On August 18, 2008, Zhao Moumou signed an "Internal House Ordering Agreement" with Tangshan Jin Mou Tong Company, stipulating that Zhang Moumou would lend 400,000 yuan to Jin Mou Tong Company, which could be converted into a deposit for the purchase of commercial housing after the real estate development project of Jin Mou Tong Company was determined; on August 13, 2014, Zhao Moumou and Jin Mou Tong Company signed the "Commercial Housing Sales Contract". On May 12, 2017, the Tangshan Intermediate People's Court ruled to accept Jin Mou Tong Company's application for bankruptcy reorganization and appointed an administrator. As of the date of acceptance of the bankruptcy, the house involved in the case had not been delivered or the property rights change registration procedures had been completed. Later, the administrator of Jin Mou Tong Company decided to terminate the "Internal House Ordering Agreement" and "Commercial Housing Sales Contract" between Jin Mou Tong Company and Zhao Moumou. Zhao Moumou objected to this behavior and filed a lawsuit in court.

First, regarding the issue of determining the nature of the contract in question. According to Zhao Moumou's statements in the first instance and retrial application, Zhao Moumou's true intention was not to purchase a house, but to sign the contract in question based on the purpose of realizing his creditor's rights. Therefore, the contract in question is essentially an agreement to offset debt with a house. Second, regarding the issue of whether the administrator has the right to terminate the contract. Article 18 of the "Enterprise Bankruptcy Law of the People's Republic of China" stipulates: "After the people's court accepts the bankruptcy application, the administrator has the right to decide to terminate or continue to perform the contract that was established before the acceptance of the bankruptcy application but has not been fully performed by both the debtor and the other party, and notify the other party." Based on this, the administrator's right to terminate the contract according to law only applies to situations where both parties have not fully performed their obligations. However, in this case, only Jin Mou Tong Company has not fulfilled its repayment obligations, and it does not appear that Zhao Moumou has any other obligations that have not been fulfilled. Therefore, it is inappropriate to apply the law to determine that the administrator has the right to terminate the contract based on this article. However, in the case where the people's court has already accepted Jin Mou Tong Company's bankruptcy application, if the agreement to offset debt with property is not terminated, the effect of continuing to perform it would be to allow Zhao Moumou, as a general creditor, to actually obtain ownership, which is unfair to other creditors. Therefore, the original judgment ordering the termination of the contract is in line with the spirit of the bankruptcy law to fairly repay debts and avoid individual repayment, and there is nothing inappropriate in the result.

The purpose of Article 18 of the "Enterprise Bankruptcy Law of the People's Republic of China" in granting the administrator the right to terminate the contract is to protect the debtor's property, maximize the value of the debtor's property, and thus ensure fair repayment to creditors. In the bankruptcy procedure, for an agreement to offset debt with a house, under the premise that the contract is valid, if the creditor does not have any unfulfilled contractual obligations, then the contract should not fall within the scope that the administrator can terminate. However, if the creditor's original claim is a general claim, the result of performing the contract is to obtain property rights, which is undoubtedly unfair to other general creditors.

Therefore, the Supreme People's Court's "exceptional" judgment on this type of issue based on the legislative spirit of the bankruptcy law is a reasonable supplement to the administrator's right to terminate the contract, and provides guidance for solving difficult problems in bankruptcy practice. It should be pointed out that the above-mentioned supplement is not an unlimited supplement. The administrator should still pay attention to the principle of balancing interests in bankruptcy practice, and prevent the debtor from evading debts due to the right to terminate the contract. At the same time, attention should be paid to the actual performance of the agreement to offset debt with a house. Not every agreement to offset debt with a house can be terminated. The administrator should exercise the right to terminate the contract prudently under the requirement of protecting the interests of creditors.

(2019) Zui Gao Fa Min Shen No. 3989 Civil Judgment on Retrial Review and Trial Supervision of Disputes Related to Bankruptcy between Zhao Moumou