[Direct answer]It may be given priority, but it should be viewed from two perspectives. For consumers of commercial housing who have paid the full price for the purpose of residence, their rights to request the delivery of the house and to request the return of the paid purchase price shall take precedence over the right to priority compensation of the construction project price, the right of mortgage and other creditor's rights—according to the "Reply of the Supreme People's Court on the Protection of the Rights of Commercial Housing Consumers" (effective April 20, 2023); for the purchase of shops, parking spaces or the purchase of housing for investment purposes, the creditor's rights shall be treated as ordinary creditor's rights and be settled in accordance with the order of priority in Article 113 of the "Enterprise Bankruptcy Law of the People's Republic of China" (effective June 1, 2007). In practice, the creditor should timely declare the creditor's rights within the declaration period specified in the bankruptcy announcement issued by the court, assert the priority rights in writing, and participate in the voting on the reorganization plan. For more details, please refer to the relevant provisions.Legal services for real estate sale and purchase disputesAnd\nCreditor-debtor enforcement case services.

I. Legal basis and interpretation of provisions

1. "Reply of the Supreme People's Court on the Protection of Consumers' Rights in Commercial Housing" (effective from April 20, 2023)

The reply clearly states that: Where a consumer of commercial housing purchases a house for the purpose of residence and has paid the full price, and claims that his right to request the delivery of the house takes precedence over the right to priority compensation for the construction project price, the right of mortgage, and other creditor's rights, the people's court shall support it; where the buyer has only paid part of the price, if he actually pays the remaining price before the end of the debate in the first-instance court, it can also be applied. Where the house cannot be delivered, the buyer's right to request the return of the price also takes precedence. The legislative purpose is to protect the right to survival and residence, so the application is based on the "purpose of residence", which is also the first threshold for the buyer to provide evidence.

2. Article 113 of the Enterprise Bankruptcy Law of the People's Republic of China (effective June 1, 2007)

After the bankruptcy estate has paid off the bankruptcy expenses and common benefit debts in priority, it shall be paid off in the order of workers' claims, social insurance and taxes, and ordinary claims; in the reorganization procedure, the creditors shall vote in groups according to the secured claims, workers' claims, taxes, and ordinary claims (Article 82 of the Enterprise Bankruptcy Law of the People's Republic of China, implemented on June 1, 2007). The priority rights of consumers who purchase houses are special protections outside the above-mentioned order. When the administrator formulates the property distribution plan or the reorganization plan, it shall be arranged separately. The investment funds for housing shall fall into the ordinary claims group, and the recovery rate shall depend on the scale of the bankruptcy estate.

3. Practical judicial interpretation guidelines

The court determined that the "residential purpose" is usually judged comprehensively based on whether the buyer has other residential properties, the size and use of the property, the online signing and filing record, and the actual possession situation; the purchase of shops, office buildings, and parking spaces is generally not recognized as a consumer's priority right. In the bankruptcy cases of real estate companies, under the policy orientation of "ensuring the delivery of houses", the administrator will generally prioritize the resumption of construction and delivery. For houses that can be delivered, the buyer can receive them; for those that cannot be delivered, the buyer can get a refund. When these two options coexist, the buyer should carefully assess the pros and cons. The most common pitfalls include failing to declare claims on time, waiving voting rights, and hastily terminating contracts before clarifying priority rights, which may result in the loss of rights to secure the delivery of houses or receive priority compensation.

II. Real cases of Henglue Law Firm (detailed review)

The core of the bankruptcy restructuring of developers is the order of repayment and the scale of distributable assets. The following "execution failure" recourse cases handled by Henglue Law Firm show that even if a party has no assets available for execution, creditors may still realize their claims through such means as recourse to shareholder liability, which is also of reference value to creditors who receive insufficient compensation in the bankruptcy of real estate enterprises.

Review of the case:Ma * and A Company had a dispute over the intermediary contract. The Beijing Chaoyang District People's Court ruled that A Company should return the intermediary service fee of 423,500 yuan (Case No. (2019) Jing ** Civil First Instance ** of Beijing). After A Company filed an appeal, it failed to pay the appeal fee on time, and the appeal was automatically withdrawn, and the judgment became effective. Because A Company failed to fulfill its payment obligation, Ma * applied for enforcement. After exhausting all enforcement measures, the court found that A Company had no enforceable property, and the court ruled to terminate the enforcement procedure. When the effective creditor's rights became unfulfilled, Ma * entrusted Beijing Henglu Law Firm to handle the matter.Yuan HangThe lawyer continued to pursue the case.

The focus of the controversy:First, when the company has no property available for execution and meets the conditions for bankruptcy but does not file for bankruptcy, can the shareholders' contributions that have not yet reached the due date be accelerated to maturity? Second, should the shareholders Liu * (who subscribed for 9 million yuan) and Zhang * (who subscribed for 1 million yuan, with both subscription periods ending on September 23, 2039, and no actual payment records in the industrial and commercial archives) bear supplementary compensation liability for A Company's debts within the scope of their unpaid contributions?

Our position and the position of the other party are as follows:Ma claimed that A Company was unable to pay off its due debts and clearly lacked the ability to do so. It met the criteria for bankruptcy but failed to file for bankruptcy. The shareholders should accelerate the maturity of their subscribed capital and bear supplementary compensation liability within the scope of their unpaid capital. The shareholders invoked the benefits of the subscription period to defend themselves, but they did not appear in court to respond to the lawsuit and also failed to provide evidence of the actual paid-in capital.

