Yunnan 'coal boss' comes back from the dead

On October 21, the Fifth Circuit Court of the Supreme People's court held a public hearing on the case of disputes over financial loan contracts between China Development Bank and Yunnan Dongyuan Coal Power Co., Ltd. Under the chairmanship of the collegial panel, a case involving complex legal relations such as financial lending, financial leasing, bankruptcy reorganization, etc. and sharp conflicts was settled through mediation, and the enterprises involved rose from the dead to the back. In 2013, Dongyuan coal power loaned 1.25 billion yuan to Guokai bank, the appellant of this case, for the construction of the coal gangue comprehensive utilization power plant in Enhong mining area, Yunnan Province, and mortgaged the relevant power generation equipment of Enhong power plant, and went through the mortgage registration. Later, due to the failure to pay the interest on schedule, Guokai bank announced the early maturity of the loan and filed a lawsuit in this case, requesting the court to order Dongyuan coal power to repay the loan capital RMB 830 million, interest, penalty interest, compound interest and liquidated damages shall be paid. Meanwhile, CDB shall be requested to have the priority to be compensated for 93 items of mortgaged equipment.

The appellee, China Merchants Bank Financial Leasing Co., Ltd., as a third party, took part in the lawsuit, believing that it had the ownership of five items of mortgaged equipment worth more than 300 million yuan in the way of after-sale leaseback, claiming that CDB should not obtain the mortgage of the five items of equipment because it failed to fulfill its obligation of inquiry and did not acquire the mortgage in good faith, and requested to refute the claim that CDB had the mortgage of the equipment in dispute. On September 29, 2018, the Yunnan Provincial High Court made a first instance decision after hearing the case. It believed that Dongyuan coal power, as a borrower, failed to repay the principal and interest according to the contract, which constituted a breach of contract, and should repay the principal, interest, default interest and compound interest of the loan; the liquidated damages were not supported because there was no evidence; CMBC financial leasing company carried out financial leasing registration in the credit reference center of the people's Bank of China, and CDB failed to comply with the regulations It is not a bona fide third party to conduct inquiry. The mortgage right of the five items of equipment in dispute is not established and has no priority to be paid.

If CDB refuses to accept the first trial decision, it is wrong to determine the starting date of the penalty interest and compound interest of the arrears in the first trial decision; it has the right to mortgage 5 items of litigation equipment worth more than 300 million yuan; Dongyuan coal power and Dongyuan coal industry shall appeal to the supreme people's Court on the grounds of paying liquidated damages jointly and severally. On the morning of October 21, the Fifth Circuit Court of the Supreme Court held a public hearing in accordance with the law. The collegial panel conducted a court investigation on the factual evidence and the application of law involved in this case; all parties made full statements and debates on whether CDB has the mortgage right, whether the mortgage right conflicts with the ownership, whether the leaseback right conflicts, whether the calculation of loan penalty interest and compound interest, whether the liquidated damages can support and other controversial focus issues. During the debate, CDB believed that the chattel mortgage had mobility and uncertainty, and it had the mortgage right on the equipment involved in the case; CMBC financial leasing company believed that there was a conflict between the chattel registration and the financing registration, and it handled the financing lease registration, but the mortgage right of CDB had major defects, so it did not enjoy the priority of repayment. After the court debate, the collegial panel once again put forward a practical mediation plan on the basis of finding out the facts of the case and distinguishing the right from the wrong according to law.

All parties agree to accept the mediation presided over by the court. In particular, Dongyuan coal power also proposed that it has serious difficulties, is heavily in debt, is struggling, and is forced to go bankrupt and restructure. It hopes to get the support of the court and relevant parties, and achieve win-win results through litigation and reconciliation. Finally, under the auspices of the court, the parties signed the mediation agreement in court and it was confirmed by the court in court. Wei Wenchao, a member of the collegial panel of this case, introduced that the enterprises and production equipment involved in the dispute in this case are the last key link in the rebirth of Yunnan coal chemical group. Through the trial and mediation of this case, the power generation production equipment worth hundreds of millions of yuan and idle for many years can finally be activated and utilized, and the series of cases of Yunnan coal chemical industry group finally achieve a perfect ending.

This case can ultimately facilitate the parties to reach a mediation, protect the legitimate rights and interests of all parties, reflect that mediation is a high-quality and efficient trial work; achieve the resurrection of "coal boss" in Yunnan, the end of enterprise capacity, equipment value maximization of social effects, and provide an effective judicial guarantee path for national governance. Li Shaoping, vice president of the Supreme Court and President of the Fifth Circuit Court, believes that the root of the dispute in this case lies in the fact that the current legal system does not clearly stipulate the registration of real rights of movable property such as production equipment, and that different state organs respectively stipulate the registration of financial leasing rights and mortgage rights and establish corresponding information systems, which leads to the registration rights of different registration organs Conflicts not only affect the production and operation of different enterprises, but also affect the order of social financing and economic development. At the same time, they also become a universal problem that puzzles the judicial judgment.