed some recent online news. Some large real estate enterprises have encountered some difficulties in the production and operation process, and the impact on the development of the entire industry needs to be observed. From the perspective of the operation of the real estate market, since this year, with various regions and departments adhering to the principle of "no speculation in real estate", and continuing to stabilize house prices, land prices, and expectations, the overall operation has maintained a stable trend. On

September 15, 2021,

China Integrity International Credit Rating Co., Ltd. (hereinafter referred to as "China Integrity International") issued an announcement on reducing the credit ratings of Evergrande Real Estate Group Co., Ltd.'s entities and related debts and continuing to include them in the observation list of possible downgrades. Zhongxin International believes that the liquidity situation of Evergrande Group and Evergrande Real Estate continues to deteriorate, and no substantial progress has been made in matters such as equity and asset sales. The continued decline in sales receipts will further exacerbate the cash flow pressure. The decline in confidence of relevant parties caused by the continuous increase in negative information will increase the uncertainty of their production and operation recovery, making it more difficult to negotiate loan renewal and extension, And further negative impact on its credit quality. Based on the above factors, Zhongxin International decided to lower the main credit rating of Evergrande Real Estate Group Co., Ltd. from AA to A, and lower the debt credit rating of "15 Evergrande 03", "19 Evergrande 01", "19 Evergrande 02", "20 Evergrande 01", "20 Evergrande 02", "20 Evergrande 03", "20 Evergrande 04", "20 Evergrande 05", and "21 Evergrande 01" from AA to A, And continue to include the entity and the credit rating of the above debt on the observation list of possible downgrades. China Integrity International will continue to pay attention to and evaluate the impact of Evergrande Real Estate and Evergrande Group's equity and asset sales progress, production and operation recovery, loan renewal and extension negotiation progress, and debt repayment fund arrangements on their credit quality. On

September 18, 2021,

Evergrande Group announced on its official website, call "As of May 1, 2021, a total of 44 executives who were then the headquarters of Evergrande Group, the president assistant or above of various industrial groups, and the chairmen and general managers of various provincial companies of real estate groups, as well as the management personnel who were then the deputy general manager or above of Evergrande Wealth, held 58 investment products of Evergrande Wealth. During the period from May 1 to September 7, among the management personnel within the above range, 9 investment products of 8 people were due and paid normally, 9 new subscriptions for 13 investment products, and 6 withdrawals." Redemption of 12 investment products before; As of September 8, 39 people still hold 50 investment products from Evergrande Wealth. The group company attaches great importance to the early redemption of Evergrande Wealth Investment products by some management personnel, and has requested that all funds redeemed by the six management personnel in advance must be returned within a specified period of time, with severe penalties. The group company requires Evergrande Wealth to strictly comply with the published cashing plan to ensure fairness, fairness, and equal treatment. "At the same time, it is required that employees at or above the middle level of Evergrande Wealth must adhere to their posts and continue to do a good job in customer service." On

September 19, 2021

, Futian Branch of Shenzhen Public Security Bureau issued a notice: "Recently, the police received a report saying that the" Notice on Evergrande Financial Services Cycle Compensation "circulated on the Internet was false information. The police immediately launched an investigation, confirmed that the notice was forged, and arrested five suspect suspected of committing fraud." At the same time, The Futian Branch of Shenzhen Public Security Bureau issued a briefing: "Recently, a netizen posted a picture on the Internet entitled" Notification on the suspected illegal absorption of public deposits by Evergrande Internet Financial Services (Shenzhen) Co., Ltd. ". After verification by our bureau and the Shenzhen Municipal Market Supervision and Administration Bureau, the content of the picture is untrue and belongs to counterfeit information.". "Our bureau has filed a case for investigation."

According to the company information provided by the enterprise investigation, the 

equity structure of Evergrande is an overseas offshore company registered in the British Virgin Islands and named Anji (BVI) Co., Ltd., which includes Evergrande Group (i.e., Evergrande Group Co., Ltd.), Evergrande Internet Group Co., Ltd., Evergrande Financial Holding Group (Shenzhen) Co., Ltd., and Evergrande Financial Wealth Management (Shenzhen) Co., Ltd, Constituting a huge business system of Evergrande. (Note: The above information is subject to the actual registration by the industrial and commercial administration department.) 

Real estate financial policies

Four years ago, on March 28, 2017, Evergrande Group announced on its official website that "Evergrande announced its 2016 performance: total assets exceeded 1.35 trillion, with a record high in indicators." In terms of diversified development, Evergrande has completed the layout of four major industries, namely real estate, finance, health, and cultural tourism, and completed the transformation from "real estate industry" to "real estate+service industry.". "Health services for the elderly, tourism services for children, and financial services for society, namely," real estate industry+industry serving the elderly+industry serving children+industry serving society "."

On October 12, 2017, the Hurun Research Institute released the Hurun Rich List 2017, and Xu Jiayin, the 60-year-old chairman of the board of directors of Evergrande Group, became the richest person in China. Its 290 billion yuan worth is 40 billion more than the second ranked Ma Huateng and 90 billion more than the third ranked Ma Yun family.

However, no one expected that in just four years, Evergrande had exploded an astronomical amount of debt, resulting in significant changes in the lives of countless people. What has happened in these four years, and what problems have caused Evergrande to encounter a fatal crisis.

We focus on August 2020, when the Central Bank and the Ministry of Housing and Urban-Rural Development held a forum for key real estate enterprises in Beijing to study and form rules for fund monitoring and financing management of key real estate enterprises. Market rumors have given three red lines, that is, the asset liability ratio excluding advance receipts is greater than 70%; The net debt ratio is greater than 100%; The cash to debt ratio is less than one time. The "three red lines" are generally intended to limit the scale of interest-bearing liabilities of real estate enterprises, and to control and tighten the financing scale of real estate enterprises, especially those with high leverage. Its fundamental purpose is mainly to make relevant policy restrictions on the high debt and leverage of real estate enterprises, prevent financial risks caused by blind leveraged expansion, and prevent overheating of the land market.

For real estate companies that touch the three red lines, especially those that rely excessively on bond issuance for financing, due to tight cash flow, liquidity is almost paralyzed and they are faced with inability to finance, resulting in inevitable distress.

On September 28, 2020, the Economic Daily published an article titled "Adhering to the Attribute of" Living "and Improving Real Estate Financial Management", Expression in the article "In the process of building a dual cycle new development pattern, it is necessary to adhere to the positioning that houses are used for living, not for speculation, adhere to the property of 'living' in real estate, actively cultivate a real estate financing environment of 'living without speculation', so as to promote the positioning of 'living without speculation' to truly take root in the real estate industry and achieve the long-term stable development of the real estate market. Real estate and finance are natural twin relationships. Whether it is real estate development, but also "It is difficult for individuals to purchase real estate without the support of real estate finance." "However, there is also a 'maverick' aspect to financial operation. Without effective regulations and constraints, it is easy for real estate to deviate from the 'living' attribute, and to some extent, become a booster of housing price speculation, a stimulant for the highly leveraged operation of the real estate industry, thereby weakening the internal motivation for the optimization and adjustment of the industrial structure, and also increasing the vulnerability of the financial operation of the national economy.". "The logic behind the highly leveraged operation of the real estate industry is the expectation that house prices will continue to rise rapidly, but 'trees cannot grow to the sky', which inevitably leads to strong externalities in the real estate industry that is moving forward under heavy load."

"However, during the period of basic matching between housing supply and demand, if financial leverage is still being overused in the real estate industry, it may cause serious consequences. From this perspective, it is necessary to actively cultivate a financing environment that allows for" non speculation in real estate ", enhance the marketization, regularization, and transparency of real estate financing, form stable and rational expectations for real estate financing, and effectively guide family home purchase behavior and real estate enterprise business behavior, "We will resolutely prevent the financial inertia of house price speculation and effectively control the risks of the financial operation of the national economy."

According to the article, only by forming a stable and rational real estate financing can we effectively control the risks in the financial operation of the national economy. Only by standardizing and restricting the current situation of the highly leveraged operation of real estate enterprises can we stop the speculation of high housing prices and achieve optimal adjustment of the industrial structure. The core of non speculation in real estate, In the process of building a new development pattern of double circulation, we should adhere to the principle of not taking real estate as a short-term means of stimulating the economy, further improve the financial management system framework of real estate, so as to realize the steady development of the real estate market and the long-term balanced operation of risk prevention and control. It was

adopted at the fifth plenary meeting of the 19th Central Committee of the CPC on October 29, 2020 "The Proposal of the Central Committee of the Communist Party of China on Formulating the 14th Five Year Plan for National Economic and Social Development and the Long-term Goals for the 2035 Year Plan" (hereinafter referred to as the "14th Five Year Plan") proposes to build a moderately prosperous society in all respects and embark on a new journey towards building a socialist modern country in all respects. At the same time, it points out that China's development environment is facing profound and complex changes, and the issue of uneven and insufficient development in China remains prominent, The reform tasks in key areas and key links are still arduous, and the innovation capacity is not adapted to the requirements of high-quality development. In the proposal to form a strong domestic market and build a new development pattern, the article points out that "promoting the balanced development of finance, real estate, and the real economy, achieving an effective connection between upstream and downstream industries, production, supply, and marketing, and promoting the coordination of industrial categories such as agriculture, manufacturing, service industry, energy resources, and other industries." "Promoting the healthy development of housing consumption," the article is optimizing the spatial layout of the land, It is pointed out again in the proposal to promote coordinated regional development and new urbanization "

Adhere to the positioning that houses are for living, not for speculation, promote the stable and healthy development of the real estate market through both rent and purchase, and implement policies based on the city. Effectively increase the supply of affordable housing, improve the income distribution mechanism for land transfer, explore and support the use of collective construction land to build rental housing according to the plan, improve the long-term rental housing policy, and expand the supply of affordable rental housing." The "Fourteenth Five Year Plan" clarifies the basic principle of not speculation in housing and housing, This indicates that the determination of the central government to curb speculation in high housing prices will not change. At the same time, it has also determined the long-term policy orientation of the central government to crack down on real estate speculation and promote the balanced development of real estate finance and the real economy. Clarify that housing is a function of the basic living conditions of the people and the nature of residence. Both finance and real estate serve the real economy, not the financial nature of real estate.

In the proposal of the 14th Five Year Plan to accelerate the development of the modern industrial system and promote the optimization and upgrading of the economic system, In terms of the real economy

, it is pointed out that "in adhering to the focus of economic development on the real economy, we will unswervingly build a strong manufacturing country, a strong quality country, a strong network country, and a digital China, promote the upgrading of the industrial base, modernization of the industrial chain, and improve economic quality, efficiency, and core competitiveness." The above-mentioned principle statement of the 14th Five Year Plan states that:, The attitude clearly establishes that adhering to the development of the real economy is the specific content of the 14th Five Year Plan and the 2035 long-term goal, and clarifies the central government's firm choice to develop the modern industrial system and promote the optimization and upgrading of the economic system.

On November 25, 2020, Liu He, member of the Political Bureau of the Central Committee of the Communist Party of China and Vice Premier of the State Council, published a signed article in the People's Daily detailing the background, connotation, and implementation path of accelerating the construction of a new development pattern dominated by the domestic grand cycle and mutually promoting domestic and international double cycles. In the comprehensive implementation of the decision and deployment to accelerate the construction of a new development pattern, the article proposes that the real estate industry affects investment and consumption, which is related to people's livelihood and development. We should adhere to the positioning that houses are used for living, not for speculation, adhere to both rent and purchase, implement policies based on the city, improve the long-term rental housing policy, and promote the stable and healthy development of the real estate market. At the same time, it is pointed out that, "Promote finance to better serve the real economy, and improve the modern circulation system. Finance is the lifeblood of the real economy. Adhere to the direction of serving the real economy, carry out structural adjustments to the financial system, vigorously increase the proportion of direct financing, reform and optimize policy based finance, improve policies for financial support innovation, give play to the pivotal role of the capital market in promoting the high-level circulation of technology, capital, and the real economy, and enhance the level of financial technology."

