"We've had so many sleepless nights and now we can finally go home. "Recently, a number of representatives of homebuyers visited the Shanghai No. 3 Intermediate People's Court (Shanghai Intellectual Property Court, Shanghai Railway Transport Intermediate Court) (hereinafter referred to as the Shanghai No. 3 Intermediate People's Court) and presented pennants to the collegial panel of the case.
It's finally finished, and I've been waiting for almost ten years, which is a historical moment in my life, and it can be regarded as an explanation for everyone and myself. The person in charge of the project construction general contractor, L Engineering Company, shed tears after the completion and acceptance of the project.
From the deep unfinished to the completion of the continued construction, what kind of road has Shanghai Y Real Estate Company experienced in the review?
part.
The capital chain of real estate enterprises is broken, and the project is unfinished
There is no way to save oneself and seek judicial reorganization
More than ten years ago, in order to seize the opportunity of the development of the property market in the Yangtze River Delta, Y Real Estate Company won the plot located at the intersection of the Beijing-Shanghai Expressway and the Outer Ring Road in the west of Shanghai in one fell swoop, and began to build the Y International Plaza project. The project includes commercial housing, office buildings and shops. At that time, although Y Real Estate Company had limited strength, it wanted to continue to "stake the land", and set up multiple mortgages for financing expansion with the Y International Plaza project under construction, and even with the help of high-interest private financing.
By 2014, Y Real Estate Company was unable to sustain itself under the heavy pressure of capital leverage, and the capital chain of the International Plaza project was broken, leaving only piles of cold reinforced concrete on the construction site, and the decline of seeing no hope of delivery.
What followed was a long road for hundreds of homeowners to defend their rights. "I'm not the worst when the money is empty. Xiao Liu and his wife are even more pitiful, they came to Shanghai from other places to work and save money, and after the house was unfinished, they quarreled all day long, and finally the family broke up. The owner's grandson couldn't help but feel a lot of emotion when he talked about the past. On the other hand, the construction party, banks, and businessmen have also sued, and creditors from all parties have complained. In particular, the general contractor of the project, L Engineering Company, had the project unfinished, the project payment was in arrears, and the wages of migrant workers were difficult to pay, and the person in charge of the general contractor wanted to cry without tears.
In May 2017, Shanghai adjusted its policies on commercial housing, explicitly stopping the approval of apartment-style office (commercial and residential) projects. As a result, the impact on the entire project is that the key to the sale of real estate is locked, and the owners who have purchased commercial housing are far away from handing over the houses, and the investors who are on the sidelines are even more discouraged.
We also carried out self-rescue, and recruited four investors after the shutdown. However, the debts on the project are too complicated, and there are mortgages, construction funds, and a large number of creditors who have purchased houses throughout the project. In 2017, the policy of commercial housing changed again, and investors were worried that the money invested in it would not be enough to fill the hole, and it would be a bottomless pit. Now we have no choice but to hope for the reorganization of the courts. "In 2019, several creditors, including the general contractor L Engineering Company, applied to the Shanghai No. 3 Intermediate People's Court for bankruptcy reorganization of Y Real Estate Company.
part.2
Survival interests take precedence over operating interests
Buyers who are recognized as having living needs in accordance with the law enjoy the right of priority
In March 2020, the reorganization case was accepted. After the collegial panel appoints the manager in accordance with the law, it will guide the manager to carry out the takeover, investigation, declaration of creditor's rights, etc., and at the same time link with the territory, and carefully inventory the funds required for the continuation of the project and the remaining saleable situation.
The first issue that needs to be considered is people's livelihood. "There is still room for the adjustment of commercial and housing policies, that is, the 'old method for the elderly', according to the policy, buyers who have gone through the online signing procedures can still perform according to the original contract. However, we have also noticed that some of the buyers who have gone through the online signing procedures have purchased multiple sets of shops purely for investment purposes, or have purchased houses in order to pay off the loan arrears, and these people should not enjoy the priority of buyers according to the law. We need to identify the buyers who are really in need of living expenses. "The judge gave detailed instructions to the administrator.
