Finance Federation, October 17 (Reporter Peng Kefeng)The hearts of the deceased change while waiting for idleness, yet the hearts of the “deceased” tend to change easily. On the evening of October 16, Lotus Health Industry Group Co., Ltd. (hereinafter referred to as Lotus Health) issued an announcement stating that after trial by the Henan Provincial High People's Court, the reconsideration application of the Henan Branch of the China Development Bank was rejected. The matter will not have a negative impact on the company's current profit or future profit.

As a national brand that recently became popular due to Li Jiaqi's turmoil, why did Lotus Health have such a dispute with CDB? On October 17, a reporter from the Finance Federation News Agency found that the incident involved an old credit account of more than 90 million dollars between CDB's Henan branch and Lotus Health before bankruptcy and restructuring. Previously, under the coordination of relevant departments, Lotus Health had already learned about the case with 30 million yuan, but after 2021, China Development Bank's Henan Branch “revisited the old story” in an attempt to continue to recover the remaining amount of this aging loan.

Before bankruptcy and restructuring, the Henan branch of China Development Bank sued Lotus for a loan of nearly 100 million yuan to recover 30 million yuan

According to the China Judgment Documents Network and other public channels, the Finance Federation reporter discovered the “entanglement of grudges and grievances” between Lotus Health and the Henan branch of CDB in this notice.

As early as 2006, the Henan branch of CDB lent money to Lotus Health to help it operate normally. However, with changes in the competitive environment in the market, compounded by the company's own reasons, the sales volume of Lotus brand MSG continued to decline, and Lotus Health's revenue continued to decline, which immediately triggered many banks and institutions to pursue loans. Since then, the Henan branch of CDB has also sued Lotus Health and Lotus Group in court to request repayment.

In 2006, after the hearing, the Zhoukou Intermediate Court of Henan Province handed down a corresponding civil judgment, ruling that Lianhua Health should repay the principal amount of 99,577,909.47 yuan, interest 1,349,727.03 yuan, and liquidated damages of 759,276.36 yuan to the CDB Henan Branch. The Lotus Group is jointly and severally liable for liquidation. However, at this point, Lotus Health clearly lacks sufficient repayment capacity.

According to reports, during the execution of this loan, the two parties, under the coordination of the Zhoukou Municipal People's Government, verbally reached an execution settlement agreement: Lotus Health repaid China Development Bank's Henan branch 30 million yuan. The execution of this case was terminated, and the debts and debts were eliminated.

In November 2009, the Henan branch of the CDB issued a “Request for Settlement of Non-Performing Loans by Henan Lianhua MSG Co., Ltd.” to the head office. The branch recommended agreeing to the opinions put forward by the Zhoukou Municipal People's Government. On December 4, 2009, the head office approved the plan proposed by the Henan Branch with the “Reply on the Implementation Plan of the Loan Dispute Case of Henan Lianhua MSG Co., Ltd.” On December 21-22, 2009, Lotus Health reimbursed CDB's Henan branch of 30 million yuan. In December of that year, the Zhoukou Intermediate Court ruled that the execution procedure for the case was terminated.

After many years, the bank “regretted” and continued to demand the remaining principal from Lotus and was rejected

What is unexpected, however, is that at the beginning of 2021, the Henan branch of the CDB made a decision requesting the Zhoukou Intermediate Court to resume this loan of nearly 100 million yuan in execution of the 2009 judgment. At the beginning, the Zhoukou Intermediate Court decided to resume the execution of Zhou Min's Civil Judgment No. 107 (2006), but it soon reversed the aforementioned decision.

“The Henan branch of the CDB has reversed its old accounts after many years and plans to continue to claim the principal amount of this loan of tens of millions. It may be related to the change of leadership.” On October 17, a senior lawyer surnamed Li from Shenzhen told the Finance Federation reporter that it is generally believed that banks have the right to continue to assert their rights over debts that have not been lost, and that it is understandable that current leaders continue to assert their previous debts.

However, judging from the subsequent situation, the “turning over old accounts” act of the Henan branch of the CDB was not supported by the courts. In the second half of 2021, the Zhoukou Intermediate Court issued a clear ruling to end the execution of the relevant case.

According to the court, the Zhoukou Intermediate People's Court ruled to accept the reorganization plan for Lotus Health Company on October 15, 2019, and approved the Lotus Health Company restructuring plan on December 16, 2019. Later, Lotus Health entered the implementation period of the restructuring plan, and the implementation of the restructuring plan was completed until April 30, 2020.

The court clearly stated that the Henan branch of the China Development Bank did not file a claim during the reorganization period of Lotus Health. It is now applying for resumption of execution after the execution of the Lotus Health Company's restructuring plan has been completed. Claims are claimed by means of individual settlement. This is not in line with the provisions of the bankruptcy and restructuring plan, and is also contrary to the principle of fairness stipulated in China's bankruptcy legal system. The Henan branch of the China Development Bank is now claiming claims and should exercise its powers in accordance with the reorganization plan and the relief channels stipulated in the relevant bankruptcy laws.

On September 11, 2023, the Zhoukou Intermediate Court issued the “Enforcement Ruling” (2023), Yu 16, and No. 81, revoking the execution notice for the corresponding case. The Henan branch of the China Development Bank continues to file an upward appeal. After several iterations, the Henan Provincial High Court recently issued a final ruling rejecting the petitioner's application for review from the Henan branch of the China Development Bank.

Financial institutions are required to “repay old accounts” according to law. Lawyers say court decisions are in line with bankruptcy law

In recent years, with the downturn in real estate and other industries, there has been a number of news reports of banks suing companies for loan repayment. Among them, old accounts from previous years have not been issued.

Regarding this, the senior lawyer mentioned above believes that the actions of the China Development Bank's Henan branch in suing Lotus have some reference significance. Bank loans are risky. Some accounts still cannot be recovered after the lawsuit. According to relevant regulations, a certain percentage can be written off, but this is only processing at the level of financial statements, and this bad debt has not disappeared. Therefore, as long as the relevant regulations are met, banks can still prosecute some old and bad accounts. Of course, if these bad things are transferred at a discount to the AMC agency, then the debt is transferred, and banks can no longer claim their rights.

Why hasn't the CDB received support for this old account? The senior lawyer believes that this is related to Lotus's bankruptcy and restructuring process, and that the court's decision is in line with the principles of fairness and justice.

First, prior to bankruptcy and restructuring, the bank had reached an oral agreement under government coordination to accept Lotus 30 million, which meant that the bank was essentially discounting the venture loan (recovering it at close to 30% of the price). Second, during the bankruptcy and restructuring period of Lotus, an announcement was issued requiring all creditors to come and register. The subsequent restructuring was successful, indicating that all creditors registered at the time voted to agree to the treatment plan. However, the Henan branch of the CDB did not come to register during the debt registration period. Instead, it re-asserted its claim after many years. If it required the enterprise to repay this single debt, it clearly violates the corresponding principle of fairness in the bankruptcy law.

“The purpose of bankruptcy law was originally to prevent a single payment and allow companies to treat every creditor fairly. Furthermore, if the bank and Lotus's oral agreement and payment of 30 million payments occurred six months before the company went bankrupt and restructured, then Lotus's creditors were entitled to recover the uniform distribution of this amount. Therefore, it is lawful and reasonable that the court ultimately did not support China Development's Henan branch's claim.” The person said.