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According to a report from Finance Alliance on January 6 (Reporter Wu Chao), the litigation dispute between two major state-owned enterprises in Nanjing, Soho Holly Corporation (600128.SH) and Nanjing Business & Tourism Corp.,Ltd. (600250.SH), has come to a conclusion. The Nanjing Intermediate People's Court recently made a final judgment in this case, rejecting both parties' appeals and upholding the original ruling that Soho Holly Corporation pay Nanjing Business & Tourism Corp.,Ltd. 22.122 million yuan and a penalty for breach of contract and pay the majority of the case acceptance fees.

This evening, Soho Holly Corporation released an announcement that according to the judgment results, the company should pay the corresponding amount and penalties to Nanjing Business & Tourism Corp.,Ltd. The company has accrued an estimated liability of 14.5 million yuan for this matter in the first half of 2024, and intends to fully accrue the remaining approximately 15.67 million yuan. This accrual is expected to impact the company's profit and loss for the year 2024 by approximately 30.17 million yuan, but it will not lead to a year-on-year decline in the company's operating performance in 2024.

Finance Alliance reporters noted that the actual controller of Soho Holly Corporation is the Jiangsu Provincial State-owned Assets Supervision and Administration Commission, while the actual controller of Nanjing Business & Tourism Corp.,Ltd. is the Nanjing Municipal State-owned Assets Supervision and Administration Commission. In addition, Soho Holly Corporation's registered and office address is located at Hongye Building, No. 50 Zhonghua Road, Qinhuai District, Nanjing, and Nanjing Business & Tourism Corp.,Ltd.'s registered and office address is at No. 18 Xiaoxinqiao East Street, Qinhuai District, Nanjing, with only a distance of 2 kilometers between them.

However, this litigation dispute has dragged on for years. According to the relevant announcements, from September 8, 2015, to February 1, 2016, an employee of Soho Holly Corporation, Li Cheng, represented Soho Holly Corporation in signing seven sales contracts with Nanjing Business & Tourism Corp.,Ltd. one after another. Nanjing Business & Tourism Corp.,Ltd. fulfilled all delivery obligations under the contracts and received payments for four of the sales contracts. However, for the remaining three sales contracts, Soho Holly Corporation refused to fulfill its payment obligations, claiming that the signing of these three contracts was based on Li Cheng forging the official seal.

In April 2016, Nanjing Business & Tourism Corp.,Ltd. filed a civil lawsuit with the People's Court of Gulou District, Nanjing, due to a sales contract dispute with Soho Holly Corporation. Subsequently, the public security agency requested the court to transfer the case, citing Li Cheng, the business personnel responsible for the case at Soho Holly Corporation, as being suspected of contract fraud. After the investigation concluded, the Nanjing Municipal People's Procuratorate prosecuted Li Cheng on charges of embezzlement. In August 2017, the Nanjing Intermediate Court sentenced Li Cheng to thirteen years in prison for contract fraud, along with a fine of 1 million yuan, and ordered Li Cheng to compensate Nanjing Business & Tourism Corp.,Ltd. for economic losses of 22.122 million yuan.

Since Nanjing Business & Tourism Corp.,Ltd. has not received any compensation from Li Cheng, to protect the interests of the listed company, in July 2023, Nanjing Business & Tourism Corp.,Ltd. filed a lawsuit against Soho Holly Corporation in the Gulou District Court on the grounds of property damage compensation, requesting a judgment to order Soho Holly Corporation to compensate for the principal loss of 22.122 million yuan and interest losses under the sales contracts in question. In January 2024, the Gulou District Court officially accepted the case. In July 2024, the Gulou District Court made a first-instance judgment ordering Soho Holly Corporation to pay Nanjing Business & Tourism Corp.,Ltd. 22.122 million yuan and a penalty for breach of contract.

Afterward, Nanjing Business & Tourism Corp., Ltd. and Soho Holly Corporation both appealed the first-instance judgment made by the Gulou District Court to the Nanjing Intermediate Court. Nanjing Business & Tourism believes that the penalty for breach of contract determined in the first-instance judgment is significantly low and unfair. Soho Holly Corporation contends that the facts of the case found in the first-instance judgment are unclear and that the law was applied incorrectly. The Nanjing Intermediate Court accepted the case for hearing in August 2024 and recently issued a final judgment result: both parties' appeals were dismissed, and the original judgment was upheld; the total acceptance fee for the second-instance case is 0.2296 million yuan, with Nanjing Business & Tourism bearing 0.0296 million yuan and Soho Holly Corporation bearing 0.1999 million yuan.