To sum up, understanding the central government's planning and reform of real estate development, accurately interpreting the "14th Five Year Plan" and relevant policies and guidelines, and grasping the direction and development rules of the new journey of socialist modernization countries will be extremely important for the development of Chinese real estate enterprises, especially for the survival and development of leading real estate enterprises. Once a new situation is lost in a changing situation, an opportunity is lost in a crisis, and the process of structural reform is lagging behind, the consequences will be irreversible. On

August 20, 2021, Evergrande Group Co., Ltd. issued a statement on its official website, stating that in response to the recent online news that "China Evergrande Group is negotiating with Xiaomi Group to sell 65% of Evergrande Automobile's shares", it is hereby stated that Evergrande Automobile has had preliminary exchanges with Xiaomi Group during the introduction of strategic shareholders, but has not conducted in-depth discussions to promote. 

On September 13, 2021, Evergrande Group Co., Ltd. issued a statement on its official website stating that the recent statements about Evergrande's bankruptcy and reorganization on the internet were completely untrue. The company has indeed encountered unprecedented difficulties at present, but the company firmly fulfills its corporate main responsibility, goes all out to resume work and production, ensure the delivery of the building, and do everything possible to restore normal operations, fully protecting the legitimate rights and interests of customers. On September 18th, Evergrande Group issued an announcement that the group company attached great importance to the early redemption of Evergrande Wealth Investment products by some management personnel, and has requested that all funds redeemed in advance by the six management personnel must be returned within a specified period of time, with severe punishment. The group company requires Evergrande Wealth to strictly comply with the published cashing plan to ensure fairness, fairness, and equal treatment. At the same time, it is required that employees at or above the middle level of Evergrande Wealth must adhere to their posts and continue to do a good job in customer service.

The above statement indicates that Evergrande is still actively implementing the redemption plan. According to reports from China First Finance and Sina Finance, on September 22, 2021, several listed banks responded to their business dealings with Evergrande, with controllable risks.

On the same day, Evergrande Real Estate Group Co., Ltd. issued the "2020 Public Issuance of Corporate Bonds by Evergrande Real Estate Group Co., Ltd. to Professional Investors (Phase I) and 2021 Interest Payment Notice" on the Shenzhen Stock Exchange. According to the announced interest payment plan, the total amount of bonds issued for this period is 4 billion yuan, with a five-year fixed interest rate bond duration, with the issuer's option to adjust the coupon rate and the investor's option to put back at the end of the third year. The coupon rate of the current bond during the current interest period is 5.80%. The interest bearing period of this bond is from September 23, 2020 to September 22, 2025. The announcement states that the bond interest payment method has been resolved through OTC negotiation for the current bond.

It is believed that Evergrande, as a well-known leader in China's real estate industry, will still strive to seek ways to break the situation and assume its corporate and social responsibilities in times of crisis. It is hoped that Evergrande's efforts will achieve ultimate success, successfully resolve the serious problems it faces, and ensure the financial safety of creditors and investors. The

way to resolve disputes in business dilemmas 

Buying wealth management products or services is an investment behavior that inherently involves both income and risk. To be absolute, risk is inevitable. Especially for high-yield products, there are inevitably high risks. Financial investment itself is a professional investment that requires investors to possess a certain amount of financial knowledge and investment experience. Investors in financial products must maintain a clear understanding, carefully understand and understand important information related to their immediate interests such as interest rates, fees, returns, and key professional terms related to financial products, and carefully review and consider the complexity and risk level of the financial products they purchase, Clearly identify the various types of contingent risks that financial products have, and clearly understand the nature and type of financial products or services. At the same time, appeals should be objectively and rationally reflected through legitimate channels according to law, and normal financial and social public order should not be disturbed.

In response to the Evergrande crisis, this paper summarizes the operational difficulties of various large enterprises, including



financial enterprises, in recent years. For possible disputes and solutions to major operational difficulties of enterprises, relevant legal interpretations are made in accordance with current Chinese laws and regulations: 1. Protection of the rights and interests of financial consumers. Regarding the civil behavior relationships involved in financial consumption, the Civil Code, the Securities Law Laws such as the Securities Investment Fund Law, the Partnership Enterprise Law, and the Trust Law, as well as the Interim Measures for the Supervision and Administration of Private Investment Funds, the Administrative Measures for the Raising of Private Investment Funds, and relevant judicial interpretations have clear provisions. This article analyzes the following two important provisions.

（1） 

On November 8, 2019, the Supreme People's Court issued a notice stating that the Minutes of the Civil and Commercial Trial Work Conference of the National Courts (hereinafter referred to as the Minutes) had been adopted in principle at the 319th meeting of the Civil Administration Professional Committee of the Judicial Committee of the Supreme People's Court on September 11, 2019. The fifth item on the trial of disputes over the protection of the rights and interests of financial consumers clearly states that "in the trial of civil and commercial cases between financial product issuers, sellers, and financial service providers (hereinafter referred to as seller institutions) and financial consumers arising from the sale of various high-risk grade financial products and the provision of services for financial consumers to participate in high-risk grade investment activities, the principle of" seller's due diligence, buyer's responsibility "must be adhered to, "Whether financial consumers fully understand the nature and risks of relevant financial products and investment activities and make independent decisions on this basis should be regarded as the basic facts of the case that should be investigated, and the legitimate rights and interests of financial consumers should be protected according to law, the operational behavior of seller institutions should be standardized, and the formation of an open, fair, and just market environment and market order should be promoted." The

specific analysis 

of the

provisions on the protection of the rights and interests of financial consumers in the Minutes of the Meeting is as follows: 1. Obligations of seller institutions According to Article 72 of the Minutes of the Meeting, seller institutions are promoting and selling high-risk financial products such as bank financial products, insurance investment asset products, trust financial products, securities firms' collective financial plans, leveraged fund shares, options, and other OTC derivatives to financial consumers, In the process of providing services for financial consumers to participate in high-risk investment activities such as margin trading, the New Third Board, the Growth Enterprise Board, the Science and Technology Innovation Board, and futures, they must fulfill the obligations of understanding customers, understanding products, and selling (or providing) appropriate products (or services) to appropriate financial consumers. The purpose of the seller institution's obligation of appropriateness is to ensure that financial consumers can make independent decisions based on a full understanding of the nature and risks of relevant financial products and investment activities, and bear the benefits and risks arising therefrom. In the field of promoting and selling high-risk financial products and providing high-risk financial services, the performance of the appropriateness obligation is the main content of "seller's due diligence", and is also the premise and foundation of "buyer's self responsibility".

Article 73 clarifies the rules of law applicable to the obligation of appropriateness, I.e "When determining the content of the seller's institution's appropriateness obligations, the basic principles stipulated in laws such as the Contract Law, the Securities Law, the Securities Investment Fund Law, and the Trust Law, as well as regulatory documents issued by the State Council, should be taken as the main basis. Relevant departments should provide regulatory provisions in departmental rules and regulatory documents for the promotion and sale of high-risk financial products, as well as for the provision of services for financial consumers to participate in high-risk investment activities, "If there is no conflict with the provisions of laws and normative documents issued by the State Council, they may be applied by reference."

Article 74 of the Minutes of the Meeting specifies the subject of responsibility. It is stipulated that "if the issuer or seller of financial products fails to fulfill their due diligence obligations, resulting in financial consumers suffering losses during the purchase of financial products, financial consumers can either request the issuer of financial products to bear the liability for compensation, or request the seller of financial products to bear the liability for compensation, in accordance with the General Principles of the Civil Law." Article 167 requires the issuer and seller of financial products to jointly assume joint and several liability for compensation. "If an issuer or seller requests the people's court to clarify their respective share of liability, the people's court may, while adjudicating that the issuer or seller shall bear joint and several liability for compensation to financial consumers, clarify that the issuer or seller has the right to recover their share of compensation from the responsible party after actually assuming the liability."

The allocation of the burden of proof is specified in Article 75 of the Minutes of the Meeting.

Article 76 clarifies the obligation of disclosure, "The fulfillment of the obligation of disclosure is the key for financial consumers to truly understand the investment risks and benefits of various high-risk financial products or high-risk investment activities," especially in Article 76 "If the seller's institution simply claims that it has fulfilled its obligation to inform and explain through handwritten statements by financial consumers, such as' I clearly know that there may be a risk of principal loss', and cannot provide other relevant evidence, the people's court will not support its defense reasons." This provision strengthens the seller's institution's responsibility to carefully and conscientiously fulfill its obligation to inform. It is indeed a clear constraint on the seller's institution to determine whether the seller's institution has fulfilled the obligation of disclosure by combining objective criteria that can be understood by rational people and subjective criteria that can be understood by financial consumers.

"The

amount of

compensation for losses" is specified in Article 77 of the Minutes of the Meeting as follows: "If the seller institution fails to fulfill its due diligence obligations and causes losses to financial consumers, it shall compensate the financial consumers for the actual losses incurred. The actual losses are the principal and interest of the losses, and the interest is calculated based on the benchmark interest rate for similar deposits issued by the People's Bank of China for the same period. Paragraph 2 of this Article also specifies punitive liability and interest losses.". That is, "Financial consumers who purchase high-risk financial products or receive services for participating in high-risk investment activities, claim that the seller's organization should comply with the Consumer Rights Protection Law on the grounds that the seller's organization has fraudulent behavior The people's court shall not support the provisions of Article 55 that bear punitive liability for compensation. If the seller's institution's behavior constitutes fraud, when requesting compensation from financial consumers for the interest losses incurred by the total amount of money they have paid, attention should be paid to distinguishing different situations and handling them: (1) If the expected rate of return, performance comparison criteria, or similar agreements are specified in the contract text of a financial product, they can be used as the standard for calculating interest losses; (2) The contract text stipulates the expected rate of return or performance comparison benchmark in the form of a floating range. If a financial consumer requests that the agreed upper limit be used as the calculation standard for interest loss, the people's court shall support it according to law; (3) Although the contract text does not contain an expected rate of return, performance comparison benchmark, or similar agreement, if financial consumers can provide evidence to prove that the expected rate of return, performance comparison benchmark, or similar statements are stated in the advertising materials for product issuance, the promotional materials should be considered as a component of the contract text; (4) "If the expected rate of return, performance comparison benchmark, or similar expressions are not specified in the contract text and advertising materials, they shall be calculated according to the loan market quoted rate published by the National Interbank Funding Center."

Article 78 of the Minutes of Meeting specifies the

exemption: "If a financial consumer intentionally provides false information, refuses to listen to the suggestions of the seller's organization, and other personal reasons cause it to purchase products or receive services inappropriately, and the seller's organization requests exemption from corresponding responsibilities, the people's court shall support it according to law, except that the financial consumer can prove that the issuance of the false information is misleading by the seller's organization. The seller's organization can provide evidence to prove that based on the previous investment experience and education level of the financial consumer "If the violation of the obligation of appropriateness does not affect the financial consumer's independent decision, the people's court shall support its defense that the financial consumer should bear the investment risk on its own according to law."

（2） The "Implementation Measures of the People's Bank of

China for the Protection of the Rights and Interests of Financial Consumers" and the "Implementation Measures of the People's Bank of China for the Protection of the Rights and Interests of Financial Consumers" (hereinafter referred to as the "Protection Measures") have been deliberated and adopted at the 6th executive meeting of the People's Bank of China in 2020 on September 1, 2020, and shall enter into force as of November 1, 2020. 

The purpose of formulating the "Protection Measures" is to "protect the legitimate rights and interests of financial consumers, regulate the behavior of financial institutions in providing financial products and services, maintain a fair and just market environment, and promote the healthy and stable operation of the financial market." Therefore, The Measures are formulated in accordance with the Law of the People's Republic of China on the People's Bank of China, the Law of the People's Republic of China on Commercial Banks, the Law of the People's Republic of China on the Protection of Consumer Rights and Interests, and the Guiding Opinions of the General Office of the State Council on Strengthening the Protection of Financial Consumer Rights and Interests (GBF [2015] No. 81). The

specific analysis of the provisions on the protection of the rights and interests of financial consumers in the "Protection Measures" is as follows: 

1. Banks 

Article 3 of the Measures for the Protection of Payment Institutions stipulates: "Banks and payment institutions that provide financial products or services to financial consumers shall abide by the principles of voluntariness, equality, fairness, honesty, and credibility, effectively assume the main responsibility for the protection of the legitimate rights and interests of financial consumers, and fulfill the legal obligations for the protection of the rights and interests of financial consumers." 

