Baoneng Taiyuan 27 Land Disposal Controversy: Granting Trust Beneficiaries and Taking Back the Land for Free | Taiyuan | Land
The real estate industry has experienced a downturn, and participants in the entire industry chain have been affected to varying degrees.
Li Bing is one of the beneficiaries of Shandong Trust's Qingshan 20 trust product. At the end of 2020, he invested millions of yuan to purchase a share of this trust product.
The financing party of Qingshan 20 is Shenzhen Baoneng Investment Group. The collateral for financing is the construction land of Baoneng Group's project in Taiyuan. However, less than a year after Li Bing's investment, this trust plan defaulted.
In addition to Shandong Trust, Chongqing Trust, which provides financing for Baoneng Group's trust products, has also encountered similar situations.
After Baoneng's three projects in Taiyuan were laid flat, relevant courts in Chongqing and Shandong, two trust companies, product beneficiaries, and local governments engaged in a long tug of war. The latest news obtained by the reporter shows that the construction land of Baoneng's three projects in Taiyuan has been listed on the auction platform by the court, while the local government has issued a "vacancy letter" for the relevant land, hoping to reclaim the right to use the land from the beneficiaries of the trust products for free.
Similar cases have not appeared before. For the beneficiaries of the two trust products of Chongqing Trust and Shandong Trust involved in the three Baoneng Taiyuan projects, if the land plots held by them are ultimately recovered by the government without compensation, their investment funds exceeding 4 billion yuan will be difficult to recover.
After the public auction, it was taken down again
In June 2020, Baoneng Group established three project companies in Taiyuan, namely: Taiyuan Baochuang Real Estate Co., Ltd., Taiyuan Baoneng Taisheng Real Estate Co., Ltd., and Taiyuan Baoneng Taifeng Real Estate Co., Ltd., preparing to develop the Taiyuan Baoneng City project in Taiyuan Comprehensive Reform Zone.
Among the three project companies mentioned above, the corresponding financing arrangement for Baochuang Real Estate and Baoneng Taisheng is Qingshan No. 20; Baoneng Taifeng's financing channel is Chongqing Trust Jinyang No.1 Collective Trust Plan
The Qingshan No. 20 invested by Li Bing was established from November 4, 2020 to April 16, 2021, with a total principal amount of 2.4 billion yuan.
According to relevant documents, Baoneng Group had already defaulted in September 2021. After filing a lawsuit against Shandong Trust, after the first and second trials of the court, in September 2022, the Shandong Provincial High Court made a second instance judgment, ruling that the underlying assets under the Qingshan 20 Trust product - two batches of construction land, as well as the corresponding company's equity, belong to the beneficiaries of the trust product.
The above two batches of construction land include a total of 14 plots of land. On June 20th, the land involved in the underlying assets of the above-mentioned trust was listed by Jinan Intermediate People's Court on the JD auction platform. The first shooting is scheduled for July 20th.
According to the auction announcement, Taiyuan Baochuangzhi Co., Ltd. and Taiyuan Baoneng Taisheng Real Estate Co., Ltd. are the project companies of Baoneng Group in Taiyuan. These plots were originally intended to be invested in the "Taiyuan Baoneng City Phase I" project.
According to auction data, the term of use of the above-mentioned land will start from July 17, 2020. That is to say, Baoneng Group obtained these lands in July 2020, and it has been more than three years since then.
According to public information, Jinyang No.1 was established on August 27, 2020, with a survival period of 2.121 billion yuan.
Similar to the situation on Qingshan 20th, on July 3rd, the Fifth Intermediate People's Court of Chongqing also listed 13 state-owned land construction land use rights of Baoneng in Xiaodian District, Taiyuan City on the Taobao auction platform. This part of the land use right is the underlying asset of Chongqing Trust Jinyang No.1 Collective Trust Plan, and the ownership of the land was originally Baoneng Taifeng.
According to the auction announcement, it has been almost two years since the land was acquired for this part of the plot, with some plots starting at a price of 2.1 billion yuan and an assessed value exceeding 3 billion yuan. The corresponding scale of trust products is around 2.1 billion yuan.
However, on July 13th, a reporter from First Financial News discovered that 14 plots of land listed by Jinan Intermediate People's Court had already been taken down from the JD auction platform on the same day. The 13 plots of land listed for auction by Chongqing Fifth Intermediate People's Court are still being displayed on the Taobao auction platform.
Why is the disposal temporarily suspended?
Li Bing told reporters that on July 11th, Shandong Trust announced to the beneficiaries that it was collaborating with Ping An Bank, the sales agent of the trust products, to negotiate matters related to the Taiyuan Baoneng City project with relevant departments in Taiyuan City. Therefore, the auction of the 14 plots of land has been temporarily suspended.
Li Bing said that on July 9th, Shandong Trust, Ping An Bank, and Chongqing Trust participated in a "hearing" in Taiyuan, Shanxi Province, attended by key personnel from the Taiyuan Municipal Planning and Natural Resources Bureau. After the meeting, Shandong Trust reported to it that Xiaodian District in Taiyuan City plans to issue a vacancy letter and reclaim the above-mentioned land on the grounds that the land has not been developed for two years.
After the meeting, investors from Jinyang No.1 and Qingshan No.20 issued written letters of objection. The content of the objection letter obtained by the reporter shows that if the government of Xiaodian District in Taiyuan City reclaims the land use rights held by the trust beneficiaries, it will directly cause thousands of investors to lose their collateral.
