Keywords:<\/strong> Supreme Court Retrial, Hundred-Million-Yuan Dispute, Atypical Guarantee, Equity Repurchase, Judgment Confirmation of Mediation Agreement, Major Transaction of Listed Company, Non-compliant Guarantee of Listed Company<\/p>\n In September 2014, a certain group borrowed 387 million RMB from a bank to purchase equity in two target companies from a listed company. To enhance transaction credit security, the listed company, the bank, and the borrower jointly signed an “Equity Repurchase Agreement,” stipulating that the listed company would repurchase the relevant equity at an agreed price if conditions such as the borrower’s inability to repay the loan upon maturity were met.<\/p>\n Upon the loan’s maturity, the group failed to fulfill its repayment obligations, and the bank subsequently filed a lawsuit, claiming that the listed company should bear joint and several liability for the borrower’s debt and liquidated damages. The case underwent six rounds of proceedings, including first instance, second instance, first instance after remand, second instance after remand, retrial review, and the Supreme Court’s retrial. Both the first and second instance courts after remand held that although the “Equity Repurchase Agreement” was named an equity repurchase, it was essentially providing credit support for the loan and constituted a non-compliant guarantee without a resolution from the shareholders’ meeting. Accordingly, the listed company was ordered to bear half of the compensation liability for the portion the borrower could not repay. If the effective judgment were executed, the listed company would face a compensation obligation of over 150 million RMB. The company’s main accounts and assets had already been frozen, posing a significant impact on liquidity and the serious consequence of triggering a delisting risk warning in the capital market.<\/p>\n The case faced complex legal and commercial pressures during the retrial application and hearing stages, primarily reflected in the following three aspects:<\/p>\n First, the criteria for identifying “atypical guarantees” are uncertain.<\/strong><\/p>\n In recent years, judicial practice has generally adopted a “look-through” review method to make substantive judgments on transaction structures involving repurchase or shortfall replenishment arrangements. The original court thus believed that the repurchase obligation in this case was directly linked to the loan default and that the payment amount was highly correlated with the unpaid loan principal and interest, thereby identifying it as a guarantee. Given that the existing judicial logic was relatively complete, how to propose a persuasive alternative legal interpretation became the key to the retrial application and hearing.<\/p>\n Second, the pressure of enforcement proceedings persisted.<\/strong><\/p>\n After the second-instance judgment took effect, the bank applied for compulsory enforcement and took measures to freeze the listed company’s main accounts and assets. If the compensation were actually enforced, it would not only cause a major shock to the company’s liquidity but could also trigger a delisting risk warning in the capital market.<\/p>\n In response to the above situation, the legal team conducted a systematic demonstration of the differences between the transaction structure and the legal relationship of a guarantee, and substantially promoted the resolution of the case through a combination of retrial procedures and negotiation strategies.<\/p>\n I. Substantive Level: Penetrating the Essence of the Transaction, Overturning the “Atypical Guarantee” Determination, and Laying the Foundation for Negotiation<\/strong><\/p>\n Based on the core facts of the case, the legal team reconstructed the legal nature of the “Equity Repurchase Agreement” from dimensions such as the underlying structure of the transaction, the origin of commercial logic, and the substantive composition of rights and obligations. This successfully gained the initiative in the litigation and established a core bargaining basis for subsequent mediation negotiations.<\/p>\n The team precisely clarified the core legal differences between the repurchase arrangement and the guarantee relationship, fundamentally shaking the basis of the original court’s determination of the agreement’s nature. Simultaneously, combined with the overall background and commercial intent of the transaction, they comprehensively explained the true commercial value and functional positioning of the repurchase arrangement. This verified the legal attributes of the transaction from the perspective of commercial essence, strengthening the rationality and credibility of the substantive defense.