At the same time, The "Protection Measures" clearly stipulates the content of the code of conduct of financial institutions in Chapter II of the Code of Conduct of Financial Institutions. Article 16 stipulates that "Banks and payment institutions shall, based on the characteristics of financial products or services, promptly, truthfully, accurately, and comprehensively disclose the following important contents to financial consumers: (1) The rights and obligations of financial consumers with respect to the financial products or services, and the methods and restrictions for concluding, modifying, suspending, and terminating contracts." The rights, obligations, and legal responsibilities of banks and payment institutions with respect to the financial product or service. （3） The annualized interest rate of the loan product. （4） The fees and liquidated damages that financial consumers should bear, including the method of determining the amount, transaction time, and transaction method. （5） Handling and complaint channels for disputes arising from financial products or services. （6） The number and name of mandatory standards, recommended standards, group standards, or enterprise standards implemented by banks or payment institutions for the financial product or service. （7） In the financial product description or service agreement, the complete Chinese name of the business entity that actually assumes contractual obligations. （8） "Other information that may affect financial consumer decision-making."

Article 17 of the Protection Measures stipulates that: "When disclosing information about financial products and services, banks and payment institutions should use methods that are conducive to the acceptance and understanding of financial consumers. For important information related to the vital interests of financial consumers, such as interest rates, fees, returns, and risks, key professional terms should be explained based on the complexity and risk level of the financial product or service, and appropriate methods should be provided for financial consumers to confirm their acceptance "Receive complete information."

Article 18 of the Protection Measures stipulates the obligation of banks and payment institutions to retain relevant information for no less than three years. Article 19 to Article 23 clearly stipulate the obligations that banks and payment institutions should comply with, in particular, Article 23 specifies the five prohibited acts in marketing and promotional activities, and Article 26 specifies the reporting obligations of banks and payment institutions. "Banks

and payment institutions shall promptly report to the People's Bank of China or its branches in accordance with the relevant

provisions on reporting major events that infringe upon the legitimate rights and interests of financial consumers." 2. Civil disputes between financial consumers and banks and payment institutions arising from the purchase or use of financial products or services are clearly defined in Chapter IV of the Measures for the Protection of Financial Consumer Disputes, Financial Consumer Disputes Resolution, Refers to civil disputes between financial consumers and banks or payment institutions over the purchase or use of financial products or services.

Article 35 of

the Protection Measures stipulates that "In the event of a financial consumption dispute between a financial consumer and a bank or payment institution, financial consumers are encouraged to first file a complaint with the bank or payment institution, and the parties concerned are encouraged to negotiate on an equal footing and reach a settlement on their own." It also stipulates that "financial consumers should objectively and rationally reflect their claims through legitimate channels in accordance with the law, without disturbing the normal financial order and social public order." Chapter IV also stipulates that banks and payment institutions should earnestly fulfill the main responsibilities for handling financial consumer complaints, the complaint handling procedures, and the procedures and handling methods for financial consumers to make complaints through the branches of the People's Bank of China.

As can be seen from the above, it indicates the attitude of the People's Bank of China towards financial consumption disputes, encourages negotiation and settlement, objectively and rationally reflects demands, and prohibits any behavior that disrupts normal financial order and social public order. That is, when dealing with disputes with banks, payment institutions, and related financial product issuers and sellers, financial consumers should first settle their disputes in accordance with the provisions of the contract, and in accordance with laws and regulations, the parties concerned should actively communicate and negotiate on an equal footing. In cases where agreement cannot be reached, one can choose to file a complaint with the regulatory authority in accordance with the law, or to resort to a people's court, which will hear the case and make a final ruling in accordance with the law.

2、 Major Asset Restructuring 

Corporate restructuring is a broad topic that involves the optimal allocation and reuse of corporate resources. Through restructuring, invest core competitive resources such as capital, human resources, and organizational management needed for the development of vulnerable enterprises that lack resources and are in operational difficulties, so that vulnerable enterprises can resume healthy operations and maximize profits, so that the legitimate rights and interests of original shareholders or investors, as well as creditors, can be protected, and the responsibility of the enterprise for social development can be restored.

Given the diversification of restructuring models, including asset restructuring, creditor's rights and debt restructuring, business restructuring, and other types of transactions, including significant asset purchases, asset replacement, asset sales, issuance of shares to purchase assets, backdoor listing, and merger and division of companies, which essentially constitute transaction methods for purchasing and selling assets.

Taking the current capital cutoff or debt crisis faced by large enterprises as an example, the funds required for their restructuring must be huge, and potential investors who can achieve their restructuring must be well-funded heavyweight investors or investment consortiums.

The applicable laws for restructuring include the Civil Code, the Securities Law, the Company Law, and other laws and administrative regulations, as well as the Measures for the Administration of Major Asset Restructuring of Listed Companies (2020 Amendment) issued by the China Securities Regulatory Commission on March 20, 2020 (hereinafter referred to as the "Restructuring Measures"). This article only analyzes the major asset restructuring activities involved by listed companies.

（1） 

The concept of significant asset restructuring clearly states in Article 2 of the "Restructuring Measures": "These measures are applicable to asset transactions by listed companies and their controlling or controlling companies that purchase, sell assets, or conduct asset transactions by other means beyond their daily business activities to a specified proportion, resulting in significant changes in the main business, assets, and income of listed companies (hereinafter referred to as" significant asset restructuring ")." 。 The issuance of shares by a listed company to purchase assets shall comply with the provisions of these Measures. "These Measures are not applicable to the acts of listed companies that use the raised funds to purchase assets and make external investments in accordance with the purposes of the raised funds disclosed in the securities issuance documents approved by the China Securities Regulatory Commission (hereinafter referred to as the CSRC)."

（2） The

board of directors of a listed company must make prudent judgments regarding material asset restructuring. According to Article 4 of the Provisions of the China Securities Regulatory Commission on Several Issues Concerning the Regulation of Major Asset Restructuring of Listed Companies, "If a listed company intends to implement a major asset restructuring, the board of directors shall make a prudent judgment on whether the restructuring meets the following requirements and record it in the resolution record of the board of directors: (1) If the underlying assets of the transaction involve project approval, environmental protection, industry access, land use, planning, construction, and other related approval matters, it is necessary to disclose in the major asset restructuring plan and report whether the corresponding license or approval document from the relevant competent department has been obtained; If this transaction involves matters related to approval, the progress reported to the relevant competent authorities for approval and the procedures that need to be submitted for approval should be disclosed in detail in the major asset restructuring plan and report. The plan and report for major asset restructuring should include special reminders about the risk that the items submitted for approval may not be approved. （2） "If a listed company intends to purchase assets, before the announcement of the first board resolution for this transaction, the asset seller must have legally owned the complete rights of the underlying assets, and there is no restriction or prohibition on transfer.". "If the assets to be purchased by a listed company are equity interests of the enterprise, the enterprise shall not have any circumstances where the investment is untrue or affects its lawful existence;"; If a listed company becomes a shareholding company after the completion of the transaction, the enterprise's equity as the main target asset shall be the controlling equity. "If the assets to be purchased by a listed company are resource related rights such as land use rights, mining rights, etc., they should have obtained corresponding ownership certificates and possess corresponding development or mining conditions.". （3） The purchase of assets by a listed company should be beneficial to improving the integrity of the assets of the listed company (including obtaining intangible assets such as trademark rights, patent rights, non patented technologies, mining rights, franchise rights, etc. required for production and operation), and to maintaining the independence of the listed company in terms of personnel, procurement, production, sales, intellectual property rights, etc. （4） "This transaction should be beneficial for listed companies to improve their financial situation, enhance their sustained profitability, highlight their main businesses, enhance their ability to resist risks, enhance their independence, reduce related party transactions, and avoid horizontal competition."

Chapter II of the Management Measures also clearly stipulates the principles and standards for major asset restructuring. Article 11 clearly stipulates that when a listed company implements a major asset restructuring, it shall fully explain and disclose that the transaction meets the seven requirements listed. The first of the seven requirements is to "comply with national industrial policies and relevant laws and administrative regulations on environmental protection, land management, and antitrust." 

From the above analysis, it can be seen that the attitude of the "14th Five Year Plan" clearly establishes that the focus of economic development should be on the real economy, firmly building a strong manufacturing country, a strong quality country, a strong network country, and a digital China, and promoting the upgrading of the industrial base and modernization of the industrial chain, Improve economic quality, efficiency, and core competitiveness. It clarified the central government's firm choice to develop the modern industrial system and promote the optimization and upgrading of the economic system. Therefore, if it involves a major asset restructuring implemented by a listed company, it should comply with the requirements of Article 11 of the "Administrative Measures", such as "complying with national industrial policies and relevant laws and administrative regulations on environmental protection, land management, and antitrust". Otherwise, it may not be able to pass the approval of the China Securities Regulatory Commission.

（3） 

Article

4 of the Administrative Measures for the Disclosure of Material Asset Restructuring stipulates: "When a listed company implements a material asset reorganization, all parties concerned must promptly and fairly disclose or provide information, ensure that the information disclosed or provided is true, accurate, and complete, and must not contain false records, misleading statements, or significant omissions." In addition to the disclosure obligations specified in Article 11 above, Article 16

stipulates: "Before the announcement of the board resolution of a municipal company on major asset restructuring, if relevant information has been disseminated in the media or there are abnormal fluctuations in the company's stock trading, the listed company shall immediately announce the status quo, relevant progress, and risk factors of the relevant plans, plans, or related matters, and handle other relevant matters in accordance with the relevant information disclosure rules." Article 2 of the "Standards for the Contents and Forms of Information Disclosure by Companies that Offer Securities to the Public No. 26 - Material Asset Restructuring of Listed Companies (2018 Revision)" stipulates that "When a listed company conducts asset trading activities specified in the Restructuring Measures (hereinafter referred to as material asset restructuring), it shall prepare material asset restructuring reports (hereinafter referred to as restructuring reports) and other information disclosure documents in accordance with these Standards, and shall comply with the Restructuring Measures." And other relevant regulations. "

In Chapter II, Restructuring Plan, Article 7 specifies ten items that should be included in the restructuring plan prepared by a listed company, including Item (5): "If the subject matter of the transaction belongs to overseas assets or is purchased through public bidding, public auction, or other means, and it is indeed impossible to disclose financial data, the reason and impact of the inability to disclose should be explained, and solutions should be proposed." Article 21 stipulates that asset transactions involving significant asset purchases, A listed company shall disclose the specific situation of the main business of the assets it intends to purchase based on the principle of importance and the characteristics of the industry. Item (8) 

of this Article stipulates: "If production and operation are conducted overseas, a geographical analysis 

of relevant business activities should be conducted; if assets are owned overseas, specific information such as the asset size, location, operation management, and profitability of the assets should be disclosed in detail." (4) Regulatory measures for major asset restructuring The Management Measures strengthen regulatory efforts and measures for compensation and commitment to the performance of major asset restructuring, Prevent performance pledging parties from evading compensation obligations during major asset restructuring, damaging the interests of investors, and impacting the good order of the securities market.

Article 59 of the Administrative Measures stipulates that: "After the completion of the implementation of a material asset restructuring, for reasons that are not known to the management of the listed company in advance and cannot be controlled afterwards, the profit realized by the assets purchased by the listed company does not reach 80% of the predicted amount in the asset evaluation report or the valuation report, or there is a significant gap between the actual operating situation and the management's discussion and analysis section in the material asset restructuring report, the chairman and general manager of the listed company and the company shall be responsible for this." The accounting firms, financial consultants, asset evaluation institutions, valuation institutions, and their employees with corresponding responsibilities should provide explanations on the same media and publicly apologize to investors while the listed company discloses its annual report; If the realized profit does not reach 50% of the predicted amount, the CSRC may take regulatory measures against listed companies, relevant institutions, and their responsible personnel, such as regulatory talks, issuing warning letters, and ordering regular reports.