After careful screening and verification by the administrator, it was found that some of the buyers were indeed investment owners who bought houses in the name of borrowing money (lending funds to Y Real Estate Company), repaying debts, or buying multiple suites, and these creditors could only be ordinary creditors; The remaining nearly 400 home buyers have purchased commercial housing for their living needs, can they enjoy the right of priority? And can it have priority over mortgage rights and project payment claims?
At that time, the Supreme People's Court's Reply on Issues Concerning the Protection of the Rights of Consumers of Commercial Housing had not yet been issued (the Reply was issued in April 2023), and the collegial panel held that " Survival rights and interests take precedence over business rights", and accordingly, the manager was instructed to refer to this principle to identify the claims of nearly 400 buyers who purchased commercial housing for their daily needs (the right to claim the house or the right to terminate the contract and return the principal and interest of the house payment) as priority claims, and had priority over mortgage rights and construction payment claims.
After the court ruled to confirm the creditor's rights, nearly 400 commercial housing buyers were reassured, and no matter whether the reorganization was successful or not, the interests of the home buyers would be protected, and the group conflicts would be alleviated. However, only one section of the tangled thread has been unraveled, and the rights and interests of the owners of the house have been protected first, and the interests of the mortgagee and the creditor of the project money may be damaged, not to mention the ordinary creditor's rights. Is there a better way for all creditors to benefit or reduce losses?
part.3
The renewal funds are repaid as "common benefit bonds" in priority
Revitalize the project for a win-win situation
In order to benefit more creditors, we must find a way to revitalize the unfinished Y International Plaza, which includes commercial housing, office buildings, and shops. After evaluation and calculation, the market value of the project is currently less than 1.5 billion yuan, and the depreciation is even more severe in the case of rapid realization. Nearly 400 home-buying owners have more than 300 million yuan of preferential claims, more than 1.5 billion yuan of secured claims including mortgage rights and project payment claims, and more than 10 billion yuan of ordinary claims. It can be seen that if the unfinished property is simply auctioned, even the secured claims cannot be fully repaid, and the repayment rate of ordinary claims is even more zero.
According to the calculation and evaluation, the current gap of more than 500 million yuan in the continuation of the construction funds, if the continuation of the construction can be completed and delivered, the buyer's purchase balance can be fully paid back, and the later investment, operation, sales or leasing of the square can be carried out smoothly, the value of the entire square project can reach 4 billion yuan. If this is the case, not only will the mortgage and the priority of the project money be fully repaid, but the repayment rate of ordinary claims will also be greatly improved.
There is a "blueprint" for development, but how to design the "construction drawings"? Investors need to be recruited for reorganization, and the main concern of investors is whether the funds invested in the later financing will be "lost" due to the priority of the statutory priority such as mortgage rights and project funds, so they dare not invest.
Is it possible to include the continuation funds in the common benefit debt in the reorganization plan and confirm the priority repayment? When the collegial panel and the administrator jointly studied the plan, they thought of "common benefit debt", which refers to the debt borne for the common interests of creditors and debtors in bankruptcy proceedings. Article 1 of the Enterprise Bankruptcy Law of the People's Republic of China stipulates several circumstances of common benefit debts and stipulates that they can be repaid at any time, but does not stipulate that debts formed by the introduction of new investments in reorganization are common benefit debts. Article 2 of the Judicial Interpretation III of the Enterprise Bankruptcy Law stipulates that new borrowings made by the debtor in reorganization for the purpose of continuing business may be included in the common benefit debts, but they do not have priority over the secured claims previously formed.
