“President Xia, when you came to visit us in 2012 as the leader of Zhejiang Province, you said that the old appearance of Xianju has changed into a new one, and we have made such a good project that you should also live in our David Century City after your retirement. However, I regret to tell you: our project was forced to auction, no more David Century City, I can no longer receive you here.”
On Dec. 16, tears rolled down the face of Shanghai businesswoman Ye Guangyan as she wrote a letter of help to Xia Baolong, vice chairman of the National Committee of the Chinese People’s Political Consultative Conference.
She also wrote in the letter, Xianju County Government repeatedly in the land delivery issues on the couple’s name Zhejiang David real estate Development Co.
“In the bankruptcy proceedings, Xianju County Committee and County Government illegally sent a working group to enter the court, continuously and illegally interfered with the court case, instructed the bankruptcy administrator to violate our rights as shareholders and creditors, and even retaliated against my husband and wife afterwards, and fabricated charges to frame my husband Wang Shiping, who has been detained for two years and three months, and is still unjustly detained in Tiantai County Detention Center. Please save him!”
Zhejiang Xianju, aerial photography of David Century City
01, investment “talk” to trap the Shanghai developers
Xianju County is located in the southeast of Zhejiang Province, the western part of Taizhou City, the terrain is dominated by hills and mountains, belongs to the Bracken Mountain Range, once named Le’an County, Yong’an County, the Northern Song Dynasty Jingde four years (1007 AD), Song Emperor Zhenzong to its “cave sky famous mountain shield Zhouwei, and more than the house of the immortals”, the edict changed to “Xianju”, meaning “the place where the immortals live”.
In the territory of Xianju, there are 109 peaks above 1000 meters above sea level. Although the scenery is beautiful, the economy is backward and belongs to the underdeveloped area in Zhejiang Province.
In 2007, Xianju County Government held a business conference in Shanghai, planning to “attract big business and big investment” and introduce social capital to participate in the “expand east – change middle – expand west” strategy of the county. -Expand West” strategic goal of the implementation. East part, is the core block of the county planning built-up area. But this part of the development, must be implemented on the Yong’an Creek “cut off the straight” urban flood control and livelihood water conservancy project.
In 2003 and 2004, the flood control project of Yongan Creek was included in the key construction projects of Zhejiang Province and the first batch of national key and urgent construction projects respectively. This project can improve the flood control capacity of the city from one in five years to one in 50 years.
Yueqing, Wenzhou, Zhejiang Province, Shanghai real estate developer Wang Shiping was already a “billion-dollar” rich man, idle at home, in a semi-retirement status. But he was impressed by the invitation of the “return of Zhejiang businessmen”, went to the field, decided to raise funds to build a dam, so that the flood waters, and with the relevant departments of Xianju began to negotiate a new phase of Xianju project investment and construction. The two sides agreed that the project scope of Xianju New District Phase I is 2820 mu (excluding the land for cutting bend and straightening and bridge project), of which about 1366 mu is for development, and the cooperation is bundled with infrastructure construction and land development. The investor is responsible for the investment in infrastructure of 557.21 million RMB and the land grant of 600 million RMB.
Such a new district development is not just a real estate project, but undertakes a huge urban development investment including urban infrastructure construction, cultural and recreational facilities construction, water conservancy engineering construction, etc. It was actually a pioneer of PPP (government-social capital cooperation) in those days when the concept of PPP (government-social capital cooperation) did not yet exist.
From 2007 to 2009, the two sides communicated deeply and reached a comprehensive consensus on the scope of cooperation, model, composition of land cost and investment approach for the first phase of the new district project in Xianju County. During that period, Wang Shiping hired professional organizations from home and abroad to study and design the urban positioning, urban space design and urban planning of the project. Ye Guangyan introduced that at that time, there was at least one seminar every quarter on average, and 30 million RMB was spent on the preliminary preparation work alone.
Wang Shiping wanted to build it from nothing to a beautiful new city. And this also requires huge amount of capital investment. It was estimated that the rolling development would take at least 8 years and the final investment would be 11.5 billion RMB. It has also become a key project of “Zhejiang Businessmen Returning” with over 10 billion RMB.
The visit of Xia Baolong was a very important news in the inaugural issue of Da Wei Cheng Newspaper in 2013. Xia Baolong shook hands with Ye Guangyan and laughed heartily.
On the basis of the preliminary consensus reached between Mr. and Mrs. Wang Shiping and the Xianju County Government, on July 17, 2009, the Administrative Committee of Xianju New District issued the “Announcement of Investment Promotion for the First Phase of Xianju New District Project”, which showed that the demolition and relocation of the project would be completed within 3 years from the date of land listing and transaction.
