[Case Summary]This case involves a dispute over a cooperative operation contract. On July 14, 2023, the plaintiff, Liu Shufen, paid a cooperation operation lease fee of 168,000 yuan to Beijing A Hotel Management Co., Ltd. (hereinafter referred to as "A Company") and obtained a 15-year cooperation operation right to the house located at No. XX03, Fengtai District, Beijing. According to the agreement, A Company was required to pay 15% of the operating income annually. After A Company paid the profits for seven quarters, it was deregistered, and the sole shareholder, Wang Xiaochen, failed to liquidate the company in accordance with the law before its deregistration. Hengluo LawyerShang JiangpengIn this case, the agent claimed to terminate the contract due to fundamental breach of contract in accordance with Article 563 of the Civil Code, and pursued the joint and several liability of shareholder Wang Xiaochen in accordance with the rules of a single-member limited liability company. The People's Court of Fengtai District, Beijing City ruled that the contract was terminated on March 20, 2026, and Wang Xiaochen was required to return 168,000 yuan and pay the arrears in operating income and the breach of contract penalty. The case acceptance fee of 6,970 yuan was borne by Wang Xiaochen.

I. Review of the case

Many litigants often feel at a loss when encountering issues such as "how to sue in a contract dispute" or "can I still recover the debt if the company has been dissolved?" On July 14, 2023, the plaintiff, Liu Shufen, and the defendant, Company A (which has now been dissolved, with its former legal representative, Wang Xiaochen, holding 100% of the shares), signed the "Beijing Short- and Long-Term Rental Apartment Cooperation and Operation Contract", which stipulated that Liu Shufen would pay a cooperation and operation fee of 168,000 yuan to obtain a 15-year cooperation and operation right to the house located at No. XX03, Fengtai District, Beijing; Company A would pay the plaintiff 15% of the operating income annually (paid quarterly), and it was agreed that "the plaintiff could choose to fully withdraw from the lease after three years of cooperation" or "if the defendant fails to pay the operating income within 30 days, the plaintiff may exercise the right to use the house".

On the day the contract was signed, Liu Shufen transferred 168,000 yuan as agreed (see Receipt No. 7……2). However, A Company only paid the first seven quarters of income and then stopped making payments. Despite reminders, A Company still failed to fulfill its main contractual obligations. What's more troublesome is that A Company refused to pay the quarterly operating income from April 15, 2025, and went through the cancellation registration, resulting in the termination of its legal person status. Faced with the dilemma of "the debtor company having been deregistered and the civil subject no longer existing," if only the deregistered company is sued, the court will directly dismiss the lawsuit, leaving the parties with no avenue for legal redress.

Therefore, Liu Shufen entrusted the Beijing Henglu Law Firm to handle the case.Shang JiangpengThe lawyer filed a lawsuit with the court, hoping to safeguard his own legitimate rights and interests through judicial means.

II. The focus of the case

  • After Debtor Company A is deregistered, will the conditions for the termination of the contract be met, and can the party in compliance demand the return of all the cooperation operating lease payments and claim the overdue breach of contract penalties?
  • The sole shareholder of the one-person limited liability company, Wang Xiaochen, deregistered the company without conducting a liquidation in accordance with the law. Should he bear joint and several liability for all of Company A's debts?

III. Professional intervention by Hengluo Lawyers

The plaintiff alleged that after collecting the cooperation fee of 168,000 yuan, Company A failed to pay the operating income as agreed, constituting a fundamental breach of contract. Moreover, the company's dissolution resulted in the inability to fulfill the contractual purpose. The plaintiff requested to rescind the contract, return all the cooperation fees, and pay the outstanding income and breach of contract damages. The defendant, Wang Xiaochen, refused to appear in court without a valid reason after being legally summoned, which was deemed as a waiver of the right to defend and cross-examine the evidence.

Shang JiangpengAfter accepting the client's commission, the lawyer first reviewed the cooperative operation contract, bank transfer records, receipts, income collection records, enterprise industrial and commercial archives, and all materials related to the company's dissolution and liquidation, and established two core litigation strategies:

First, at the contractual level. The "Beijing Short-Term and Long-Term Rental Apartment Cooperation Operating Contract" involved in the case is a true expression of the parties' intent and is legally valid. Liu Shufen has fulfilled her obligation to make full payment, but A Company registered for cancellation during the performance period, objectively lost the ability to continue performance, and refused to pay the quarterly operating income since April 15, 2025. After being reminded, it still failed to perform its main obligations. According to Article 563 of the Civil Code, this constitutes a breach of the main obligations by its own actions, which meets the statutory conditions for termination, and the contract should be terminated. After the termination, the breaching party shall return all the cooperation operating rent and pay the arrears in operating income and the default penalty for late payment according to the contract.