"If the counterparty fails to fulfill or violates the performance compensation agreement or commitment within the specified period, the CSRC shall order it to make corrections, and may take regulatory measures such as

regulatory talks, issuing a warning letter, ordering a public explanation, and identifying an inappropriate person, and record relevant information in the integrity file." The Administrative Measures clarify the legal liability for fraud in issuing shares to purchase assets. Article 60 stipulates: "Any person who has knowledge of material asset restructuring information, before the relevant information is disclosed in accordance with the law, divulges the information, buys or sells or advises others to buy or sell the securities of relevant listed companies, uses material asset restructuring to disseminate false information, manipulates the securities market, or conducts fraudulent activities, the CSRC shall, in accordance with the Securities Law Penalties shall be imposed in accordance with Articles 191, 192, and 193; "Those suspected of committing crimes shall be transferred to judicial organs for criminal responsibility in accordance with the law."

III Bankruptcy 

According to Article 2 of the Enterprise Bankruptcy Law, "If an enterprise as a legal person is unable to pay off its debts as they fall due, and its assets are insufficient to pay off all of its debts, or it is obviously lacking in solvency, its debts shall be liquidated in accordance with the provisions of this Law. If an enterprise as a legal person falls under the circumstances specified in the preceding paragraph, or it is likely to become significantly insolvent, it may undergo reorganization in accordance with the provisions of this Law." Article 7 stipulates: "If the debtor falls under the circumstances specified in Article 2 of this Law, it may apply to the people's court for reorganization, settlement, or bankruptcy liquidation. If the debtor is unable to repay its debts as they fall due, the creditor may apply to the people's court for reorganization or bankruptcy liquidation of the debtor. If the enterprise as a legal person has been dissolved but has not been liquidated or has not been liquidated, and its assets are insufficient to repay its debts, the person responsible for liquidation according to law shall apply to the people's court for bankruptcy liquidation "Calculate."

（1） 

Article 11 of the Enterprise Bankruptcy Law stipulates that: "If the people's court accepts a bankruptcy application, it shall serve it on the applicant within five days from the date of making the ruling. If the creditor files an application, the people's court shall serve it on the debtor within five days from the date of making the ruling. The debtor shall, within fifteen days from the date of serving the ruling, submit to the people's court a description of the property situation, a detailed list of debts, a detailed list of creditors' rights, relevant financial and accounting reports, as well as the payment of employee salaries and social insurance expenses." Situation. "

（2） The

reorganization of bankrupt enterprises is clearly stipulated in Chapter VIII of the Enterprise Bankruptcy Law. 

Article 70 stipulates: "The debtor or creditor may directly apply to the people's court for reorganization of the debtor in accordance with the provisions of this Law. If a creditor applies for bankruptcy liquidation of the debtor, after the people's court accepts the bankruptcy application and before the debtor is declared bankrupt, the debtor or a contributor whose capital contribution accounts for more than one tenth of the debtor's registered capital may apply to the people's court for reorganization." Article 71 stipulates: "If the people's court, upon examination, considers that the reorganization application meets the provisions of this Law, it shall rule on the debtor's reorganization and make a public announcement." Article

72 stipulates that "the period from the date of the people's court ruling on the debtor's reorganization to the termination of the reorganization proceedings shall be the reorganization period." Article 79 of the Enterprise Bankruptcy Law stipulates that: "The debtor or manager shall, within six

months from the date of the People's Court's ruling on the debtor's reorganization, simultaneously submit a draft reorganization plan to the People's Court and the creditors' meeting. Upon the expiration of the time limit

specified in the preceding paragraph, and upon the request of the debtor or manager, and with justified reasons, the People's Court may order an extension of three months. At the same time, Article 88 provides that: "If the draft reorganization plan has not been adopted and has not been approved in accordance

with the provisions of Article 87 of this Law, or if the approved reorganization plan has not been approved, the people's court shall rule to terminate the reorganization proceedings and declare the debtor bankrupt. As mentioned above, bankruptcy reorganization is similar to the reorganization described above, in essence, it is the rescue and regeneration of the distressed enterprise that has been applied for bankruptcy, compared to the reorganization of ordinary enterprises or significant asset reorganization, The difficulty of bankruptcy reorganization is relatively large. In addition to the need for cash flow transfusion to revitalize the enterprise, there is also a need for a complete set of detailed and feasible reorganization plans, including dealing with creditor's rights and debts, stripping off bad assets, and supporting asset projects.

If the debtor or the administrator fails to submit a draft reorganization plan within the time limit specified above, or if the draft reorganization plan has not been approved and has not been approved in accordance with Article 87 of this Law, or if the approved reorganization plan has not been approved, the people's court shall rule to terminate the reorganization proceedings and declare the debtor bankrupt.

（3） The

debtor of a bankrupt enterprise may directly apply to the people's court for settlement in accordance with the provisions of the "Enterprise Bankruptcy Law"; "You may also apply to the people's court for a settlement after the people's court has accepted the bankruptcy application and before declaring the debtor bankrupt.". The debtor shall repay the debt in accordance with the conditions specified in the settlement agreement.

According to Article 105 of the Enterprise Bankruptcy Law, "After the people's court accepts the bankruptcy application, 

if the debtor and all creditors reach an agreement on the treatment of their claims and debts, they can request the people's court to make a ruling for approval and terminate the bankruptcy proceedings." If the debtor can repay all the debts due, the people's court should make a ruling to terminate the bankruptcy proceedings. According to Article 108

of the Enterprise Bankruptcy Law, "Before the declaration of bankruptcy, the people's court shall rule to terminate the bankruptcy proceedings and make a public announcement in any of the following circumstances: (1) A third party provides sufficient security for the debtor or pays off all of the debtor's debts that are due; (2) The debtor has paid off all of the debtor's debts that are due." The conclusion of the bankruptcy proceedings through settlement can be a win-win outcome for all parties, However, in judicial practice, due to its own debt problems and operational difficulties, it is extremely difficult for a bankrupt enterprise to reconcile itself with the debtor and terminate the bankruptcy proceedings. Often, it is necessary to achieve reconciliation with all or part of its creditors through reorganization proceedings.



（4） According to Article 16 of the Enterprise Bankruptcy Law, "After the people's court accepts the bankruptcy application, the debtor's debt repayment to individual creditors is invalid." In addition, according to Article 12 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People's Republic of China (II): "The people's court shall not support the request of the administrator to cancel the undue debts of the debtor that have been repaid in advance within one year before the acceptance of the bankruptcy application, and have expired before the acceptance of the bankruptcy application. However, unless the repayment occurs within six months before the acceptance of the bankruptcy application, and the debtor has the circumstances specified in

Article 2, Paragraph 1 of the Enterprise Bankruptcy Law." Article 107 of the Enterprise Bankruptcy Law stipulates that: "If the people's court declares a debtor bankrupt in accordance with the provisions of this Law, it shall serve a notice on the debtor and the administrator within five days from the date of making the decision, notify known creditors within ten days from the date of making the decision, and make a public announcement. After the debtor is declared bankrupt, the debtor is referred to as the bankrupt, and the debtor's property is referred to as the bankruptcy property. The creditor's rights enjoyed by the people's court against the debtor when accepting the bankruptcy application are referred to as bankruptcy creditor's rights." Article 113 stipulates: "After giving priority to paying off bankruptcy expenses and co beneficial debts, the bankruptcy property shall be paid off in the following order: (1) the wages, medical treatment, disability subsidies, and pension expenses owed by the bankrupt to the employees, the basic old-age insurance and basic medical insurance expenses owed that should be transferred to the employees' personal accounts, and the compensation that should be paid to the employees according to laws and administrative regulations;" Social insurance premiums and taxes owed by the bankrupt other than those specified in the preceding paragraph that are not paid by the bankrupt; （3） Ordinary bankruptcy claims. "If the bankruptcy property is insufficient to meet the repayment requirements in the same order, it shall be distributed in proportion.". "The salaries of directors, supervisors, and senior management personnel of a bankrupt enterprise shall be calculated based on the average salary of the employees of the enterprise."

（5） "If the

bankrupt has no property to distribute, the administrator shall request the people's court to make a ruling to terminate the bankruptcy proceedings.". "Or after the final distribution is completed, the administrator shall promptly submit a report on the distribution of the bankruptcy property to the people's court, and submit it to the people's court for a ruling to terminate the bankruptcy proceedings.". According to Article 120 of the Enterprise Bankruptcy Law, "The people's court shall make a ruling on whether to terminate the bankruptcy proceedings within 15 days from the date of receiving the administrator's request to terminate the bankruptcy proceedings. If the ruling is terminated, it shall be announced

." In summary, investors must first perform the duty of careful review to avoid blind investment in financial products and services. In the event of disputes over investment and consumer financial products, the parties concerned shall, based on their own different needs and the progress of relevant relief procedures, choose appropriate legal remedies and measures provided by the above-mentioned different dispute resolution methods to maximize the protection of the legitimate rights and interests of investors, namely financial consumers, and relevant creditors.

 

Legal Interpretation of Policies Involved in the Evergrande Crisis

2021 09/27

Recently, Evergrande, a leading Chinese real estate company, has become the overwhelming focus of hot news, with all parties in the capital market focusing their attention on Evergrande.

 

hot news

 

Just over a month ago, Evergrande Group Co., Ltd. (hereinafter referred to as Evergrande Group) announced on August 2 that Evergrande Group ranked 122nd among the world's top 500. The announcement states that "Fortune 2021" Evergrande Group ranked 122nd among the world's top 500, up 30 places from last year, and has been on the list for six consecutive years. The high growth of sales and revenue is the key to Evergrande's six consecutive years on the list. According to data, from 2015 to 2020, Evergrande's sales increased from 2013 billion yuan to 723.2 billion yuan, and its operating revenue increased from 133.1 billion yuan to 507.2 billion yuan. Since this year, Evergrande's performance has continued to maintain steady growth. As of the end of June, the company had achieved a cumulative contract sales of 356.79 billion yuan, with a cumulative sales collection rate of 321.19 billion yuan, exceeding 90%. "At the same time, Evergrande's interest-bearing liabilities have decreased to about 570 billion yuan, and its net debt ratio has decreased to below 100%. The three red lines have successfully achieved one turning green."

 

August 20, 2021

 

Evergrande Group announced that "On August 19, 2021, Evergrande Group accepted an interview with the People's Bank of China and the China Banking and Insurance Regulatory Commission. Evergrande Group will fully implement the interview requirements, unswervingly implement the central government's strategic deployment for the stable and healthy development of the real estate market, effectively fulfill the main responsibility of the enterprise, spare no effort to ensure the construction of the project, and complete the delivery of the property with quality and quantity guaranteed. Evergrande Group will resolutely disclose information on major issues in accordance with laws and regulations, and will never disseminate and Clarify untrue information in a timely manner; "We will maintain the company's operational stability with the greatest determination and effort, resolve debt risks, and maintain the stability of the real estate market and finance."

 

On the same day, Evergrande Group issued a statement saying, "In response to the recent online rumor that China Evergrande Group is negotiating with Xiaomi Group to sell 65% of Evergrande Automobile's shares, our company hereby declares as follows: Evergrande Automobile has had preliminary exchanges with Xiaomi Group during the introduction of strategic shareholders, but has not conducted in-depth discussions to promote."

 

August 31, 2021

 

Evergrande Group released news, Expression in the text "On August 31, China Evergrande Semiannual Report released: In the first half of 2021, Evergrande recorded sales of 356.79 billion yuan, received payments of 321.19 billion yuan, and made a net profit of 10.5 billion yuan, including losses in the real estate development business. Market analysis believes that last February, when the epidemic broke out, Evergrande launched a 75% discount nationwide. Subsequently, in order to vigorously recover funds and reduce liabilities, it repeatedly introduced phased and extraordinary preferential measures targeting specific products, resulting in: The main industry lost 4.1 billion yuan. "According to the semi-annual report, Evergrande has fully implemented the new strategy of 'high growth, scale control, and debt reduction' since March last year. As of the end of June this year, Evergrande's interest-bearing liabilities have decreased by about 300 billion yuan compared to the end of March last year, and the net debt ratio has decreased to below 100%, realizing a red line turning green."

