Fangda Partners recently secured a final victory in a dispute arising from a combined equity and debt transfer when the Shanghai High People’s Court dismissed the counterparty’s application for retrial. 

The case stemmed from a debt-assumption acquisition involving a 60% equity interest and all outstanding debt of a real estate project company, with a total transaction value of nearly RMB 900 million. Spanning eight years from the emergence of the payment dispute in early 2018, through negotiations and subsequent litigation, the dispute travelled through first instance, second instance, retrial, and retrial review proceedings. With the joint efforts of the client, the co-counsel, and the Fangda team, the client prevailed in two successive appeals, ultimately obtaining a favorable judgment and achieving full enforcement of a debt recovery worth hundreds of millions of renminbi.

After a mostly adverse ruling in the first instance proceedings, the Fangda team was brought in as lead counsel. We carefully reviewed the contract formation and performance history. This allowed us to reconstruct and analyze the commercial objectives and complex underlying interests behind the contracts. 

Based on this analysis, we were able to overcome multiple defenses raised by the counterparty, including claims that other shareholders had pre-emptive rights, allegations that our client failed to meet post-closing obligations, and the argument that settlement obligations ran only between the client and the target company rather than the counterparty. 

Ultimately, the court held that the insurance company, as the acquirer in the debt-assumption transaction, was responsible for paying both the equity and debt transfer consideration and for paying overdue payment penalties.

The team was led by partner Jason LI. Team members included counsel WU Yaqiong and attorney ZHANG Yingxue.