As the saying goes, "those who are barefoot are not afraid of wearing shoes, and those who are bare-shouldered are not afraid of wearing shirts", and now some debtors are doing everything possible to let themselves "take off their shoes and bare feet" in order to achieve the purpose of debt evasion, and try every means to make their "property return to zero", resulting in the creditor winning the lawsuit and not being able to enforce the property. In the face of these "cunning" debtors, how should creditors protect their rights and interests?
Hurry up and follow Jing Xiaomallet through a creditor's revocation dispute case to see how to break this deadlock.
Brief facts of the case
Zhao Jia and Zhao B, both brothers, were shareholders of their family business, a food company, and received huge compensation for the company's demolition. Zhao Jia wanted to cease business and divide the compensation, while Zhao Yi wanted to continue to operate the company. After negotiation between all parties, Zhao Yi and a food company issued an "Explanation" to Zhao Jia on March 11, 2016, promising that Zhao Jia would pay Zhao Jia 5 million yuan after withdrawing from business, and paid 800,000 yuan to Zhao Jia on the spot, and agreed on the follow-up payment time.
On April 9, 2018, Zhao Yi and Wu signed a divorce agreement, stipulating that House No. 1 (joint property of husband and wife), House No. 2 (Wu's personal property before marriage) and the bank deposits in Wu's name belonged to Wu; The equity of a food company is owned by Zhao Yi personally, and the resulting creditor's rights and debts are borne by Zhao Yi personally; Zhao Yi was responsible for the joint debts of the husband and wife totaling 5.8 million yuan and Zhao Yi's external debts during the marriage.
Because Zhao Yi failed to continue to pay Zhao A as scheduled, on August 27, 2021, Zhao A sued Zhao B to the court, demanding that Zhao B pay the remaining amount. After hearing the case in accordance with the law, the court made a judgment in favor of Zhao Jia's claim. After the judgment took effect, Zhao Jia applied to the court for compulsory enforcement, and the case was terminated because Zhao Yi had no property available for enforcement.
On January 18, 2023, Zhao Jia sued the court again, requesting to revoke the gift of house No. 1 to Wu in the divorce agreement between Zhao B and Wu.
During the trial of the case, the defendant Wu argued that according to the law, the right of revocation was exercised within one year from the date on which the creditor knew or should have known the reason for revocation, and all the claims in this case filed by Zhao Jia with the creditor's right of revocation had exceeded the statutory statute of limitations. In addition, there is no possibility of reconciliation between Zhao Yi and Wu due to the complete breakdown of the relationship between husband and wife, and as for the ownership of House No. 1, it is a voluntary consensus between the two parties on the division of the joint property during the existence of the husband and wife relationship, and the above-mentioned property division method also takes into account the economic pressure of Wu raising two children, and there is no subjective intention to transfer property and maliciously evade debts. Therefore, Zhao Jia's litigation claim was not agreed.
Zhao Jia said that in the WeChat communication between him and Zhao Yi, Zhao Yi still called Wu "daughter-in-law" many times, and said that he had "made do" with Wu, so Zhao Jiaqi did not know that Zhao Yi and Wu had divorced, let alone the specific content of the divorce agreement. After receiving their divorce agreement in August 2022, I learned that they agreed to give all the property to Wu and all the debts to Zhao Yi, and their intention to transfer property to avoid debts was already obvious.
Heard by the courts
After trial, the court held that Zhao Yi still called Wu as "daughter-in-law" after divorcing Wu, and this behavior was unreasonable after the divorce of the husband and wife, so it was common sense for Zhao Jia to claim that he did not know about Zhao Yi and Wu's divorce. In addition, even if Zhao Jia later learned that Zhao Yi and Wu were divorced, it did not mean that he knew about the property division clause in the divorce agreement. The "grounds for revocation" should refer to specific property division clauses rather than general divorce matters. If the creditor only knows the divorce matters but does not know the specific content of the property division clause, the creditor cannot file a clear and specific avoidance action against the debtor.
In addition, before the divorce, Wu clearly knew that Zhao Yi had debts involved in the case that had not been paid off, and in this case, Zhao Yi and Wu agreed to divorce and divided a large amount of joint property of the husband and wife into Wu; Although the equity division belongs to Zhao Yi, the equity has been transferred to a third party by agreement in 2017, and the company is already operating in debt, which means that all debts such as the company's debts, joint debts of husband and wife and Zhao Yi's personal debts belong to Zhao Yi. This method of property division is obviously extremely unbalanced, resulting in Zhao Yi having no property to pay off his own debts, which affects the realization of the creditor Zhao Jia's creditor's rights, and this act belongs to the "free transfer of property" under the law.
In the end, the court decided to revoke the clause in the divorce agreement signed by defendant Zhao Yi and defendant Wu on April 9, 2018 that "House No. 1 is owned by the contractor Wu".