 

September 10, 2021

 

In early September, there was a market rumor that the expired wealth products under Evergrande suffered from the problem of overdue payment. An employee who has purchased Evergrande Wealth Management has publicly stated that the Evergrande Wealth Management product he has purchased has encountered a situation where it is overdue and cannot be redeemed.

 

"The Shenzhen Local Financial Supervision and Administration Bureau issued a notice on its Weibo official website saying, 'Recently, the notice on periodic compensation matters for' Evergrande Financial Services' circulated on the internet has been verified to be counterfeit and not issued by our bureau. Our bureau has reported the case to the public security organ. '"

 

On the same day, according to a report by the Securities Times, "Evergrande's liquidity shortage has reappeared, and Evergrande Wealth has been exploded and cannot be redeemed. Xu Jiayin made a bold statement, 'I can have nothing, but Evergrande Wealth's investors cannot have nothing!'" On September 10th, Xu Jiayin, Chairman of the Board of Directors of Evergrande Group, stated at the Evergrande Wealth Symposium that it is necessary to ensure that all mature wealth products are fully redeemed as soon as possible, and that no penny is lost. "

 

September 13, 2021

 

Evergrande Group issued a statement on its official website stating that "the recent statements about Evergrande's bankruptcy and reorganization on the internet are completely untrue. The company has indeed encountered unprecedented difficulties at present, but the company has resolutely fulfilled its corporate main responsibility, made every effort to resume work and production, ensure the delivery of buildings, and tried every means to resume normal operations, fully protecting the legitimate rights and interests of customers."

 

September 15, 2021

 

The Information Office of the State Council held a press conference. Fu Linghui, a spokesman for the National Bureau of Statistics, gave a briefing on the national economy in August 2021 and answered questions from reporters. Phoenix Satellite TV reporter asked, "Recently, Evergrande's debt default risk is increasing, causing widespread concern in the market. How should we evaluate the impact of this event on the real estate industry and how should we judge the future trend of the industry?"? Fu Linghui replied that he had also noticed some recent online news. Some large real estate enterprises have encountered some difficulties in the production and operation process, and the impact on the development of the entire industry needs to be observed. From the perspective of the operation of the real estate market, since this year, with various regions and departments adhering to the principle of "no speculation in real estate", and continuing to stabilize house prices, land prices, and expectations, the overall operation has maintained a stable trend.

 

September 15, 2021

 

China Integrity International Credit Rating Co., Ltd. (hereinafter referred to as "China Integrity International") issued an announcement on reducing the credit ratings of Evergrande Real Estate Group Co., Ltd.'s entities and related debts and continuing to include them in the observation list of possible downgrades. Zhongxin International believes that the liquidity situation of Evergrande Group and Evergrande Real Estate continues to deteriorate, and no substantial progress has been made in matters such as equity and asset sales. The continued decline in sales receipts will further exacerbate the cash flow pressure. The decline in confidence of relevant parties caused by the continuous increase in negative information will increase the uncertainty of their production and operation recovery, making it more difficult to negotiate loan renewal and extension, And further negative impact on its credit quality. Based on the above factors, Zhongxin International decided to lower the main credit rating of Evergrande Real Estate Group Co., Ltd. from AA to A, and lower the debt credit rating of "15 Evergrande 03", "19 Evergrande 01", "19 Evergrande 02", "20 Evergrande 01", "20 Evergrande 02", "20 Evergrande 03", "20 Evergrande 04", "20 Evergrande 05", and "21 Evergrande 01" from AA to A, And continue to include the entity and the credit rating of the above debt on the observation list of possible downgrades. China Integrity International will continue to pay attention to and evaluate the impact of Evergrande Real Estate and Evergrande Group's equity and asset sales progress, production and operation recovery, loan renewal and extension negotiation progress, and debt repayment fund arrangements on their credit quality.

 

September 18, 2021

 

Evergrande Group released an announcement on its official website, call "As of May 1, 2021, a total of 44 executives who were then the headquarters of Evergrande Group, the president assistant or above of various industrial groups, and the chairmen and general managers of various provincial companies of real estate groups, as well as the management personnel who were then the deputy general manager or above of Evergrande Wealth, held 58 investment products of Evergrande Wealth. During the period from May 1 to September 7, among the management personnel within the above range, 9 investment products of 8 people were due and paid normally, 9 new subscriptions for 13 investment products, and 6 withdrawals." Redemption of 12 investment products before; As of September 8, 39 people still hold 50 investment products from Evergrande Wealth. The group company attaches great importance to the early redemption of Evergrande Wealth Investment products by some management personnel, and has requested that all funds redeemed by the six management personnel in advance must be returned within a specified period of time, with severe penalties. The group company requires Evergrande Wealth to strictly comply with the published cashing plan to ensure fairness, fairness, and equal treatment. "At the same time, it is required that employees at or above the middle level of Evergrande Wealth must adhere to their posts and continue to do a good job in customer service."

 

September 19, 2021

 

Futian Branch of Shenzhen Public Security Bureau issued a report: "Recently, the police received a report saying that the" Notice on Evergrande Financial Services Cycle Compensation "circulated on the Internet was false information. The police immediately launched an investigation, confirmed that the notice was forged, and arrested five suspect suspected of fraud." At the same time, The Futian Branch of Shenzhen Public Security Bureau issued a briefing: "Recently, a netizen posted a picture on the Internet entitled" Notification on the suspected illegal absorption of public deposits by Evergrande Internet Financial Services (Shenzhen) Co., Ltd. ". After verification by our bureau and the Shenzhen Municipal Market Supervision and Administration Bureau, the content of the picture is untrue and belongs to counterfeit information.". "Our bureau has filed a case for investigation."

 

Equity structure of Evergrande

 

According to the company information provided by the enterprise investigation, an overseas offshore company registered in the British Virgin Islands, called Anji (BVI) Co., Ltd., consists of Evergrande Group (Evergrande Group Co., Ltd.), Evergrande Internet Group Co., Ltd., Evergrande Financial Holding Group (Shenzhen) Co., Ltd., and Evergrande Financial Wealth Management (Shenzhen) Co., Ltd., which constitute Evergrande's huge business system. (Note: The above information is subject to the actual registration by the industrial and commercial administration department.)

 

Real Estate Financial Policy

 

 

Four years ago, on March 28, 2017, Evergrande Group announced on its official website that "Evergrande announced its 2016 performance: total assets exceeded 1.35 trillion, with a record high in indicators." In terms of diversified development, Evergrande has completed the layout of four major industries, namely real estate, finance, health, and cultural tourism, and completed the transformation from "real estate industry" to "real estate+service industry.". "Health services for the elderly, tourism services for children, and financial services for society, namely," real estate industry+industry serving the elderly+industry serving children+industry serving society "."

 

On October 12, 2017, the Hurun Research Institute released the Hurun Rich List 2017, and Xu Jiayin, the 60-year-old chairman of the board of directors of Evergrande Group, became the richest person in China. Its 290 billion yuan worth is 40 billion more than the second ranked Ma Huateng and 90 billion more than the third ranked Ma Yun family.

 

However, no one expected that in just four years, Evergrande had exploded an astronomical amount of debt, resulting in significant changes in the lives of countless people. What has happened in these four years, and what problems have caused Evergrande to encounter a fatal crisis.

 

We focus on August 2020, when the Central Bank and the Ministry of Housing and Urban-Rural Development held a forum for key real estate enterprises in Beijing to study and form rules for fund monitoring and financing management of key real estate enterprises. Market rumors have given three red lines, that is, the asset liability ratio excluding advance receipts is greater than 70%; The net debt ratio is greater than 100%; The cash to debt ratio is less than one time. The "three red lines" are generally intended to limit the scale of interest-bearing liabilities of real estate enterprises, and to control and tighten the financing scale of real estate enterprises, especially those with high leverage. Its fundamental purpose is mainly to make relevant policy restrictions on the high debt and leverage of real estate enterprises, prevent financial risks caused by blind leveraged expansion, and prevent overheating of the land market.

 

For real estate companies that touch the three red lines, especially those that rely excessively on bond issuance for financing, due to tight cash flow, liquidity is almost paralyzed and they are faced with inability to finance, resulting in inevitable distress.

 

On September 28, 2020, the Economic Daily published an article titled "Adhering to the Attribute of" Living "and Improving Real Estate Financial Management", Expression in the article "In the process of building a dual cycle new development pattern, it is necessary to adhere to the positioning that houses are used for living, not for speculation, adhere to the property of 'living' in real estate, actively cultivate a real estate financing environment of 'living without speculation', so as to promote the positioning of 'living without speculation' to truly take root in the real estate industry and achieve the long-term stable development of the real estate market. Real estate and finance are natural twin relationships. Whether it is real estate development, but also "It is difficult for individuals to purchase real estate without the support of real estate finance." "However, there is also a 'maverick' aspect to financial operation. Without effective regulations and constraints, it is easy for real estate to deviate from the 'living' attribute, and to some extent, become a booster of housing price speculation, a stimulant for the highly leveraged operation of the real estate industry, thereby weakening the internal motivation for the optimization and adjustment of the industrial structure, and also increasing the vulnerability of the financial operation of the national economy.". "The logic behind the highly leveraged operation of the real estate industry is the expectation that house prices will continue to rise rapidly, but 'trees cannot grow to the sky', which inevitably leads to strong externalities in the real estate industry that is moving forward under heavy load."

 

"However, during the period of basic matching between housing supply and demand, if financial leverage is still being overused in the real estate industry, it may cause serious consequences. From this perspective, it is necessary to actively cultivate a financing environment that allows for" non speculation in real estate ", enhance the marketization, regularization, and transparency of real estate financing, form stable and rational expectations for real estate financing, and effectively guide family home purchase behavior and real estate enterprise business behavior, "We will resolutely prevent the financial inertia of house price speculation and effectively control the risks of the financial operation of the national economy."

 

According to the article, only by forming a stable and rational real estate financing can we effectively control the risks in the financial operation of the national economy. Only by standardizing and restricting the current situation of the highly leveraged operation of real estate enterprises can we stop the speculation of high housing prices and achieve optimal adjustment of the industrial structure. The core of non speculation in real estate lies in "in the process of building a new dual cycle development pattern, we should adhere to not using real estate as a short-term means of stimulating the economy, and further improve the framework of the real estate financial management system to achieve the stable development of the real estate market and long-term balanced operation of risk prevention and control."

 

On October 29, 2020, the Fifth Plenary Session of the 19th Central Committee of the CPC adopted the Proposal of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five Year Plan for National Economic and Social Development and the Vision for the Year 2035 (hereinafter referred to as the Fourteenth Five Year Plan), proposing to build a moderately prosperous society in all respects and start a new journey of building a socialist modern country in all respects, At the same time, it is pointed out that China's development environment is facing profound and complex changes, and the issue of uneven and insufficient development in China remains prominent. The reform tasks in key areas and key links are still arduous, and the innovation capacity is not adapted to the requirements of high-quality development. In the proposal to form a strong domestic market and build a new development pattern, the article points out that "promoting the balanced development of finance, real estate, and the real economy, achieving an effective connection between upstream and downstream industries, production, supply, and marketing, and promoting the coordination of industrial categories such as agriculture, manufacturing, service industry, energy resources, and other industries." "Promoting the healthy development of housing consumption," the article is optimizing the spatial layout of the land, It is pointed out again in the proposal to promote coordinated regional development and new urbanization "Adhere to the positioning that houses are used for living, not for speculation, promote the stable and healthy development of the real estate market through both rent and purchase, and implement policies based on the city. Effectively increase the supply of affordable housing, improve the income distribution mechanism for land transfer, explore and support the use of collective construction land to build rental housing according to the plan, improve the long-term rental housing policy, and expand the supply of affordable rental housing."