Li Bing told reporters that after issuing an objection letter to relevant departments, around July 13th, the Jinan Intermediate People's Court still removed the land for auction.
According to the announcement from Shandong Trust obtained by the reporter, the reason for the hearing on July 9th was that five days ago, the Taiyuan Planning and Natural Resources Bureau issued the "Idle Land Recognition Certificate" and "Idle Land Disposal Hearing Rights Notice" to Baoneng Group's two project companies, Baochuang Real Estate and Baoneng Taisheng, in Taiyuan. They determined that 14 plots of land under the names of the two project companies were idle land and will take measures to reclaim the land free of charge after two years of idle period.
Jinyang No.1 investor Song Xi also presented the announcement of Chongqing Trust to the reporter. Chongqing Trust informed investors that on July 4th, the Taiyuan Planning and Natural Resources Bureau issued the "Idle Land Recognition Certificate" and "Notice of Idle Land Disposal Hearing Rights" to the project company, identifying 14 plots of land under the project company's name as idle land. The company will take measures to dispose of the land free of charge after two years of idle period.
Deemed idle after mortgage transfer
According to the announcement of Shandong Trust, the mortgaged land of Qingshan 20xin has an assessed value of approximately 3.712 billion yuan for its use rights.
Li Bing told reporters that after winning the lawsuit between Shandong Trust and Baoneng, the project manager told him, "The land belongs to us now. As long as we sell the land, it can completely cover the principal and interest."
However, the road to disposal is much more winding than expected.
A few months ago, the relevant authorities in Taiyuan attempted to retrieve the frozen land use rights from the court through "unsealing and transferring mortgages".
In May of this year, Li Bing suddenly received a call from the customer manager of Ping An Bank. He told Li Bing that Shandong Trust would hold an investor conference and request investors to vote to unseal the 14 land parcels of Baoneng Taiyuan Project Company pledged under the trust contract, and transfer them to the construction agent and the advance fund agent.
Not long after the verbal notice from the customer manager, on May 12th, Li Bing received a temporary announcement from the manager Shandong Trust. The administrator notifies the beneficiaries of the trust that a beneficiaries meeting is proposed to be held for voting, and the relevant land will be mortgaged to the construction agent and the advance fund provider.
Li Bing didn't understand the need to unfreeze even after the judicial judgment came into effect.
According to a previous temporary announcement from Shandong Trust, due to the prolonged suspension of the Taiyuan Baoneng City project, it has now been included in the Taiyuan Municipal Guaranteed Delivery Real Estate Project. On April 27, 2023, the Xiaodian Sub district Office in Xiaodian District, Taiyuan City delivered a letter to the mortgagor and co repayment parties of the trust plan, Baochuang Real Estate and Baoneng Taisheng, regarding the supervision of the official seals of Baochuang Real Estate. The Xiaodian Sub district Office will supervise the official seals of both parties.
The above announcement also informs the beneficiaries that they will agree to the repayment guarantee measures for the resumption of work and production of Taiyuan Baoneng City Phase I by Shanxi Erjian Group Co., Ltd., as well as the repayment of funds for Taiyuan Baoneng City Phase I, and the land use rights of the 8th plot under the name of Baochuang Real Estate and the 39th plot under the name of Baoneng Taisheng, as well as the mortgage registration with them or the designated party. The manager plans to hold a beneficiaries meeting to vote on the proposal in the near future.
For the underlying assets corresponding to Jinyang No.1, its investors did not mention to First Financial in the interview whether there is any situation of collateral transfer.
Why haven't measures been taken in a timely manner?
According to relevant regulations, idle land refers to state-owned construction land that has not been developed for more than one year beyond the paid use contract or allocation decision stipulated by the state-owned construction land use right owner.
The area of state-owned construction land that has started construction but accounts for less than one-third of the total area of land that should be developed and constructed, or the invested amount accounts for less than 25% of the total investment, and the development and construction have been suspended for more than one year, can also be recognized as idle land.
In addition, the "Measures for the Disposal of Idle Land" issued by relevant departments stipulate several procedures for the identification of idle land, including issuing investigations, self certification of the right holder, verification by the land and resources department, and handling.
Among them, for idle land that is not caused by government or force majeure reasons and has not started construction and development, the above measures stipulate that: 1. For land that has not started construction for more than one year, the land department shall issue a "Decision on the Collection of Land Idle Fee" and collect the land idle fee within 20% of the land transfer or allocation price; 2. For those who have not started construction for more than two years, the Ministry of Land and Resources shall issue a decision to reclaim the right to use state-owned construction land, and reclaim the land use right free of charge.
Tian Yong, the chief lawyer of Guangdong Shengma Law Firm, analyzed to First Financial reporters that based on the above situation, the handling of overdue idle land under Baoneng by relevant departments is legal.
But why is there a situation where the court has already started a judicial auction and the trust beneficiary accepts the auction, but the land has to be reclaimed by the government? According to Tian Yong's analysis, there may be two main reasons: firstly, there are situations in reality where buying land is just speculation, and idle land is not regulated in a timely manner.
Secondly, the relevant departments have not dealt with the surging phenomenon of idle land transfer in the past decade or so in a timely manner.
Tian Yong believes that the judicial authority of court judgments should be recognized higher. He suggested that relevant measures and regulations should be introduced as soon as possible, and two different management methods should be adopted for historical legacy problems and new problems, in order to avoid more similar problems from occurring.