<\/p>\n II. Procedural Level: Precisely Utilizing Retrial Rules, Promoting the Confirmation of the Mediation Agreement in the Form of a Judgment, and Achieving Results<\/strong><\/p>\n After the case was brought for retrial by the Supreme Court, the legal team, while solidifying the foundation of the substantive defense, simultaneously promoted negotiations among all parties in conjunction with the progress of the trial. After multiple rounds of consultation, all parties finally reached a mediation plan to resolve the dispute once and for all for 50 million RMB, defining a clear path for fulfillment.<\/p>\n Considering that the second-instance judgment had already taken effect and some guarantors did not participate in the retrial mediation process, simply issuing a mediation document would lead to procedural issues with multiple conflicting legal documents for the same case. In response, the legal team precisely analyzed legal regulations and the actual circumstances of the case, promoting the confirmation of the mediation agreement’s content through a revised judgment, thereby achieving an effective link between the mediation agreement and the judicial judgment.<\/p>\n Ultimately, the Supreme Court adopted this plan. In terms of the form of adjudication, the Supreme Court, through a retrial judgment, revoked the relevant items in the original first and second-instance judgments regarding the listed company’s compensation liability and included the main fulfillment content of the mediation agreement in the main text of the judgment. This achieved a unified handling of the original judgment liability and enforcement measures.<\/p>\n Spanning seven years and six major litigation procedures, this case finally resolved the dispute through “substantive defense + procedural innovation,” providing a typical model for resolving complex commercial cases through retrial.<\/p>\n Insights for Compliance Management of Listed Companies<\/strong><\/p>\n In M financing and capital operations, if transaction structures such as repurchase arrangements and shortfall replenishments are directly linked to debt default and the payment amount is highly correlated with loan principal and interest, they may be identified as atypical guarantees in judicial practice. When designing relevant transaction documents, listed companies should fully assess potential guarantee risks and perform necessary internal decision-making procedures.<\/p>\n Insights for Dispute Resolution Strategies<\/strong><\/p>\n In cases involving complex transaction structures, systematically reviewing the transaction background and economic purpose and translating commercial logic into a clear civil law structural interpretation helps form a new perspective during the retrial stage. Meanwhile, coordinating arrangements between the mediation mechanism and enforcement procedures during the retrial process also helps improve the efficiency of dispute resolution.<\/p>\n Insights for Judicial Practice<\/strong><\/p>\n In this case, the Supreme Court concluded the retrial case by “confirming the mediation agreement through a judgment,” providing a typical model for handling “mediation by some parties” in retrial procedures. This reflects the core orientation of “substantively resolving disputes” in judicial practice. That is, under the premise of strictly complying with civil procedure rules, balancing procedural justice and substantive fairness, and using flexible forms of adjudication, the dispute is thoroughly resolved, avoiding procedural circularity and reducing the litigation burden on the parties.<\/p>\n","protected":false},"author":3,"featured_media":0,"template":"","meta":{"_acf_changed":false},"case-category":[298,316,308],"case_tag":[367,600,601,602,603,604,605],"class_list":["post-2902","case","type-case","status-publish","hentry","case-category-supreme-court","case-category-innovative-cases","case-category-corporate-investment","case_tag-retrial-by-the-supreme-peoples-court","case_tag-hundred-million-yuan-dispute","case_tag-atypical-guarantee","case_tag-equity-repurchase","case_tag-judgment-confirmation-of-mediation-agreement","case_tag-major-transaction-of-listed-company","case_tag-non-compliant-guarantee-of-listed-company"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.zhenghan.com\/en\/wp-json\/wp\/v2\/case\/2902","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.zhenghan.com\/en\/wp-json\/wp\/v2\/case"}],"about":[{"href":"https:\/\/www.zhenghan.com\/en\/wp-json\/wp\/v2\/types\/case"}],"author":[{"embeddable":true,"href":"https:\/\/www.zhenghan.com\/en\/wp-json\/wp\/v2\/users\/3"}],"wp:attachment":[{"href":"https:\/\/www.zhenghan.com\/en\/wp-json\/wp\/v2\/media?parent=2902"}],"wp:term":[{"taxonomy":"case-category","embeddable":true,"href":"https:\/\/www.zhenghan.com\/en\/wp-json\/wp\/v2\/case-category?post=2902"},{"taxonomy":"case_tag","embeddable":true,"href":"https:\/\/www.zhenghan.com\/en\/wp-json\/wp\/v2\/case_tag?post=2902"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Case Background<\/h2>\n
Key Points and Challenges<\/h2>\n
Representation Highlights<\/h2>\n
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<\/p>\nCase Insights<\/h2>\n