 

"The 14th Five Year Plan" clarifies the basic principle of non speculation in real estate, indicating that the central government's determination to curb speculation in high housing prices will not change. At the same time, it has also determined the long-term policy orientation of the central government to crack down on real estate speculation and promote the balanced development of real estate finance and the real economy. Clarify that housing is a function of the basic living conditions of the people and the nature of residence. Both finance and real estate serve the real economy, not the financial nature of real estate.

 

In the proposal to accelerate the development of the modern industrial system and promote the optimization and upgrading of the economic system in the 14th Five Year Plan, it is pointed out for the real economy that "in adhering to the focus of economic development on the real economy, we will unswervingly build a strong manufacturing country, a strong quality country, a strong network country, and a digital China, promote the upgrading of the industrial base, modernization of the industrial chain, and improve economic quality, efficiency, and core competitiveness."

 

The above principled statement of the "14th Five Year Plan" clearly establishes that adhering to the development of the real economy is the specific content of the "14th Five Year Plan" and the "2035 Vision", and clarifies the central government's firm choice to develop the modern industrial system and promote the optimization and upgrading of the economic system.

 

On November 25, 2020, Liu He, member of the Political Bureau of the Central Committee of the Communist Party of China and Vice Premier of the State Council, published a signed article in the People's Daily detailing the background, connotation, and implementation path of accelerating the construction of a new development pattern dominated by the domestic grand cycle and mutually promoting domestic and international double cycles. In the comprehensive implementation of the decision and deployment to accelerate the construction of a new development pattern, the article proposes that the real estate industry affects investment and consumption, which is related to people's livelihood and development. We should adhere to the positioning that houses are used for living, not for speculation, adhere to both rent and purchase, implement policies based on the city, improve the long-term rental housing policy, and promote the stable and healthy development of the real estate market. At the same time, it is pointed out that, "Promote finance to better serve the real economy, and improve the modern circulation system. Finance is the lifeblood of the real economy. Adhere to the direction of serving the real economy, carry out structural adjustments to the financial system, vigorously increase the proportion of direct financing, reform and optimize policy based finance, improve policies for financial support innovation, give play to the pivotal role of the capital market in promoting the high-level circulation of technology, capital, and the real economy, and enhance the level of financial technology."

 

To sum up, understanding the central government's planning and reform of real estate development, accurately interpreting the "14th Five Year Plan" and relevant policies and guidelines, and grasping the direction and development rules of the new journey of socialist modernization countries will be extremely important for the development of Chinese real estate enterprises, especially for the survival and development of leading real estate enterprises. Once a new situation is lost in a changing situation, an opportunity is lost in a crisis, and the process of structural reform is lagging behind, the consequences will be irreversible.

 

Evergrande's efforts

 

On August 20, 2021, Evergrande Group Co., Ltd. issued a statement on its official website, stating that in response to the recent online news that "China Evergrande Group is negotiating with Xiaomi Group to sell 65% of Evergrande Automobile's shares", it is hereby stated that Evergrande Automobile has had preliminary exchanges with Xiaomi Group during the introduction of strategic shareholders, but has not conducted in-depth discussions to promote.

 

On September 13, 2021, Evergrande Group Co., Ltd. issued a statement on its official website stating that the recent statements about Evergrande's bankruptcy and reorganization on the internet were completely untrue. The company has indeed encountered unprecedented difficulties at present, but the company firmly fulfills its corporate main responsibility, goes all out to resume work and production, ensure the delivery of the building, and do everything possible to restore normal operations, fully protecting the legitimate rights and interests of customers. On September 18th, Evergrande Group issued an announcement that the group company attached great importance to the early redemption of Evergrande Wealth Investment products by some management personnel, and has requested that all funds redeemed in advance by the six management personnel must be returned within a specified period of time, with severe punishment. The group company requires Evergrande Wealth to strictly comply with the published cashing plan to ensure fairness, fairness, and equal treatment. At the same time, it is required that employees at or above the middle level of Evergrande Wealth must adhere to their posts and continue to do a good job in customer service.

 

The above statement indicates that Evergrande is still actively implementing the redemption plan. According to reports from China First Finance and Sina Finance, on September 22, 2021, several listed banks responded to their business dealings with Evergrande, with controllable risks.

 

On the same day, Evergrande Real Estate Group Co., Ltd. issued the "2020 Public Issuance of Corporate Bonds by Evergrande Real Estate Group Co., Ltd. to Professional Investors (Phase I) and 2021 Interest Payment Notice" on the Shenzhen Stock Exchange. According to the announced interest payment plan, the total amount of bonds issued for this period is 4 billion yuan, with a five-year fixed interest rate bond duration, with the issuer's option to adjust the coupon rate and the investor's option to put back at the end of the third year. The coupon rate of the current bond during the current interest period is 5.80%. The interest bearing period of this bond is from September 23, 2020 to September 22, 2025. The announcement states that the bond interest payment method has been resolved through OTC negotiation for the current bond.

 

It is believed that Evergrande, as a well-known leader in China's real estate industry, will still strive to seek ways to break the situation and assume its corporate and social responsibilities in times of crisis. It is hoped that Evergrande's efforts will achieve ultimate success, successfully resolve the serious problems it faces, and ensure the financial safety of creditors and investors.

 

Ways and means to resolve disputes in business dilemmas

 

Buying wealth management products or services is an investment behavior that inherently involves both income and risk, and absolutely speaking, risk is inevitable. Especially for high-yield products, there are inevitably high risks. Financial investment itself is a professional investment that requires investors to possess a certain amount of financial knowledge and investment experience. Investors in financial products must maintain a clear understanding, carefully understand and understand important information related to their immediate interests such as interest rates, fees, returns, and key professional terms related to financial products, and carefully review and consider the complexity and risk level of the financial products they purchase, Clearly identify the various types of contingent risks that financial products have, and clearly understand the nature and type of financial products or services. At the same time, appeals should be objectively and rationally reflected through legitimate channels according to law, and normal financial and social public order should not be disturbed.

 

In response to the Evergrande crisis, this paper summarizes the operational difficulties encountered by various large enterprises, including financial enterprises, in recent years. For possible disputes and solutions to major operational difficulties of enterprises, relevant legal interpretations are made based on current Chinese laws and regulations:

 

1、 Protection of the rights and interests of financial consumers

 

Regarding the civil behavior relationships involved in financial consumption, laws such as the Civil Code, the Securities Law, the Securities Investment Fund Law, the Partnership Enterprise Law, and the Trust Law, as well as the Interim Measures for the Supervision and Administration of Private Investment Funds, the Administrative Measures for the Raising of Private Investment Funds, and relevant judicial interpretations have clear provisions. This article analyzes the following two important provisions.

 

（1） Minutes of the National Conference on Civil and Commercial Trials of Courts

 

On November 8, 2019, the Supreme People's Court issued a notice that the Minutes of the National Civil and Commercial Trial Work Meeting of Courts (hereinafter referred to as the Minutes) had been adopted in principle at the 319th meeting of the Civil Administration Professional Committee of the Judicial Committee of the Supreme People's Court on September 11, 2019. The fifth item on the trial of disputes over the protection of the rights and interests of financial consumers clearly states that "in the trial of civil and commercial cases between financial product issuers, sellers, and financial service providers (hereinafter referred to as seller institutions) and financial consumers arising from the sale of various high-risk grade financial products and the provision of services for financial consumers to participate in high-risk grade investment activities, the principle of" seller's due diligence, buyer's responsibility "must be adhered to, "Whether financial consumers fully understand the nature and risks of relevant financial products and investment activities and make independent decisions on this basis should be regarded as the basic facts of the case that should be investigated, and the legitimate rights and interests of financial consumers should be protected according to law, the operational behavior of seller institutions should be standardized, and the formation of an open, fair, and just market environment and market order should be promoted."

 

The specific analysis of the provisions on the protection of the rights and interests of financial consumers in the Minutes of the Meeting is as follows:

 

1. Obligations of the Seller's Agency

 

Article 72 of the Minutes of the Meeting stipulates that sellers' institutions are promoting and selling bank financial products, insurance investment products, trust financial products, securities companies' collective financial plans, leveraged fund shares, options, and other OTC derivatives and other high-risk and other financial products to financial consumers, as well as participating in margin trading, securities trading, the New Third Board, the Growth Enterprise Board, and the Science and Technology Innovation Board for financial consumers In the process of providing services for high-risk investment activities such as futures, it is necessary to fulfill the obligations of understanding customers, understanding products, and selling (or providing) appropriate products (or services) to suitable financial consumers. The purpose of the seller institution's obligation of appropriateness is to ensure that financial consumers can make independent decisions based on a full understanding of the nature and risks of relevant financial products and investment activities, and bear the benefits and risks arising therefrom. In the field of promoting and selling high-risk financial products and providing high-risk financial services, the performance of the appropriateness obligation is the main content of "seller's due diligence", and is also the premise and foundation of "buyer's self responsibility".

 

Article 73 clarifies the rules of law applicable to the obligation of appropriateness, I.e "When determining the content of the seller's institution's appropriateness obligations, the basic principles stipulated in laws such as the Contract Law, the Securities Law, the Securities Investment Fund Law, and the Trust Law, as well as regulatory documents issued by the State Council, should be taken as the main basis. Relevant departments should provide regulatory provisions in departmental rules and regulatory documents for the promotion and sale of high-risk financial products, as well as for the provision of services for financial consumers to participate in high-risk investment activities, "If there is no conflict with the provisions of laws and normative documents issued by the State Council, they may be applied by reference."

 

Article 74 of the Minutes of the Meeting specifies the subject of responsibility. It is stipulated that "if the issuer or seller of financial products fails to fulfill their due diligence obligations, resulting in financial consumers suffering losses during the purchase of financial products, financial consumers can either request the issuer of financial products to bear the liability for compensation, or request the seller of financial products to bear the liability for compensation, in accordance with the General Principles of the Civil Law." Article 167 requires the issuer and seller of financial products to jointly assume joint and several liability for compensation. "If an issuer or seller requests the people's court to clarify their respective share of liability, the people's court may, while adjudicating that the issuer or seller shall bear joint and several liability for compensation to financial consumers, clarify that the issuer or seller has the right to recover their share of compensation from the responsible party after actually assuming the liability."

 

The allocation of the burden of proof is specified in Article 75 of the Minutes of the Meeting.

 

Article 76 clarifies the obligation of disclosure, "The fulfillment of the obligation of disclosure is the key for financial consumers to truly understand the investment risks and benefits of various high-risk financial products or high-risk investment activities," especially in Article 76 "If the seller's institution simply claims that it has fulfilled its obligation to inform and explain through handwritten statements by financial consumers, such as' I clearly know that there may be a risk of principal loss', and cannot provide other relevant evidence, the people's court will not support its defense reasons." This provision strengthens the seller's institution's responsibility to carefully and conscientiously fulfill its obligation to inform. It is indeed a clear constraint on the seller's institution to determine whether the seller's institution has fulfilled the obligation of disclosure by combining objective criteria that can be understood by rational people and subjective criteria that can be understood by financial consumers.

 

2. Amount of compensation for losses

 

In Article 77 of the Minutes of the Meeting, it is clarified that "if the seller institution fails to fulfill its due diligence obligations and causes losses to financial consumers, it shall compensate the financial consumers for the actual losses incurred. The actual losses are the principal and interest of the losses, and the interest shall be calculated according to the benchmark interest rate for similar deposits issued by the People's Bank of China for the same period."

