On August 18, 2015, Yin Mou signed 17 'Commodity House Sale Contracts' with Baoshi Company, which were in the nature of debt repayment with houses, and completed the online signing procedures. Baoshi Company confirmed that the payment had been settled through debt offsetting. On May 9, 2018, the Second Intermediate People's Court of Chongqing ruled to accept Baoshi Company's bankruptcy application. Subsequently, Yin Mou declared creditor's rights and requested the delivery of the houses, but the administrator determined that the rights declared by Yin Mou did not belong to the statutory priority rights. On January 17, 2020, the administrator delivered 2 of the 17 houses used for debt repayment to Yin Mou according to relevant regulations, and the creditor's rights corresponding to the remaining 15 undelivered houses were treated as ordinary creditor's rights.

The ownership determination of the 15 houses involved should be handled in accordance with the current laws and regulations on property rights and enforcement. After Baoshi Company entered bankruptcy proceedings, the 15 houses involved had not yet been delivered, and the property rights had not been registered for change. According to Article 9, Paragraph 1 of the Property Law and Article 30 of the Enterprise Bankruptcy Law, the 15 houses involved should be recognized as bankruptcy property. As for whether Baoshi Company should continue to perform the contract and deliver the houses, it should be determined from the legal relationship between the two parties and the order of rights among creditors. First of all, the basic legal relationship between the two parties is debt repayment with goods. Under the premise that there is no malicious damage to the legitimate rights and interests of third parties and there are no other invalid reasons, the debt repayment agreement reached by both parties is legal and valid. Secondly, the performance and delivery of the debt repayment agreement in bankruptcy proceedings shall be handled in accordance with the provisions of the Bankruptcy Law. Although the Bankruptcy Law and related laws and regulations do not clearly stipulate whether the administrator should continue to perform the contract that one party has already performed. However, considering that bankruptcy proceedings are a general debt settlement enforcement procedure, in the absence of explicit provisions in the Bankruptcy Law and related laws and regulations, the ownership of bankruptcy property can be determined with reference to the provisions on the order of creditor protection in the enforcement procedure. Article 29 of the Provisions on Objections to Enforcement and Reconsideration stipulates that the priority creditor's right involved is the expectation right of the property of the consumer of commercial housing. Even if Yin Mou is a consumer of commercial housing, the expectation right of property that he should enjoy has been protected by receiving 2 houses from the administrator. For the 15 houses involved, which have exceeded Yin Mou's need for residence, Yin Xiaochuan should no longer enjoy the corresponding expectation right of property of the consumer of commercial housing, that is, he does not enjoy the priority right to be compensated for the creditor's rights of the 15 houses involved in the bankruptcy proceedings, but only enjoys ordinary creditor's rights.

Debt-for-house agreements are a common method of debt settlement for real estate companies, and their characteristics often include the following three aspects: First, they are based on non-housing sales contract debts as the basic legal relationship; second, in most cases, they are not for the purpose of meeting living and consumption needs; and third, they do not use actual payment of currency as the transaction completion method. In non-bankruptcy proceedings, the contractual purpose of debt-for-house can be achieved by following the regular procedures for the transfer and registration of real estate property rights, provided that it does not violate mandatory legal provisions. However, debt-for-house transactions formed before the start of bankruptcy proceedings fall under the scope of bankruptcy law once bankruptcy proceedings are initiated. From the administrator's perspective, the goal is to maximize the collection and confirmation of the debtor's assets and to fairly compensate creditors to the greatest extent possible. From the perspective of the debt-for-house creditor, the goal is to achieve the transaction purpose and deliver the house as much as possible. The completion of the debt-for-house creditor's contractual obligations does not automatically ensure the realization of the transaction purpose. The administrator can legally confirm the debt-for-house as the debtor's property by breaching the contract and terminating it. The debtor is then responsible for the damages caused by the breach of contract and termination. This liability for damages corresponds to ordinary creditor's rights and cannot be used to oppose priority compensation rights such as the limited rights of consumers who purchase houses and mortgage rights. The termination of the debt-for-house contract will result in the legal consequence of returning to the debt of the basic legal relationship, and the obligee can only declare creditor's rights to the administrator based on the debt of the basic legal relationship. Therefore, when adopting the debt-for-house method, the obligee should pay sufficient attention to transaction security in law, improve transaction efficiency, fully consider the adverse effects that may arise if the debtor enters bankruptcy proceedings, and choose the correct litigation plan to maximize the protection of their legitimate rights and interests.

Supreme Court Min Shen No. 7497 Yin Mou, Baoshi Company and bankruptcy-related dispute civil application for retrial review civil ruling