After the judgment was rendered, Wu appealed, and after trial, the court of second instance rejected Wu's appeal request and upheld the original judgment, and the case has now taken effect.
Jing Xiao Mallet popularization
This case protects the legitimate rights and interests of creditors by strictly applying the requirements for the establishment of the creditor's right of revocation, revoking the debtor's act of disposing of property without compensation, and clarifying that "it is not possible to give up property for free in order to avoid debts".
What is a creditor's right of avoidance?
The creditor's right of avoidance system is one of the core systems of creditor's rights protection, which grants creditors the right of avoidance under certain conditions, thereby interfering with the debtor's freedom to dispose of its property at will, and aims to ensure that creditors realize their creditor's rights. Note, however, that the creditor's right of avoidance can only be exercised through litigation.
There are three requirements for the exercise of the creditor's right of revocation: first, the creditor has a legal and valid claim against the debtor; (2) the debtor has carried out the act of gratuitous disposition, or has carried out the act of compensatory disposition at an obviously unreasonable price, and the counterparty of the compensated disposition has malicious intent on the part of the debtor; Third, the above-mentioned debtor's disposition of property affects the realization of the creditor's claim.
In this case, the creditor's rights asserted by Zhao Jia were finally determined through the civil judgment in 2021, and although the creditor's rights on which Zhao Jia relied were confirmed after the divorce of Zhao Yi and Wu, they were formed during the existence of the marital relationship between Zhao Yi and Wu, so Zhao A had a legal and valid claim against Zhao B.
At the same time, there is a statutory exclusion period for the exercise of the right of revocation. Article 541 of the Civil Code of the People's Republic of China provides that the right of avoidance shall be exercised within one year from the date on which the creditor knows or should know the reasons for avoidance. If the right of avoidance is not exercised within five years from the date of the debtor's act, the right of avoidance shall be extinguished.
Special attention should be paid to the fact that when the debtor disposes of the property without compensation, there is no need to consider whether the counterparty is at fault.
The legal effect of exercising the creditor's right of avoidance
Article 542 of the Civil Code of the People's Republic of China stipulates that if the debtor's act affecting the realization of the creditor's claim is revoked, it shall not be legally binding from the beginning. That is, after the relevant legal act is revoked, retroactively, when the act is made, it does not have the legal effect of binding the parties. The creditor's exercise of the right of avoidance is aimed at achieving the return of the debtor's property.
In this case, after the clause on the ownership of the property involved in the case in the divorce agreement between Zhao Yi and Wu was revoked, the property involved in the case will be jointly owned by Zhao B and Wu again, and can be divided as the joint property of the husband and wife in accordance with the law.
Article 540 of the Civil Code of the People's Republic of China stipulates that the scope of exercise of the right of avoidance is limited to the creditor's claim. The necessary expenses for the creditor to exercise the right of avoidance shall be borne by the debtor. The necessary expenses here generally include litigation fees, lawyer fees, travel expenses, property preservation insurance premiums, etc.
There is no truth or falsehood in divorce, and there is no escaping debt
A divorce agreement is a composite agreement reached by a man and a woman on the dissolution of marriage, child support and division of property, and is within the scope of party autonomy. Once the divorce agreement is filed and registered with the civil affairs department and the divorce certificate is obtained, the corresponding legal consequences will arise.
Here, Jing Xiaomao reminds everyone that any attempt to escape debts by using the principle of autonomy of will in the marriage system is not only disrespectful to marriage, but also cannot achieve the purpose of debt evasion. In addition, there is no concept of a "fake divorce" in law. Even if the creditor exercises the right of revocation to revoke the property division clause in the divorce agreement, it will not affect the legal effect of the clause in the divorce agreement on the dissolution of marriage, child support and other status relationships.
Links to legal provisions
Civil Code of the People's Republic of China
Article 538:If the debtor disposes of the property rights and interests free of charge by waiving its creditor's rights, waiving the guarantee of its creditor's rights, transferring property without compensation, etc., or maliciously extends the time limit for the performance of its due creditor's rights, affecting the realization of the creditor's creditor's rights, the creditor may request the people's court to revoke the debtor's acts.
Article 540:The scope of the exercise of the right of avoidance shall be limited to the creditor's claim. The necessary expenses for the creditor to exercise the right of avoidance shall be borne by the debtor.
Article 541:The right of revocation shall be exercised within one year from the date on which the creditor knows or should know the reason for revocation. If the right of avoidance is not exercised within five years from the date of the debtor's act, the right of avoidance shall be extinguished.
Article 542: If the debtor's act affecting the realization of the creditor's claim is revoked, it shall not be legally binding from the beginning.
Contributed by: Tongzhou Court
Editor: Fang Yingjun Wang Xi
Review: Zhang Lei