If the reorganization fails because the continuation investment does not have priority over the secured claim, the secured claim cannot be realized. We need to do the work of the secured creditors such as the mortgagee and the creditor of the construction money, so that they understand that if the reorganization plan clearly invests the continuation funds can be given priority over the secured claim, the secured claim is likely to be paid in full; Conversely, the secured claim will also be subject to losses. In this way, investors' concerns can be allayed. According to this line of thinking, the judge and the administrator repeatedly explained to the creditors.
In order to give investors confidence, it is necessary to make the capital of their investment in the continuation of the construction can be returned. ”
Only when the living water of investment comes can it drive the continuation. ”
The plaza project is revitalized, and there is hope for the realization of creditor's rights, and our goal is a win-win situation. ”…
In the end, after the recruitment of investors, the arduous negotiation of all parties and two rounds of voting, the creditors' meeting was 996%, 997%, tax claims group 999%, 885%, 100% of the investor group, voted to approve the draft reorganization plan, making it clear that the investor invests in the continuation of the construction as a common benefit debt, limited to 500 million yuan, if the reorganization fails and turns into bankruptcy liquidation procedure, this part of the common benefit debt has priority over the secured claim to be repaid; The investment, operation, sales and other affairs in the later stage of the International Plaza will be completed by the team formed by the investor; The reorganization plan will be implemented over a period of four years.
If this reorganization plan can be smoothly promoted, the value of the entire plaza project will exceed 4 billion yuan after completion, not only the creditor's rights of the mortgagee and the creditor of the project money can be fully repaid, but the repayment rate of ordinary claims will also be significantly improved.
In July 2021, the Shanghai No. 3 Intermediate People's Court ruled to approve the reorganization plan of Y Real Estate Company in accordance with the law.
part.4
The government and the court jointly broke the obstacles to the implementation of the reorganization
Active justice has given unfinished buildings a new lease of life
The court ruled that the approval of the reorganization plan meant that the reorganization case could be closed, but the judge's efforts continued.
In order to effectively promote the early completion and delivery of the project and the implementation stage of the reorganization, the judge continued to implement the concept of active justice, actively let the resumption of work of the project enter the fast lane through the linkage of the government and the court, and obtained the approval of the relevant ** functional departments for the resumption of work more than two months after the approval of the reorganization plan. With the approval of the resumption of work, according to the reorganization plan, the investor's continuation funds have been invested one after another, and the project has resumed work.
According to the reorganization plan, the value-added part of the sales proceeds and the final payment and price difference paid by the original buyers will also be invested in the continuation of the construction for circular development, but due to the restrictions on the acceptance, delivery and sales policies of commercial housing, the collection funds cannot catch up with the progress of resumption of work. In order to recover the funds for the sale of houses as soon as possible, the judge convened many coordination meetings with the participation of the housing management and other functional departments, and repeatedly communicated and reached an agreement on the conditions for lifting the sales key of unsold shops and office buildings, the construction plan, and the supervision of pre-sale funds.
With the investment of continuation funds, at the end of 2023, the Y International Plaza project will be completed and accepted, Y Real Estate Company will be able to survive, assets worth 4 billion yuan will be revitalized, and buyers will be handed over soon. "It's a miracle to finally get out of the quagmire. The buyer's grandson looked at the brand-new building and sighed.
The recovery of the real estate market needs to meet the reasonable financing needs of real estate enterprises to ensure the delivery of buildings. In the bankruptcy reorganization procedure of the real estate enterprise as the debtor, the new construction funds invested by the investors are repaid as 'common benefit debts' in priority, which can dispel the investors' concerns about the new investment funds filling the previous debt holes and 'going down the drain'. After the completion of the reconstruction, the overall project value of the real estate project will often increase significantly, benefiting the buyer, the secured creditor, the ordinary creditor and the debtor. We will further leverage the institutional advantages of bankruptcy reorganization, actively rescue distressed enterprises with reorganization value, better support and serve the development of the real economy, and protect people's livelihood rights and interests. Xu Ziliang, president of the Bankruptcy Division of the Shanghai Third Intermediate People's Court (Shanghai Bankruptcy Court), said.