Can you repay your debt without auctioning? Zhuhai Court provides a "win-win" answer

“Thank you for the court’s proactive coordination, which broke the deadlock of ‘assets that are difficult to liquidate,’ allowing us to smoothly recover our investment funds.” Recently, Ms. Sun specially presented a banner of commendation to the enforcement officer of the Doumen District People’s Court in Zhuhai.

In 2021, Ms. Sun and two other parties entered into a “Project Cooperation Agreement” with Mr. Chen, agreeing to jointly carry out a village renovation project. However, the cooperation stalled after the project was not approved. Ms. Sun and the other two parties then filed a lawsuit, requesting Mr. Chen to refund the investment of 1.6 million yuan and interest. The Doumen District People’s Court supported the claims according to law. After the judgment took effect, Mr. Chen did not voluntarily comply, and the case entered compulsory enforcement proceedings.

At the beginning of enforcement, Ms. Sun found that although the court had already seized the real estate under Mr. Chen’s name, it had delayed initiating the auction process for a long time. She became anxious and came to the court: “Why does Mr. Chen have property, but the court doesn’t auction it?”

In response to the applicant’s confusion, the enforcement officer patiently explained the law: “All of these pieces of real estate have mortgage interests, and the secured debt amounts are relatively high. If we directly start judicial auctions, the auction proceeds must first be used to satisfy the mortgagee, and the remaining funds may not be able to fully cover your claims. Having a house doesn’t necessarily mean it can be liquidated—this is the reality of the predicament we are facing.”

To break the stalemate, the enforcement officer did not simply push forward the auction process. Instead, they launched “dialogue-based enforcement,” actively building a communication platform and thoroughly understanding the demands of all parties. During conversations with the person subject to enforcement, Mr. Chen, the enforcement officer was keenly able to detect his willingness to fulfill his obligations positively.

“Since there is still room for financing for the property under my name, I can use the property for refinancing. The financing funds will be supervised by the court and used specifically to repay the debts.” Mr. Chen proposed a new solution, and also expressed the difficulties: “I hope the applicant can understand the operational pressure I’m facing at the moment, and appropriately waive part of the interest.”

The enforcement officer promptly relayed this proposal to Ms. Sun and the other two parties, and analyzed the pros and cons: “If you agree to lift the seizure of the property and appropriately reduce the interest, so that Mr. Chen can finance smoothly, everyone may be able to get back the investment funds faster and more safely, while avoiding a lengthy auction process.”

After careful deliberation, Ms. Sun and the other two parties ultimately agreed to Mr. Chen’s proposal: “If Mr. Chen can fulfill the agreement, we are willing to waive the interest on the 1.6 million yuan creditor’s claim, and we voluntarily forgo all overdue enforcement interest, and settle this case with 1.6 million yuan.” On the spot, all parties reached an enforcement settlement agreement. After examination, the Doumen District People’s Court confirmed the agreement.

According to the settlement agreement, the Doumen District People’s Court, in accordance with the law, lifted the seizure of the real estate under Mr. Chen’s name, and granted him a reasonable financing period. Twenty days later, Mr. Chen successfully completed bank approval, finished refinancing the property, and transferred the full amount into the court-designated account. The enforcement officer quickly completed the procedures for distributing the case funds, and delivered the 1.6 million yuan enforcement payment to the three applicant-enforcers. This dispute spanning five years was thus fully resolved.

Looking back on the case-handling process, the enforcement officer was deeply moved: “The successful conclusion of this case hinges on finding the greatest common denominator of interests among all parties. By facilitating real estate refinancing through an enforcement settlement, we not only cleverly resolved the disposal dilemma of ‘having assets but making them difficult to liquidate’ for mortgage-encumbered real estate, but also avoided the time costs and fee losses brought by lengthy and complex judicial auction procedures. This allowed the applicant-enforcers to quickly realize their rights, while also giving the person subject to enforcement the space to activate assets, truly achieving ‘the case is concluded and the affairs are settled, and mutual benefits lead to a win-win outcome.’”

South+ Reporter Wang Shaojiang

Correspondent Chen Jingzhong Chen Junjie

[Author] Wang Shaojiang

[Source] Nanfang Media Group South+ Client