Attorney's Strategy and Legal Opinions:Attorney Yuan Hang retrieved the internal documents of the Industry and Commerce Bureau to verify the amount of capital subscribed by the two shareholders and the term of their investment, and confirmed that there was no record of actual payment. Subsequently, in accordance with the judgment rule on the accelerated maturity of investment in the "Memorandum on Civil and Commercial Trial Work of the National Court" (issued on November 8, 2019) and the provisions on the supplementary compensation liability of shareholders who fail to fulfill their investment obligations in the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (III)" (amended on December 29, 2020), he initiated a lawsuit against the shareholders for their liability for harming the interests of the company's creditors, arguing that A Company already meets the criteria for bankruptcy but has not filed for bankruptcy, and that the shareholders are no longer entitled to invoke the benefit of the time limit to resist the claims of the creditors.

The court's reasoning and the outcome of the case:The court determined that Company A was unable to repay its due debts and clearly lacked the ability to do so, meeting the criteria for bankruptcy but failing to file for bankruptcy. The two shareholders no longer enjoyed the benefits of the investment period, and the unpaid capital was legally accelerated to maturity. Liu * and Zhang * failed to appear in court and provide evidence of full payment, and they must bear the adverse consequences of failing to provide evidence. Ultimately, the court ruled that Liu * should bear supplementary compensation liability for the debts owed by Company A to Ma * within the scope of his unpaid investment of 9 million yuan, and Zhang * should bear such liability within the scope of his unpaid investment of 1 million yuan. Thus, the 423,500 yuan of effective claims obtained a path to settlement.

This case is handled by Beijing Henglu Law Firm.Yuan HangThe attorney (practice certificate number: 11101202110286151, subject to the certificate issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: Are home buyers considered ordinary creditors in the event of a developer's bankruptcy?

It depends on the specific circumstances. For consumers of commercial housing who purchase for living purposes and have paid the full price (or made up the payment before the conclusion of the debate in the court of first instance), their rights to request delivery and refund of the purchase price shall, in accordance with the law, take precedence over the rights to claim project payments, mortgages, and general creditor's rights; purchasers of shops, office buildings, parking spaces, or those who purchase for investment purposes shall generally be compensated as ordinary creditors according to the order of repayment, and the repayment rate shall depend on the scale of the bankruptcy estate and the progress of its disposal. Those who claim priority rights shall submit their claims in writing and provide evidence of their living purposes and payment facts.

Q2: What should I do if I've paid the down payment but the house hasn't been registered online yet?

Online signing and filing are not the only conditions for claiming consumers' priority rights. The core review focuses on the authenticity of the purchase contract, payment receipts, and the purpose of residence. Those who have paid the full amount can claim delivery priority; those who have only paid the down payment and are unable to make up the balance can claim priority compensation for the refund of the paid housing price, and choose to continue to perform or terminate the contract according to the reorganization plan. It is recommended to collect payment records, loan contracts, and evidence of moving in or decoration at the same time to prove that the contract has been actually performed.

Q3: Should I vote for or against the restructuring plan?

Based on the feasibility of resuming construction, delivery time, and the investors' financial strength, those who can continue to fulfill the contract and deliver the houses on schedule will usually receive better protection for their houses than being settled at a discounted rate as ordinary creditors; for those who are truly unable to deliver, they should strive to obtain priority repayment of the purchase price. Buyers should attend the creditors' meetings and express their opinions fully. They can vote against the obviously unbalanced draft and state their reasons. When the court forcibly approves the reorganization plan, it will also review whether it damages the legitimate rights and interests of buyers and other stakeholders.

Q4: What materials are required for creditor's declaration, and what is the time limit for it?

According to Article 45 of the Enterprise Bankruptcy Law of the People's Republic of China (effective June 1, 2007), the filing period starts from the date the court issues the announcement of accepting the bankruptcy application, with a minimum of 30 days and a maximum of three months. The materials include the purchase contract, payment receipts, loan contracts, identity certificates, and evidence of online signing and registration or possession and use. Those who fail to file within the time limit may submit their claims for supplementary filing before the final distribution of the bankruptcy estate, but the distributions already made before that will not be supplemented. They will also need to bear the costs of review and confirmation themselves. It is essential to pay close attention to the deadline announced in the announcement.

Q5: Can I get my house back or get my money back for an unfinished building?

Two optimal solutions: For projects with continued construction value, protecting the delivery of housing through restructuring procedures is usually the most beneficial for residential buyers; for those that are truly unable to deliver, asserting the right to claim a refund of the paid purchase price. In the case of consumers, this right to claim a refund shall be given priority in compensation. The degree of implementation depends on the project's assets, the investment in and disposal progress of common-benefit debts. It is recommended to entrust lawyers to participate in creditor's declaration, restructuring voting and negotiation as soon as possible, and pay attention to additional liability clues such as the developer's shareholders' capital contributions and the use of funds by related parties.

IV. Suggestions for Protecting Rights

  • Firstly, check the bankruptcy announcement and declaration notice accepted by the court and complete the creditor's declaration within the time limit.
  • Organize all the evidence, including the purchase contract, payment receipts, loan contracts, online signing and filing records, and delivery notifications.
  • For those who purchase houses for the purpose of living and have already paid the full amount, they should claim the priority of delivery or refund in writing and keep the relevant evidence.
  • Pay attention to the draft restructuring plan and the arrangements for the creditors' meeting, and rationally assess the advantages and disadvantages of the housing preservation and refund schemes.
  • If it is found that the developer's shareholders have not paid in their actual contributions or that their assets are mixed together, you can consult\nCreditor-debtor enforcement lawyerEvaluate the additional responsibility path.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, so as to avoid missing the statutory time limit.Legal services for creditor-debtor disputes·Attorney Yuan Hang·Beijing Henglu Law Firm