According to the “selection method” of the announcement, after the registered investors submitted the project development plan and the starting price of the development land intention to the New District Development Management Committee, the Committee will organize relevant experts to evaluate the investors according to “60% of the project development plan and 40% of the starting price of the development land intention”, and select the investor with the first comprehensive score to sign the “Cooperation Development Intention Agreement”.
On August 13, the Xianju County Government issued a power of attorney authorizing the Administrative Committee of Xianju New District to sign the agreement on its behalf. Yonggu and the Administrative Committee of Xianju New District signed the “Agreement on Cooperation and Development of Xianju New District Phase I Project” (including five attachments).
The second article of the Project Agreement, “Mode of Cooperation”, stipulates that the infrastructure construction and land development of the project will be bundled, and public bidding will be conducted for the overall development. Party A, Xianju New District Management Committee, will provide the land for infrastructure projects, and Shanghai Yonggu will enjoy the right to develop 1,366 mu of land within the project area, and the land use life will be subject to the legal maximum use life. Article 5 “Price of Land Transfer” stipulates that the development land available for transfer will be offered in the form of one-time public listing, and the starting price of the development land available for transfer will be not less than 440,000 yuan per mu after deducting the public inputs such as infrastructure construction projects, demolition and resettlement agreed by both parties according to the land evaluation and the current market price.
From the initial agreement of 600 million yuan to setting the starting price of the concession at not less than 440,000 yuan/mu, Mr. and Mrs. Wang Shiping believe that the government has not kept its promise on the land concession. Nevertheless, considering that more than 30 million yuan has been invested in the early stage, they still signed an investment agreement with Xianju County in accordance with the investment announcement.
Xianju County Government, the wall is written with the slogan “Keep the original heart, take the mission”. Wu Yingjiao photo
02, the government repeatedly postponed the delivery of land, enterprises lost more than 4 billion yuan
What Wang Shiping did not expect was that the Xianju government would default again and again in the following days. And with the increasingly high cost of invested capital, he could no longer pull himself out.
The Project Agreement signed between the two parties on August 17, 2009 stipulated that the development land available for sale for the project would be publicly listed for a one-time period within 12 months from the date of this agreement.
However, one year later, Xianju County changed its mind again. When the land was finally offered for sale, it again violated its promise by unilaterally changing the land offer method and pre-conditions and introducing five other companies, thus greatly pushing up the land offer price.
On August 17, 2010, the Bureau of Land and Resources of Xianju County issued the Notice on the Listing and Sale of State-owned Construction Land Use Rights and the Notice on the Listing and Sale of State-owned Construction Land Use Rights. The Notice of Sale stipulates that “Applicants may submit their development ideas for the first phase of the Xianju New District project at the Xianju Tender Center before 9:00 on September 16; if they pass the evaluation of the development ideas, they may submit their bidding applications to the Bureau at the Xianju County Tender Center from 8:00 on September 19 to 17:00 on September 27”, and the Instructions for Sale The “Qualifications and Requirements for Bidding” stipulates that “the bidder of this listing must sign the “Agreement on Cooperative Development of Phase I of Xianju New District Project” and “Supplementary Agreement on Cooperative Development of Phase I of Xianju New District Project” with the Administrative Committee of Xianju New District before signing the “Contract for the Sale of State-owned Construction Land Use Rights”. “.
In fact, the above two agreements were originally signed between Shanghai Yonggu and Xianju government after the aforementioned investment promotion matters were agreed upon, and the bidding time for the previous investment cooperation had been closed long ago. That is to say, the tender agreed in the previous investment agreement was turned into a bidding one year later. Shanghai Yonggu, who had previously signed a development agreement and a supplemental agreement with Xianju New District as the only bidder, was faced with new competitors, and all the preliminary investment of Mr. and Mrs. Wang Shiping had the possibility of being “wasted”.
With no choice, Mr. and Mrs. Wang Shiping decided to participate in the auction at the last moment before the auction application deadline, and continued to push forward the project construction. Eventually, after several rounds of bidding, the premium for the 1,366 mu of development land was sold for 2.459 billion yuan, more than four times the 600 million yuan agreed upon by both parties at the beginning.
On September 29, 2010, Shanghai Yonggu and Xianju County Bureau of Land and Resources signed a confirmation of the transaction, followed by 21 contracts for the transfer of the right to use state-owned construction land on October 18. It is worth noting in particular that the description of “the condition of the land to be delivered” in the contract, i.e. the leveling of the site, the level of the surrounding infrastructure construction and the current land condition, is blank; the agreed time for delivery of the land is the date of signing the contract. At that time, the land in question had not been demolished and relocated, and there was no infrastructure construction, so there were no delivery conditions at all, and the land was not actually delivered and could not be delivered.