 

The second paragraph of this article also clarifies punitive liability and interest losses. That is, "Financial consumers who purchase high-risk financial products or receive services for participating in high-risk investment activities, claim that the seller's organization should comply with the Consumer Rights Protection Law on the grounds that the seller's organization has fraudulent behavior The people's court shall not support the provisions of Article 55 that bear punitive liability for compensation. If the seller's institution's behavior constitutes fraud, when requesting compensation from financial consumers for the interest losses incurred by the total amount of money they have paid, attention should be paid to distinguishing different situations and handling them: (1) If the expected rate of return, performance comparison criteria, or similar agreements are specified in the contract text of a financial product, they can be used as the standard for calculating interest losses; (2) The contract text stipulates the expected rate of return or performance comparison benchmark in the form of a floating range. If a financial consumer requests that the agreed upper limit be used as the calculation standard for interest loss, the people's court shall support it according to law; (3) Although the contract text does not contain an expected rate of return, performance comparison benchmark, or similar agreement, if financial consumers can provide evidence to prove that the expected rate of return, performance comparison benchmark, or similar statements are stated in the advertising materials for product issuance, the promotional materials should be considered as a component of the contract text; (4) "If the expected rate of return, performance comparison benchmark, or similar expressions are not specified in the contract text and advertising materials, they shall be calculated according to the loan market quoted rate published by the National Interbank Funding Center."

 

3. Exemption

 

Article 78 of the Minutes of the Meeting clearly states: "If a financial consumer intentionally provides false information, refuses to listen to the suggestions of the seller's organization, and other personal reasons cause it to purchase products or receive services inappropriately, and the seller's organization requests exemption from corresponding responsibilities, the people's court shall support it according to law, except that the financial consumer can prove that the issuance of the false information is misleading by the seller's organization. The seller's organization can provide evidence to prove that based on the previous investment experience and education level of the financial consumer "If the violation of the obligation of appropriateness does not affect the financial consumer's independent decision, the people's court shall support its defense that the financial consumer should bear the investment risk on its own according to law."

 

（2） Measures for the Implementation of the People's Bank of China on the Protection of the Rights and Interests of Financial Consumers

 

The "Implementation Measures of the People's Bank of China for the Protection of the Rights and Interests of Financial Consumers" (hereinafter referred to as the "Measures") has been deliberated and adopted at the 6th executive meeting of the People's Bank of China in 2020 on September 1, 2020, and shall enter into force as of November 1, 2020.

 

The purpose of formulating the "Protection Measures" is to "protect the legitimate rights and interests of financial consumers, regulate the behavior of financial institutions in providing financial products and services, maintain a fair and just market environment, and promote the healthy and stable operation of the financial market." Therefore, The Measures are formulated in accordance with the Law of the People's Republic of China on the People's Bank of China, the Law of the People's Republic of China on Commercial Banks, the Law of the People's Republic of China on the Protection of Consumer Rights and Interests, and the Guiding Opinions of the General Office of the State Council on Strengthening the Protection of Financial Consumer Rights and Interests (GBF [2015] No. 81).

 

The specific analysis of the provisions on the protection of the rights and interests of financial consumers in the "Protection Measures" is as follows:

 

Obligations of banks and payment institutions

 

Article 3 of the Protection Measures stipulates that "When providing financial products or services to financial consumers, banks and payment institutions shall abide by the principles of voluntariness, equality, fairness, honesty, and credibility, effectively assume the main responsibility for protecting the legitimate rights and interests of financial consumers, and fulfill the legal obligations for protecting the rights and interests of financial consumers."

 

At the same time, the "Protection Measures" clearly stipulates the content of the code of conduct of financial institutions in Chapter II of the Code of Conduct of Financial Institutions. Article 16 stipulates that "Banks and payment institutions shall, based on the characteristics of financial products or services, promptly, truthfully, accurately, and comprehensively disclose the following important contents to financial consumers: (1) The rights and obligations of financial consumers with respect to the financial products or services, and the methods and restrictions for concluding, modifying, suspending, and terminating contracts." The rights, obligations, and legal responsibilities of banks and payment institutions with respect to the financial product or service. （3） The annualized interest rate of the loan product. （4） The fees and liquidated damages that financial consumers should bear, including the method of determining the amount, transaction time, and transaction method. （5） Handling and complaint channels for disputes arising from financial products or services. （6） The number and name of mandatory standards, recommended standards, group standards, or enterprise standards implemented by banks or payment institutions for the financial product or service. （7） In the financial product description or service agreement, the complete Chinese name of the business entity that actually assumes contractual obligations. （8） "Other information that may affect financial consumer decision-making."

 

Article 17 of the Protection Measures stipulates that: "When disclosing information about financial products and services, banks and payment institutions should use methods that are conducive to the acceptance and understanding of financial consumers. For important information related to the vital interests of financial consumers, such as interest rates, fees, returns, and risks, key professional terms should be explained based on the complexity and risk level of the financial product or service, and appropriate methods should be provided for financial consumers to confirm their acceptance "Receive complete information."

 

Article 18 of the Protection Measures stipulates the obligation of banks and payment institutions to retain relevant information for no less than three years. Article 19 to Article 23 clearly stipulate the obligations that banks and payment institutions should comply with, in particular, Article 23 specifies the five prohibited acts in marketing and promotional activities, and Article 26 specifies the reporting obligations of banks and payment institutions. "Banks and payment institutions shall timely report to the People's Bank of China or its branches in accordance with the relevant provisions on reporting major events that infringe upon the legitimate rights and interests of financial consumers."

 

Civil disputes between financial consumers and banks or payment institutions arising from the purchase or use of financial products or services

 

The definition of financial consumption disputes is clearly defined in Chapter IV of the Protection Measures, which refers to civil disputes between financial consumers and banks and payment institutions over the purchase and use of financial products or services.

 

Article 35 of the Protection Measures stipulates that "In the event of a financial consumption dispute between a financial consumer and a bank or payment institution, financial consumers are encouraged to first file a complaint with the bank or payment institution, and the parties concerned are encouraged to negotiate on an equal footing and reach a settlement on their own." It also stipulates that "financial consumers should objectively and rationally reflect their claims through legitimate channels in accordance with the law, without disturbing the normal financial order and social public order."

 

Chapter IV of the "Protection Measures" also stipulates that banks and payment institutions should effectively fulfill the main responsibilities for handling financial consumer complaints, complaint handling procedures, as well as the procedures and handling methods for financial consumers to submit complaints through branches of the People's Bank of China.

 

As can be seen from the above, it indicates the attitude of the People's Bank of China towards financial consumption disputes, encourages negotiation and settlement, objectively and rationally reflects demands, and prohibits any behavior that disrupts normal financial order and social public order. That is, when dealing with disputes with banks, payment institutions, and related financial product issuers and sellers, financial consumers should first settle their disputes in accordance with the provisions of the contract, and in accordance with laws and regulations, the parties concerned should actively communicate and negotiate on an equal footing. In cases where agreement cannot be reached, one can choose to file a complaint with the regulatory authority in accordance with the law, or to resort to a people's court, which will hear the case and make a final ruling in accordance with the law.

 

2、 Significant asset restructuring

 

Enterprise restructuring is a broad topic that involves the optimal allocation and reuse of enterprise resources. Through restructuring, invest core competitive resources such as capital, human resources, and organizational management needed for the development of vulnerable enterprises that lack resources and are in operational difficulties, so that vulnerable enterprises can resume healthy operations and maximize profits, so that the legitimate rights and interests of original shareholders or investors, as well as creditors, can be protected, and the responsibility of the enterprise for social development can be restored.

 

Given the diversification of restructuring models, including asset restructuring, creditor's rights and debt restructuring, business restructuring, and other types of transactions, including significant asset purchases, asset replacement, asset sales, issuance of shares to purchase assets, backdoor listing, and merger and division of companies, which essentially constitute transaction methods for purchasing and selling assets.

 

Taking the current capital cutoff or debt crisis faced by large enterprises as an example, the funds required for their restructuring must be huge, and potential investors who can achieve their restructuring must be well-funded heavyweight investors or investment consortiums.

 

The applicable laws for restructuring include the Civil Code, the Securities Law, the Company Law, and other laws and administrative regulations, as well as the Measures for the Administration of Major Asset Restructuring of Listed Companies (2020 Amendment) issued by the China Securities Regulatory Commission on March 20, 2020 (hereinafter referred to as the "Restructuring Measures"). This article only analyzes the major asset restructuring activities involved by listed companies.

 

（1） The concept of significant asset restructuring

 

Article 2 of the Restructuring Measures clearly stipulates: "These measures are applicable to asset transactions by listed companies and their holding or controlling companies that purchase or sell assets outside of their daily business activities, or engage in asset transactions by other means to achieve a prescribed proportion, resulting in significant changes in the main business, assets, and income of listed companies (hereinafter referred to as significant asset restructuring)." 。 The issuance of shares by a listed company to purchase assets shall comply with the provisions of these Measures. "These Measures are not applicable to the acts of listed companies that use the raised funds to purchase assets and make external investments in accordance with the purposes of the raised funds disclosed in the securities issuance documents approved by the China Securities Regulatory Commission (hereinafter referred to as the CSRC)."

 

（2） Principles and standards for significant asset restructuring

 

The board of directors of a listed company must make prudent judgments regarding significant asset restructuring. According to Article 4 of the Provisions of the China Securities Regulatory Commission on Several Issues Concerning the Regulation of Major Asset Restructuring of Listed Companies, "If a listed company intends to implement a major asset restructuring, the board of directors shall make a prudent judgment on whether the restructuring meets the following requirements and record it in the resolution record of the board of directors: (1) If the underlying assets of the transaction involve project approval, environmental protection, industry access, land use, planning, construction, and other related approval matters, it is necessary to disclose in the major asset restructuring plan and report whether the corresponding license or approval document from the relevant competent department has been obtained; If this transaction involves matters related to approval, the progress reported to the relevant competent authorities for approval and the procedures that need to be submitted for approval should be disclosed in detail in the major asset restructuring plan and report. The plan and report for major asset restructuring should include special reminders about the risk that the items submitted for approval may not be approved. （2） "If a listed company intends to purchase assets, before the announcement of the first board resolution for this transaction, the asset seller must have legally owned the complete rights of the underlying assets, and there is no restriction or prohibition on transfer.". "If the assets to be purchased by a listed company are equity interests of the enterprise, the enterprise shall not have any circumstances where the investment is untrue or affects its lawful existence;"; If a listed company becomes a shareholding company after the completion of the transaction, the enterprise's equity as the main target asset shall be the controlling equity. "If the assets to be purchased by a listed company are resource related rights such as land use rights, mining rights, etc., they should have obtained corresponding ownership certificates and possess corresponding development or mining conditions.". （3） The purchase of assets by a listed company should be beneficial to improving the integrity of the assets of the listed company (including obtaining intangible assets such as trademark rights, patent rights, non patented technologies, mining rights, franchise rights, etc. required for production and operation), and to maintaining the independence of the listed company in terms of personnel, procurement, production, sales, intellectual property rights, etc. （4） "This transaction should be beneficial for listed companies to improve their financial situation, enhance their sustained profitability, highlight their main businesses, enhance their ability to resist risks, enhance their independence, reduce related party transactions, and avoid horizontal competition."

 

Chapter II of the Management Measures also clearly stipulates the principles and standards for major asset restructuring. Article 11 clearly stipulates that when a listed company implements a major asset restructuring, it shall fully explain and disclose that the transaction meets the seven requirements listed. "The first of the seven requirements is to comply with national industrial policies and relevant laws and administrative regulations on environmental protection, land management, and antitrust."

 

From the above analysis, it can be seen that the attitude of the 14th Five Year Plan clearly establishes that the focus of economic development should be on the real economy, firmly building a strong manufacturing country, a strong quality country, a strong network country, and a digital China, promoting the upgrading of the industrial base, modernization of the industrial chain, and improving economic quality, efficiency, and core competitiveness. It clarified the central government's firm choice to develop the modern industrial system and promote the optimization and upgrading of the economic system. Therefore, if it involves a major asset restructuring implemented by a listed company, it should comply with the requirements of Article 11 of the "Administrative Measures", such as "complying with national industrial policies and relevant laws and administrative regulations on environmental protection, land management, and antitrust". Otherwise, it may not be able to pass the approval of the China Securities Regulatory Commission.

 

（3） Disclosure of significant asset restructuring

 

Article 4 of the Administrative Measures stipulates: "When a listed company implements a material asset reorganization, all parties concerned must promptly and fairly disclose or provide information, ensure the authenticity, accuracy, and completeness of the information disclosed or provided, and must not contain false records, misleading statements, or significant omissions."

