Good News! Attorney Chen Shaomin, Senior Advisor at Tongfang Law Firm, has won the Second Prize in the 19th “Liaoning Rule of Law Forum” for his paper.
Tongfang Honor
2024-01-27
Tongfang's Good News
Summary:
How we respond to the impending wave of real estate industry bankruptcies is critical for preventing the outbreak of financial risks, safeguarding national security, facilitating the transformation of our country’s economic development, and protecting the property rights of ordinary citizens. This article identifies several key problems in the real estate sector: banks are facing massive loan defaults from real estate developers that remain unpaid; it is increasingly difficult for real estate developers to free up their mortgaged completed properties and ongoing construction projects; homebuyers have suffered substantial losses; real estate developers—either through their own companies or via controlled shell entities—have obtained loans from banks or issued bonds, creating enormous debt leverage and associated debt risks; and many real estate developers, by means of multiple closely linked companies under their control, have engaged in financial and personnel intermingling as well as blurring of corporate identities, thereby evading tax payments, transferring assets, and siphoning off funds. After analyzing the three root causes behind these issues, this article proposes three countermeasures: first, fully recognizing the importance and urgency of resolving real estate problems and focusing on preventing these issues from triggering a financial crisis; second, scientifically managing real estate bankruptcies and strengthening institutional frameworks to ensure the healthy development of the real estate sector; and third, reinforcing organizational leadership to effectively and steadily resolve real estate challenges. In particular, the guiding principle for addressing current real estate problems is to take as our fundamental principle the avoidance of triggering financial risks, with the goal of achieving a healthy restructuring of the real estate industry. We should scientifically regulate the scale, methods, and pace of real estate developer bankruptcies, prioritizing bankruptcy reorganization as the primary approach, focusing on revitalizing high-quality assets and pursuing strategic mergers and acquisitions, extending the reasonable duration of bankruptcy proceedings to buy time and create space, and ultimately achieving a soft landing for the real estate sector. Finally, the article outlines specific, actionable measures for implementing these strategies.
Chen Shaomin
Tongfang Law Firm
Senior Advisor
Haikou Branch Attorney
A member of the Communist Party of China, he formerly served as Deputy Director of the Liaoning Provincial Letters and Calls Bureau, Secretary of the Political and Legal Committee of the Liaoyang Municipal Party Committee, Deputy Secretary of the Working Committee of the Liaoning Provincial Party Committee’s Organs, and Inspector. Currently, he is a Senior Counsel at Tongfang Law Firm and an attorney at Tongfang’s Haikou Branch.
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