According to Article 2 of the Notice on Increasing the Disposal of Idle Land issued by the Ministry of Land and Resources on September 8, 2007, the right to use construction land shall be transferred on a “net basis”, and before the transfer, economic and legal relations such as property rights, compensation and resettlement of land shall be dealt with, and necessary pre-development such as water, electricity, access roads and land leveling shall be completed. Development, to prevent land idle waste. On January 29, 2008, the ministry also issued a notice on the implementation of the State Council’s Notice on Promoting Land Conservation and Concentration, which clearly requires “strict urban land management, and strictly prohibits the direct supply of land and issuance of construction land approval documents without compensation for demolition and resettlement, and recovery of state-owned land use rights.
On September 21, 2010, the Ministry of Land and Resources and the Ministry of Housing and Urban-rural Development jointly issued the Notice on Further Strengthening the Regulation and Control of Real Estate Land and Construction Management, which requires strict management of land concessions for housing construction; land concessions must provide planning conditions, construction conditions and land use standards on a parcel-by-parcel basis; and strict implementation of The area of commercial housing land to be transferred in a single block is strictly enforced, and no more than two plots of land shall be bundled and transferred, and no “gross land” shall be transferred; it is required to strengthen the supervision of real estate land supply, and the competent provincial land and resource departments shall strengthen the timely supervision of the announcement of housing land transfer and the content of contractual agreements, and the announcement issued by cities and counties shall be subject to the existence of bundled transfer, super The scale of land use, “gross” to let, more than three years of development cycle to let land, to order the immediate withdrawal of the announcement, adjusting the transfer program to re-offer.
Xianju County government and the land department did not follow the regulations of the land resources department in the announcement of the listing transfer, and did not correct them in the subsequent implementation.
In terms of land delivery conditions and delivery time, Xianju County land department repeatedly violated the contract, and the “David Century City” project of Zhejiang David Real Estate Development Co., Ltd. established by Mr. and Mrs. Wang Shiping failed to advance as originally planned, and eventually fell into financial constraints and stalled the project.
In the two sides signed and agreed to 21 state-owned construction land delivery date of October 18, 2010, Xianju County did not hand over the land. Although this in fact constituted a breach of contract, but Wang Shiping in order to let the project continue to move forward, the two sides signed a supplementary contract, the time and manner of payment of land premiums and state-owned construction land use right certificate to make an agreement.
According to Wang Shiping’s recollection, in June 2011, Lot 1 basically had the conditions for land delivery, and on the 30th of that month, the site immediately started construction; by the end of 2012, Lots 2, 3, 4, 5 and 6 were started one after another. Xia Baolong, then deputy secretary of the Zhejiang Provincial Party Committee and governor, also visited David Century City in August 2012. Since then, there were provincial leaders such as Che Jun and Li Qiang who visited David Century City. It was only by the end of 2014 that lots 8, 9 and 10 started to be delivered.
Plots 1, 2, 5 and 6 projects were completed at the end of 2014 and the beginning of 2015; Plot 3 was completed at the end of June this year; Plots 8, 9 and 10 projects are expected to be completed at the end of this year. the delivery of Plots 11-21 has not been fully completed so far.
Faced with a large number of land delivery obligations, Xianju County Government and related departments have not only failed to complete the land requisition and demolition work in Chai Lingxia Village, but also failed to complete the aftercare work on the requisitioned land, such as the relocation of graves within Lot 1, the disposal of Guanshan Landfill, the land not requisitioned on the west side of Jingli Road, the land not requisitioned on the outside of the road side from Donglingxia to Shiniu, the pump house and other buildings not demolished, etc. And even until the bankruptcy restructuring of Zhejiang David Company ended in 18 years, the land requisition and demolition work in Chai Lingxia Village was just started.
As the Xianju County Government had not delivered the land in time according to the contract, it directly affected the construction progress of David Company, slowing down the project and prolonging the development cycle, resulting in David Company’s failure to achieve rolling development, which greatly increased the development cost and caused huge losses to the company.
In order to assess the risk of government default, in 2014, the Administrative Committee of Xianju New District had commissioned Ningbo Hongzheng Engineering Consulting Co., Ltd. to conduct an assessment, and the Supplementary Report of issued by the latter on April 4 of the same year concluded that the value of government default loss included the value of default loss formed by untimely demolition and relocation of graves of 363 million yuan and the value of default loss formed by untimely relocation of graves of The value of default loss is RMB 223 million, with a total default loss value of RMB 586 million.