 

In addition to the disclosure obligations stipulated in Article 11 above, Article 16 stipulates: "Before the announcement of the board resolution of a municipal company on major asset restructuring, if relevant information has been disseminated in the media or there are abnormal fluctuations in the company's stock trading, the listed company shall immediately announce the status quo, relevant progress, and risk factors of the relevant plans, plans, or related matters, and handle other relevant matters in accordance with the relevant information disclosure rules."

 

According to Article 2 of the "Standards for the Contents and Forms of Information Disclosure by Companies Offering Securities to the Public No. 26 - Major Asset Restructuring of Listed Companies (2018 Revision)" issued by the China Securities Regulatory Commission, "Listed companies that engage in asset trading activities specified in the Restructuring Measures (hereinafter referred to as material asset restructuring) shall prepare information disclosure documents such as a material asset restructuring report (hereinafter referred to as a restructuring report) in accordance with these Standards, and shall comply with these Standards "The Restructuring Measures and other relevant regulations shall be disclosed."

 

In Chapter II, Restructuring Plan, Article 7 specifies ten items that should be included in the restructuring plan prepared by a listed company, including Item (5): "If the subject matter of the transaction belongs to overseas assets or is purchased through public bidding, public auction, or other means, and it is indeed impossible to disclose financial data, the reason and impact of the inability to disclose should be explained, and solutions should be proposed." Article 21 stipulates that asset transactions involving significant asset purchases, A listed company shall disclose the specific situation of the main business of the assets it intends to purchase based on the principle of importance and the characteristics of the industry. Item (8) of this Article stipulates: "If production and operation are conducted overseas, a geographical analysis of relevant business activities shall be conducted; if assets are owned overseas, specific information such as the asset size, location, operation management, and profitability of the assets shall be disclosed in detail."

 

（4） Regulatory measures for significant asset restructuring

 

The "Management Measures" have strengthened regulatory efforts and measures on performance compensation and commitments for major asset restructurings, preventing performance commitment parties from evading compensation obligations during major asset restructurings, harming the interests of investors, and impacting the good order of the securities market.

 

Article 59 of the Administrative Measures stipulates that: "After the completion of the implementation of a material asset restructuring, for reasons that are not known to the management of the listed company in advance and cannot be controlled afterwards, the profit realized by the assets purchased by the listed company does not reach 80% of the predicted amount in the asset evaluation report or the valuation report, or there is a significant gap between the actual operating situation and the management's discussion and analysis section in the material asset restructuring report, the chairman and general manager of the listed company and the company shall be responsible for this." The accounting firms, financial consultants, asset evaluation institutions, valuation institutions, and their employees with corresponding responsibilities should provide explanations on the same media and publicly apologize to investors while the listed company discloses its annual report; If the realized profit does not reach 50% of the predicted amount, the CSRC may take regulatory measures against listed companies, relevant institutions, and their responsible personnel, such as regulatory talks, issuing warning letters, and ordering regular reports.

 

"If the counterparty fails to fulfill or violates the performance compensation agreement or commitment within the specified period, the CSRC shall order it to make corrections, and may take regulatory measures such as regulatory talks, issuing a warning letter, ordering a public explanation, and identifying an inappropriate candidate, and record the relevant information in the integrity file."

 

The Administrative Measures clarify the legal liability for fraud in issuing shares to purchase assets. Article 60 stipulates: "Any person who has knowledge of material asset restructuring information, before the relevant information is disclosed in accordance with the law, divulges the information, buys or sells or advises others to buy or sell the securities of relevant listed companies, uses material asset restructuring to disseminate false information, manipulates the securities market, or conducts fraudulent activities, the CSRC shall, in accordance with the Securities Law Penalties shall be imposed in accordance with Articles 191, 192, and 193; "Those suspected of committing crimes shall be transferred to judicial organs for criminal responsibility in accordance with the law."

 

3、 Bankruptcy

 

According to Article 2 of the Enterprise Bankruptcy Law, "If an enterprise as a legal person is unable to pay off its debts as they fall due, and its assets are insufficient to pay off all of its debts, or it is obviously lacking in solvency, its debts shall be liquidated in accordance with the provisions of this Law. If an enterprise as a legal person falls under the circumstances specified in the preceding paragraph, or there is a significant possibility of losing solvency, it may undergo reorganization in accordance with the provisions of this Law." Article 7 stipulates: "If the debtor falls under the circumstances specified in Article 2 of this Law, it may apply to the people's court for reorganization, settlement, or bankruptcy liquidation. If the debtor is unable to repay its debts as they fall due, the creditor may apply to the people's court for reorganization or bankruptcy liquidation of the debtor. If the enterprise as a legal person has been dissolved but has not been liquidated or has not been liquidated, and its assets are insufficient to repay its debts, the person responsible for liquidation according to law shall apply to the people's court for bankruptcy liquidation "Calculate."

 

（1） Acceptance of bankruptcy application

 

Article 11 of the Enterprise Bankruptcy Law stipulates that: "If the people's court accepts a bankruptcy application, it shall serve it on the applicant within five days from the date of making the ruling. If the creditor files an application, the people's court shall serve it on the debtor within five days from the date of making the ruling. The debtor shall, within fifteen days from the date of serving the ruling, submit to the people's court a description of the property situation, a detailed list of debts, a detailed list of creditors' rights, relevant financial and accounting reports, as well as the payment of employee salaries and social insurance expenses." Situation. "

 

（2） Reorganization of bankrupt enterprises

 

Chapter VIII of the Enterprise Bankruptcy Law clearly stipulates reorganization.

 

Article 70 stipulates: "The debtor or creditor may directly apply to the people's court for reorganization of the debtor in accordance with the provisions of this Law. If a creditor applies for bankruptcy liquidation of the debtor, after the people's court accepts the bankruptcy application and before the debtor is declared bankrupt, the debtor or a contributor whose capital contribution accounts for more than one tenth of the debtor's registered capital may apply to the people's court for reorganization." Article 71 stipulates: "If the people's court, upon examination, considers that the reorganization application meets the provisions of this Law, it shall rule on the debtor's reorganization and make a public announcement." Article 72 stipulates that "the period from the date of the people's court's ruling on the debtor's reorganization to the termination of the reorganization proceedings shall be the reorganization period."

 

Article 79 of the Enterprise Bankruptcy Law stipulates: "The debtor or administrator shall submit a draft reorganization plan to the people's court and the creditors' meeting within six months from the date of the people's court ruling on the debtor's reorganization.".

 

"At the expiration of the period specified in the preceding paragraph, the people's court may, upon the request of the debtor or administrator and with justifiable reasons, order an extension of three months.".

 

At the same time, Article 88 stipulates: "If the draft reorganization plan has not been adopted and has not been approved in accordance with the provisions of Article 87 of this Law, or if the approved reorganization plan has not been approved, the people's court shall rule to terminate the reorganization proceedings and declare the debtor bankrupt."

 

As mentioned above, bankruptcy reorganization is similar to the reorganization described above, in essence, it is the rescue and regeneration of distressed enterprises that have been filed for bankruptcy. Compared to the reorganization of ordinary enterprises or major asset restructuring, bankruptcy reorganization is more difficult. In addition to the need for cash flow transfusion to revitalize the enterprise, it is also necessary to have a complete set of detailed and feasible reorganization plans, including dealing with creditor's rights and debts, stripping off bad assets, supporting asset projects, etc.

 

If the debtor or the administrator fails to submit a draft reorganization plan within the time limit specified above, or if the draft reorganization plan has not been approved and has not been approved in accordance with Article 87 of this Law, or if the approved reorganization plan has not been approved, the people's court shall rule to terminate the reorganization proceedings and declare the debtor bankrupt.

 

（3） Termination of bankruptcy proceedings

 

The debtor of a bankrupt enterprise may directly apply to the people's court for settlement in accordance with the provisions of the Enterprise Bankruptcy Law; "You may also apply to the people's court for a settlement after the people's court has accepted the bankruptcy application and before declaring the debtor bankrupt.". The debtor shall repay the debt in accordance with the conditions specified in the settlement agreement.

 

According to Article 105 of the Enterprise Bankruptcy Law, "After the people's court accepts the bankruptcy application, if the debtor and all creditors reach an agreement on the treatment of their claims and debts on their own, they can request the people's court to rule for approval and terminate the bankruptcy proceedings."

 

"If the debtor is able to pay off all of its due debts, the people's court shall rule to terminate the bankruptcy proceedings.". According to Article 108 of the Enterprise Bankruptcy Law, "Before the declaration of bankruptcy, the people's court shall rule to terminate the bankruptcy proceedings and make a public announcement in any of the following circumstances: (1) a third party provides sufficient guarantee for the debtor or pays off all the debts due to the debtor; (2) the debtor has paid off all the debts due to the debtor."

 

The conclusion of bankruptcy proceedings through reconciliation can be a win-win outcome for all parties. However, in judicial practice, due to its own debt problems and operational difficulties, it is extremely difficult for a bankrupt enterprise to reconcile itself with the debtor and terminate the bankruptcy proceedings. Often, it is necessary to achieve reconciliation with all or part of its creditors through reorganization proceedings.

 

（4） Discharge of bankruptcy property

 

According to Article 16 of the Enterprise Bankruptcy Law, "After the people's court accepts the bankruptcy application, the debtor's debt repayment to individual creditors is invalid." At the same time, according to Article 12 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Enterprise Bankruptcy Law of the People's Republic of China (II): "The people's court shall not support the request of the administrator to cancel the undue debts of the debtor that have been repaid in advance within one year before the acceptance of the bankruptcy application, unless the liquidation occurred within six months before the acceptance of the bankruptcy application and the debtor has the circumstances specified in Article 2, Paragraph 1 of the Enterprise Bankruptcy Law."

 

Article 107 of the Enterprise Bankruptcy Law stipulates that: "If the people's court declares a debtor bankrupt in accordance with the provisions of this Law, it shall serve a notice on the debtor and the administrator within five days from the date of making the decision, notify known creditors within ten days from the date of making the decision, and make a public announcement. After the debtor is declared bankrupt, the debtor is referred to as the bankrupt, and the debtor's property is referred to as the bankruptcy property. The creditor's rights enjoyed by the people's court against the debtor when accepting the bankruptcy application are referred to as bankruptcy creditor's rights." Article 113 stipulates: "After giving priority to paying off bankruptcy expenses and co beneficial debts, the bankruptcy property shall be paid off in the following order: (1) the wages, medical treatment, disability subsidies, and pension expenses owed by the bankrupt to the employees, the basic old-age insurance and basic medical insurance expenses owed that should be transferred to the employees' personal accounts, and the compensation that should be paid to the employees according to laws and administrative regulations;" Social insurance premiums and taxes owed by the bankrupt other than those specified in the preceding paragraph that are not paid by the bankrupt; （3） Ordinary bankruptcy claims. "If the bankruptcy property is insufficient to meet the repayment requirements in the same order, it shall be distributed in proportion.". "The salaries of directors, supervisors, and senior management personnel of a bankrupt enterprise shall be calculated based on the average salary of the employees of the enterprise."

 

（5） Termination of bankruptcy proceedings

 

"If the bankrupt has no property to distribute, the administrator shall request the people's court to rule to terminate the bankruptcy proceedings.". "Or after the final distribution is completed, the administrator shall promptly submit a report on the distribution of the bankruptcy property to the people's court, and submit it to the people's court for a ruling to terminate the bankruptcy proceedings.". According to Article 120 of the Enterprise Bankruptcy Law, "The people's court shall make a ruling on whether to terminate the bankruptcy proceedings within 15 days from the date of receiving the administrator's request to terminate the bankruptcy proceedings. If the ruling is terminated, it shall be announced."

 

To sum up, investors must first fulfill their prudent review obligations and avoid blind investment in financial products and services. In the event of disputes over investment and consumer financial products, the parties concerned shall, based on their own different needs and the progress of relevant relief procedures, choose appropriate legal remedies and measures provided by the above-mentioned different dispute resolution methods to maximize the protection of the legitimate rights and interests of investors, namely financial consumers, and relevant creditors.

 

(This article is translated by software translator for reference only.)