[Case Summary]This case involves a business trust dispute. In December 2019 and January 2020, Xu * signed two trust contracts with XX Trust Company, with a total subscription amount of 12 million yuan and a performance benchmark of 9.3%. The contract was expected to expire on June 19, 2021. After the expiration, the trust company failed to return the funds and distribute the profits within the agreed timeframe. Xu * entrusted Beijing Henglu Law Firm to handle the case.Xue Suhua、Wang DongThe attorney filed a lawsuit, requesting compensation for the principal loss of 12 million yuan and interest. The court determined that the trust company failed to fulfill its fiduciary duty and misused funds in violation of regulations, resulting in the inability to redeem the investment. The court ruled that the trust company should compensate for the investment loss of 11,279,233.53 yuan and interest. The core disputes include whether the trustee breached the contract, whether the losses are certain, and the scope of compensation. The applicable laws include the Trust Law and the relevant provisions of the Trust Contract.

I. Review of the case

"What should I do if the trust expires and the payment is not made?" "Can I claim the principal if the trust company defaults?" "Who is responsible for handling business trust disputes?" These are common questions among investors. Business trust, also known as "commercial trust", is a common form of trust in the financial field. On December 6, 2019 and January 10, 2020, Xu * and XX Trust Company signed two trust contracts for the "China XX Trust Zhi Xin XXX Preferred Equity Investment Collective Fund Trust Plan" respectively. Xu * transferred 3 million yuan and 9 million yuan on December 5, 2019 and January 10, 2020 respectively.

On December 19, 2020, XX Trust Company issued the "Confirmation Letter of Supplementary Contract", confirming the subscription funds of 12 million yuan and the trust shares of 12 million units, with an effective date of December 19, 2020 and an expected termination date/expiration of the lock-up period of June 19, 2021. The performance benchmark was 9.3%, and the proceeds would be distributed upon maturity. After the trust units matured, XX Trust Company failed to return the funds and distribute the profits within the agreed timeframe.

In order to safeguard his legitimate rights and interests, Xu * entrusted Beijing Henglu Law Firm to handle the case for him.Xue Suhua、Wang DongThe lawyer represents the plaintiff to protect their rights and requests the court to order XX Trust Company to compensate the plaintiff for the principal loss of 12 million yuan and the interest loss.

II. The focus of the case

  • Focus 1: Whether there are any default or regulatory violations by trust companies.Whether the trustee failed to exercise due diligence and responsibility, or misused the trust funds in violation of regulations, is a prerequisite for making a claim.
  • Focus Two: Is the investor's loss certain?The defendant claimed that the losses had not yet been determined and that the compensation should be based on the degree of responsibility.
  • Focus 3: What kind of compensation liability should the trustee bear if he violates his obligations?The scope of compensation and the calculation standards.

III. Professional intervention by Hengluo Lawyers

The plaintiff (investor) alleges that:After the trust expired, the defendant failed to return the funds or distribute the profits, which constituted a breach of contract. We request compensation for the principal loss of 12 million yuan and interest thereon.

The defendant (the trust company) argued that:There is no breach of contract or violation of regulations on our part; due to the insufficient trust property in the form of cash, we are entitled to defer or distribute it in installments according to the benchmark; we have used the funds in accordance with the agreement, fulfilled our obligation to disclose information, and preserved the debtor's property; and the plaintiff's losses have not yet been determined. Even if compensation is required, the amount should be determined based on the degree of responsibility.

Legal opinion by Hengluo Law Firm:Xue Suhua、Wang DongAfter accepting the client's entrustment, the lawyer promptly begins to provide legal representation, carefully analyzing the rights and obligations of the trustor, trustee, and beneficiary under the trust relationship. The lawyer collects evidence showing that the trust company, as the trustee, has violated contractual agreements and statutory obligations, and committed multiple breaches of contract. Based on this evidence, the lawyer formulates a litigation strategy.

  • After the trust units expired, the defendant failed to return the funds and distribute the profits within the agreed time limit, failed to perform its duties with due diligence and responsibility, and violated the provisions of the Trust Contract regarding the management, use, and disposition of the trust property. The defendant also misused the funds in violation of regulations, which seriously damaged the plaintiff's interests.
  • The defendant failed to fulfill his obligations as a trustee of honesty, credit, caution, and effective management, and seriously violated the agreed investment, resulting in the product's inability to be redeemed and liquidated upon maturity; according to the Trust Contract, the trustee shall compensate the client for all actual losses caused by the breach of contract.

IV. Outcome of the case

After the trial, the court of first instance accepted the evidence submitted by the plaintiffXue Suhua、Wang DongThe lawyer's part of the opinions and main claims determined that the trust company failed to fulfill its fiduciary obligations and misused funds, resulting in the inability to redeem the funds. The final judgment ordered the defendant to compensate the plaintiff, Xu *, for investment losses of 11,279,233.53 yuan and interest (based on the unpaid principal, from October 22, 2021 to the date of actual payment, calculated at the loan market quotation interest rate announced by the National Interbank Funding Center for the same period); from the date of this judgment, the defendant shall offset the new payments to the plaintiff in accordance with the manner and order determined by this judgment.

5. Henglu Law Firm's Advice

Trust investment does not guarantee principal and returns. Investors should pay attention to the trustee's duty of due diligence and information disclosure. This case is handled by Beijing Henglu Law Firm.Xue SuhuaAttorney (Practice Certificate No.: 11101201211769926, subject to the certificate issued by the judicial administrative organ);Wang DongThe attorney (practice license number: 11101201910090334, subject to the document issued by the judicial administrative organ) hereby acts as an agent and reminds investors to keep the contract, confirmation letter, and distribution records. If they encounter payment risks, they should entrust professional lawyers as soon as possible.

VI. Common Questions and Answers about Business Trust Disputes

  1. Q: If the trust expires and the trust company fails to make the payout, can we sue the trust company?
    A:Yes. If the trust company fails to fulfill its fiduciary duties and misuses the funds in violation of regulations, resulting in the inability to make payments, investors can claim compensation for actual losses in accordance with the Trust Law and the contract.
  2. Q: Is it reasonable for a trust company to say that "if there's not enough cash, the distribution can be postponed"?
    A:It depends on the provisions of the contract and whether the management and disclosure obligations have been fulfilled. If the investment is in violation of regulations and results in the inability to make payments, the delayed distribution cannot exempt them from their liability for compensation.
  3. Q: How is the trust loss calculated?
    A:Generally, it is based on the principal and agreed or statutory interest that the investor has not actually received, calculated according to standards such as the LPR of the same period, and calculated from the date of default or the date on which the distribution should be made.
  4. Q: Do trust companies have an obligation to disclose information?
    A:Yes. The trustee shall, in accordance with the agreement, truthfully disclose the management, utilization and risk status of the trust property. Any failure to disclose the information or any misrepresentation may constitute a breach of contract.
  5. Q: Where should I file a lawsuit for a business trust dispute?
    A:Generally, disputes are handled in accordance with the dispute resolution method and jurisdiction court stipulated in the Trust Contract. These courts are usually located at the defendant's residence or the place of contract performance. Arbitration may also be agreed upon.