David calculated that as of April 30, 2017, the liquidated damages and compensation due to the late delivery of land by Xianju County Government and relevant departments had amounted to RMB4,254.12 million.
Its specific composition is: liquidated damages for the non-delivery of parcels 8 to 21 before March 30, 2014 of RMB 229,940,781,000 + liquidated damages for the non-delivery of parcels 11 to 21 so far of RMB 192,410,410,000 + liquidated damages for the delayed delivery of parcels 8, 9 and 10 from April 1, 2014 to December 30, 2014 of RMB 30,630,400,000.
- Tax proposal bankruptcy case with billions of net assets still available
Affected by the land delivery problem, David Century City project is not progressing as expected, and Zhejiang David is also in a financial straitened situation.
Due to the inability to deliver the land, the two sides were at a standstill, and in desperation, Zhejiang David filed a civil lawsuit with the Xianju County Court, making a request for delivery of the land according to law. Xianju County Court presided over the mediation, Zhejiang David and Xianju New District Management Committee finally reached an agreement, including the adjustment of the time of land transfer and the time of collecting the transfer fee; Zhejiang David admitted the late payment of land on parcels 2, 3, 4 and 7, and there was no late payment on other parcels.
Ye Guangyan said that because the funds were in straits, Wang Shiping approached Beijing CYT Property Group Co., Wenzhou Huahong Jiaxin Group, Beyoncé and Evergrande in the hope of cooperative development, and signed a framework agreement for project development cooperation with Evergrande and Beyoncé respectively, but they were all opposed by the Xianju government and ultimately failed.
As of 2016, a total investment of 5.5 billion yuan has been completed, 400.29 mu of land has been developed, more than 700,000 ㎡ of houses have been completed, 962.26 mu of undeveloped land remains, and 70% of urban infrastructure has been completed. However, at this time, David Century City project also almost came to a standstill, and the land parcels 11, 12 and 13 could not be delivered due to financial constraints even though they had reached the conditions for delivery. 2016, because of the dispute with Great Wall Asset Management Co. and Shanghai Putian over unpaid bills, Zhejiang David was sued, its main bank accounts were frozen and its property was applied for preservation.
After David was established in Xianju County, it was the number one taxpayer in the county for many years. Despite the temporary financial difficulties, the company still has billions of net assets.
On April 20, 2017, Xianju County Local Taxation Bureau suddenly applied to Xianju County Court for bankruptcy liquidation of Zhejiang David on the grounds that the company “has accumulated about 51.25 million yuan of unpaid tax principal and 6.33 million yuan of late payment, and 258,000 yuan of social security premium principal and 25,000 yuan of late payment” and cannot settle its debts due. In May of the same year, Xianju County Court filed a bankruptcy petition against Zhejiang David. In May of the same year, the Xianju County Court started the bankruptcy proceedings against Zhejiang David.
Xianju County Taxation Bureau, which made the perverse act of filing for bankruptcy of tax-paying enterprises. Wu Yingjiao photo
“There has never been a law that provides that the tax bureau can be the applicant for the commencement of bankruptcy proceedings. And it was filed for bankruptcy by the taxation authority when its assets far exceeded its liabilities, which is really a strange story for the ages and the first case in the country!” Ye Guangyan believes that Zhejiang David should not have been put into bankruptcy proceedings at all.
“First of all, Zhejiang David can debts offset debts, after the debt offset, Zhejiang David to Xianju County government and off departments not only no liabilities, and still enjoy a huge amount of claims.” Ye Guangyan said, “At present, the confirmed debts of Zhejiang David to Xianju County Bureau of Land and Resources and Xianju County Bureau of Local Taxation are only taxes and late payment for lots 2, 3 and 4, totaling 82.03 million yuan (51.25 million yuan in taxes + 30.78 million yuan in late payment for land). However, at the same time, Xianju County Government is liable for a huge amount of defaulted debts to Zhejiang David.”
David calculated that as of April 30, 2017, according to the contractual agreement and the evaluation results commissioned by the Administrative Committee of Xianju New District, the total amount of liquidated damages and compensation that should be borne by Xianju is 4.84 billion yuan, including: liquidated damages for the non-delivery of plots 8 to 21 by March 30, 2014 2.299 billion yuan + the loss caused to the development of plots 1 to 7 due to the government’s default 586 RMB 1.924 billion + liquidated damages for the non-delivery of Lots 11 to 21 as of April 30, 2017 to date + liquidated damages for the delayed delivery of Lots 8, 9 and 10 from April 1, 2014 to December 30, 2014 of RMB 30,630,400,000, with the liquidated damages from May 1, 2017 to be calculated separately. “Zhejiang David’s claim against the local government of Xianju County is 59 times the amount of the debt that should be assumed. After the offsetting of claims and debts, Zhejiang David has no liabilities to Xianju County government and related departments.”