Second, with regard to the subject of accountability. Company A is a one-person limited liability company, and Wang Xiaochen is the natural person shareholder who holds 100% of the shares and the liquidation obligor of the company's current dissolution. According to the relevant provisions of the Company Law, shareholders of one-person limited liability companies have the obligation to provide evidence to prove that the company's assets are independent of their personal assets; when the company is dissolved, the liquidation obligors shall faithfully and diligently perform their liquidation duties and truthfully handle the company's external creditor's rights and debts. Wang Xiaochen neither provided evidence to prove that his personal assets are independent of the company's assets nor submitted a liquidation report stating that "the creditor's rights and debts have been settled" when the contractual debts involved in the case were not repaid, completing the dissolution process. This constitutes dissolving the company without completing the liquidation in accordance with the law, and he should bear joint and several liability for all the company's debts.

Based on the above opinions, Attorney Shang compiled a complete chain of evidence, drafted a civil complaint, listed Wang Xiaochen as the defendant, and filed the case with the court. After receiving the complaint and the court summons, Wang Xiaochen refused to appear in court without a valid reason. Attorney Shang completed all the courtroom procedures, including presenting evidence, cross-examination, and courtroom debate, on behalf of the client.

IV. Outcome of the case

The People's Court of Fengtai District, Beijing City held that the cooperation operation contract in the case is legal and effective, and Liu Shufen has paid the cooperation rental in full; after A Company paid the seven-quarter earnings, it stopped making payments and went through the cancellation registration, and the legal person's subject qualification was extinguished, so the contractual purpose could not be achieved, which meets the statutory conditions for rescission of the contract. The court confirmed that March 20, 2026, the date on which the lawsuit was served on Wang Xiaochen, is the time of rescission of the contract. A Company is a one-person limited liability company, and Wang Xiaochen is the 100% shareholder and liquidation obligor. He failed to provide evidence to prove that the company's property is independent of his personal property, and he also failed to fully perform his liquidation obligations. Therefore, he shall bear joint and several liability for all the debts of A Company.

The court's final ruling is as follows: It is confirmed that the "Cooperative Operation Contract for Short- and Long-Term Rental Apartments in Beijing" signed by Liu Shufen and Beijing A Hotel Management Co., Ltd. was terminated on March 20, 2026; Wang Xiaochen shall return to Liu Shufen the cooperative operation lease payment of 168,000 yuan within seven days after the judgment takes effect; Wang Xiaochen shall pay two outstanding operating income of 6,300 yuan each, and shall calculate the overdue payment penalty at a rate of 0.01% per day from the date of the expiration of the corresponding quarter until the actual payment is made; if the overdue performance occurs, the debt interest during the delay in performance shall be doubled in accordance with the relevant provisions of the Civil Procedure Law of the People's Republic of China; and all the litigation requests of the parties in this case have been supported.

5. Hengluo Law Firm's Reminder

Case Note: Company deregistration is not a debt-free exit route. If a shareholder of a one-person limited liability company cannot prove that the company's assets are separate from his/her personal assets, or deregisters the company without going through legal liquidation and settling debts, he/she will bear joint and several liability for the company's debts. When a transaction counterparty encounters the question "Can I still recover the debt if the other company has been deregistered?", he/she should promptly preserve contracts, transfer records, business registration files, and liquidation materials, and investigate the shareholders' liabilities in accordance with the law. This case was handled by Beijing Henglu Law Firm.Shang Jiang PengThe attorney (practice license number: 111012023105807, subject to the document issued by the judicial administrative organ) acts as the agent.

VI. Common Questions About Contract Disputes - FAQ

  1. Q: The company has been deregistered. Can I still recover the money owed to me? A: Yes. If the shareholders deregistered the company without conducting a legal liquidation or settling debts, or if the shareholders of a one-person limited liability company cannot prove the independence of their assets, they may be held jointly and severally liable for repayment in accordance with the Company Law.
  2. Q: How to file a lawsuit for a contract dispute? A: Prepare evidence such as the contract, payment receipts, and records of reminders. Draft a civil complaint and file it with the court that has jurisdiction; pay attention to the statute of limitations and jurisdiction agreements.
  3. Q: What circumstances constitute a fundamental breach of contract that allows the contract to be terminated? A: According to Article 563 of the Civil Code, if a party delays in performing its main obligation and fails to perform it after being reminded, or if it indicates through its own actions that it will not perform its main obligation, the party in compliance may terminate the contract.
  4. Q: Can the paid amount be recovered after the contract is terminated? A: After the contract is terminated, the unperformed part of the contract shall be terminated. The party in compliance with the contract has the right to request the restoration of the original state, the return of the paid amount, and compensation for the corresponding losses.
  5. Q: If the other party refuses to appear in court, how will the court rule? A: If the other party refuses to appear in court without a valid reason after being legally summoned, it will be considered as giving up the right to defend and cross-examine. The court may make a judgment in absentia according to the law.