On September 29, 2011, Jianchang Company and Anju Company signed a construction agreement, stipulating that Jianchang Company would undertake the construction of Buildings 1 to 5 of the Jinyu Blue Mountain Community contracted by Anju Company. During the performance of the contract, the two parties had a dispute over the payment of the project progress payment. Jianchang Company claimed to have priority in receiving compensation for the project price and compensation for work stoppage losses. After trial, the court of first instance confirmed through mediation the rescission of the agreement signed by the two parties, the payable project payment, compensation for work stoppage losses, and other matters. Subsequently, Jianchang Company applied for compulsory execution, requesting to enjoy the priority right to receive compensation for the discounted or auctioned price of the constructed project. During this period, Jianchang Company transferred the construction project payment claim to Stanwell Company. On October 25, 2016, Anju Company entered bankruptcy liquidation proceedings. The administrator of Anju Company determined that Stanwell Company did not have priority in the construction project payment for the project payment involved in the debtor through assignment. Stanwell Company refused to accept this and filed a lawsuit to confirm the creditor's rights.

The Supreme People's Court's Reply on How to Apply the Law to the Issue of the People's Court Mediation Document Not Specifying the Priority Right of Construction Project Payment ([2007] Zhi Ta Zi No. 11) believes that the priority right of construction project payment is a statutory priority right and does not require the parties to explicitly state it. Given that Jianchang Company had claimed to enjoy the priority right of construction project payment when it filed the lawsuit and applied for execution in 2015, although the People's Court did not explicitly state in the mediation document that the construction project payment enjoyed priority, it does not prevent the obligee from applying to exercise its priority right. The priority right of construction project payment is a statutory priority right, and the original intention of the legislation is to protect the construction project payment claims of contractors and thus ensure that the wage rights of construction workers can be realized. The protection of this claim should not change due to the change of the subject of the claim, but the assignee should be allowed to enjoy this priority right. In this case, Stanwell Company claimed that its shareholder Yu Jinzhou was the actual constructor of the construction project in this case, and that Jianchang Company transferred the construction project payment claim to Stanwell Company to facilitate the actual constructor's exercise of rights, and Anju Company did not deny that the actual constructor was Yu Jinzhou. Therefore, confirming in this case that Stanwell Company still enjoys the priority right to receive compensation after assigning the construction project payment claim does not violate the system purpose of the construction project payment priority right system to protect the labor remuneration of construction workers.

This case deals with a bankruptcy claim confirmation dispute. From the perspective of bankruptcy law, what needs to be emphasized is the legality of the claim formed based on the underlying legal relationship. The priority right to receive compensation for project payments is a statutory priority right. The underlying legal relationship corresponding to this right is the construction project construction contract legal relationship established between the contractor and the employer. The legislative purpose is to protect the labor remuneration of vulnerable groups. The debt relationship confirmed by effective legal documents should in principle be confirmed in the creditor's rights review procedure. However, can matters that are not explicitly confirmed by effective legal documents be confirmed in the creditor's rights review procedure? Not all bankruptcy administrators and creditors can correctly understand and handle this. In fact, the principle of the creditor's rights review and confirmation procedure is just like the people's court making a judgment with the help of the administrator. The administrator's review of the creditor's rights is legally equivalent to the extended trial activity of the people's court. Matters that were not recognized and confirmed by the effective legal documents generated before the bankruptcy procedure was initiated can be supplemented and recognized in accordance with the law through the administrator's creditor's rights review procedure for matters that were not recognized by the original effective legal documents. As mentioned in this case, when encountering similar cases, if the administrator encounters a case of a construction project construction contract dispute during the review of creditor's rights, and the effective legal document does not confirm the judgment on the priority right to receive compensation for the project payment, but the creditor insists on claiming it, such as the original obligee having a legal assignment of creditor's rights, the assignee of the creditor's rights not only enjoys the construction project payment claim, but also enjoys the priority right to receive compensation for the project payment.

(2021) Supreme Court Minzai No. 18 Stanwell Company, Anju Company, etc. Ordinary Bankruptcy Claim Confirmation Dispute Civil Retrial Civil Judgment