On the other hand, Zhejiang David simply did not meet the “insolvency” as a precondition for bankruptcy.
Ye Guangyan said that Zhejiang David’s external liabilities at the time included two parts, part of the liabilities to shareholders of Zhejiang David, part of the liabilities to creditors other than shareholders. As of March 27, 2017, Zhejiang David had 391 sets of unsold houses with a total value of 2.136 billion yuan, which was sufficient to settle all debts other than those to shareholders. And excluding the 4.84 billion yuan of default from the local government of Xianju, Zhejiang David also has roughly 640 million yuan of external debts. In other words, we have net assets of 5.48 billion yuan.”
04、In order to recover 50 million in taxes, we first spent 90 million in bankruptcy management fees
Although not insolvent, Xianju County Court still ruled on June 16, 2017 to accept the bankruptcy liquidation of Zhejiang David, appointed Zhejiang Jarey Cheng Law Firm, Zhejiang Zhongxing Accounting Firm Limited, Zhejiang Antian Law Firm as the administrator of Zhejiang David, entered the bankruptcy reorganization stage.
“Under the guise of recovering 50 million yuan of taxes, only the first to pay the bankruptcy administration costs exceeded 90 million yuan. What in the end is this bankruptcy?” Ye Guangyan asked.
Mr. and Mrs. Wang Shiping believe that in the process of entering bankruptcy reorganization, Zhejiang David’s interests as creditors and themselves as contributors were not legally protected.
“Xianju County Government misrepresented claims in the name of New District Development Management Committee and Xianju New District Development Co., Ltd. and declared claims totaling up to more than 1.63 billion yuan in an attempt to misappropriate Zhejiang David’s and shareholders’ assets and make a disaster fortune by misrepresenting claims and other means. In order to kick our couple out of David Century City project, Xianju County Government influenced the administrator to maliciously squeeze our claims, and identified the claims declared by Wang Shiping and Shanghai Yonggu as 0, or even negative. What’s more, Xianju County officials have repeatedly threatened to use criminal means to put us in jail. The law, in the eyes of the local government leaders, is just used to deal with the people and foreign entrepreneurs like us who are vulnerable but never pay bribes to the local government!”
“The administrator did let us attend the creditors’ meeting, but we were not allowed to speak or make comments at the meeting, and the moderator directly stopped Wang Shiping from intending to speak. The administrator and the local court did not give any response to the draft reorganization plan or the objections submitted to them.” Ye Guangyan said.
Since then, the bankruptcy administrator has commissioned two appraisal agencies in Taizhou City to evaluate David’s 21 plots of land and related fixed assets, as well as all the shareholders’ equity of four subsidiaries. The 26 appraisal reports issued stated that David’s assets were valued at 6.55 billion yuan. Subsequently, the administrator set the asset reservation price at 1.608 billion yuan, while the Evergrande Group bid 1.61 billion yuan for the transaction on July 31, 2018, with no bids due to the reservation price being leaked in advance. The “David Century City”, which Mr. and Mrs. Wang Shiping had painstakingly operated for ten years, thus became “Evergrande Century City”.
“David Century City” has become “Evergrande Century City”. Photo by Wu Yingjiao
“As a shareholder, we know the company’s assets best, and the real market value of these assets should be 8 to 10 billion yuan!” Ye Guangyan said that the manager did not consider the commercial value of the undelivered parcels at all. In fact, the commercial value of the undelivered parcel 11-21 is the most attractive to the restructuring investors, and the Land Bureau has replied with a letter agreeing to continue to fulfill the land grant contract for the undelivered land. “The hard work and money we invested in the early stage for more than ten years to get a significant appreciation of the land, now we have easily made a dowry for others!”
“Our bankruptcy is a wrongful case, and it is the largest real estate bankruptcy wrongful case in China, the largest bankruptcy wrongful case of private enterprises in Zhejiang. If they all do this, what business environment is there in Zhejiang to speak of?” Ye Guangyan said, because Wang Shiping can not agree with, do not accept the many unreasonable requirements and practices of the government and the administrator, began to write a complaint, to reflect the situation to the higher leadership. On September 27, 2018, Wang Shiping was taken away from his home in Shanghai by Xianju Public Security and has not returned home since.
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