Shenzhen Zhongyuan sued Evergrande, Baoneng, and others for owing over 1 billion in sales commissions! Difficulty in operation | Shenzhen Zhongyuan | Developer | Commission

Release time:Apr 15, 2024 01:33 AM

Recently, a notice titled "Notice on Feedback and Advance Payment of Commission by Shenzhen Zhongyuan" circulated in the market, stating that "developers/agents have not yet paid commissions exceeding 1 billion yuan to Shenzhen Zhongyuan". The key developers and projects sued by Shenzhen Zhongyuan include Jiazhaoye, Evergrande, Baoneng, Shimao, Longguang, and Jixiangli.

According to the announcement, in recent years, the real estate industry has been in a downturn, with developers experiencing a broken capital chain and being unable to pay sales commissions to Zhongyuan Group and its related companies, resulting in continuous huge losses and difficult operations for the company. The signature of the above notice is "Shi Junrong, CEO of Zhongyuan Group". An insider from Zhongyuan Group confirmed the authenticity of the report to the media.

Shenzhen Zhongyuan belongs to Zhongyuan Group. Established in 1978, Zhongyuan Group is a large-scale comprehensive real estate service enterprise mainly engaged in real estate agency business, involving property management, measurement and valuation, mortgage agency, asset management, data integration, investment immigration, and other fields.

Shi Junrong once stated at a meeting held in early January this year that the overall market situation has changed, from extreme pessimism at the end of the year to now seeing hope and opportunities. This transformation allows them to face 2023 with a more optimistic outlook.

At that time, Shi Junrong stated that the changes in competitors left more space for the market, and he should consider how to seize market share and increase profits.

Shenzhen Zhongyuan sued Evergrande, Baoneng, and others for owing over 1 billion in sales commissions! Difficulty in operation | Shenzhen Zhongyuan | Developer | Commission

Involving Evergrande, Baoneng, etc

Shenzhen Zhongyuan is the abbreviation of Zhongyuan Real Estate Agency Co., Ltd. It is a large professional real estate agency in Shenzhen. Since 2001, it has accounted for the main share of the Shenzhen real estate market in terms of the number and sales volume of real estate agents in the secondary market.

Shenzhen Zhongyuan provides research services for government land investment, provides full consultation, planning, and sales agency services for developers, and provides rental and sales brokerage services for residential, office, commercial, and factory buildings, as well as mortgage and evaluation services for clients in Shenzhen, Hong Kong, and other places.

Shenzhen Zhongyuan, with its impressive strength, has been repeatedly seeking debt through litigation. According to its statistics, developers/agents have not yet paid commissions exceeding 1 billion yuan to Shenzhen Zhongyuan. At present, the court has initiated a lawsuit to pursue a commission of 535 million yuan. Among them, the court has ruled that the amount under compulsory enforcement exceeds 400 million yuan, and the amount awaiting judgment is over 135 million yuan.

At present, the main developers and projects sued by Shenzhen Zhongyuan include Jiazhaoye, Evergrande, Baoneng, Shimao, Longguang, and Jixiangli. Recently, various news has also been circulating about the above-mentioned sued real estate developers.

On August 16th, China Evergrande announced that in order to allow creditors under the Evergrande Agreement to have time to consider the proposed subscription and its impact on creditors under the Evergrande Agreement, the company has decided to postpone and reconvene the Evergrande Agreement meeting.

Tianyancha shows that Baoneng Real Estate has been executed with a total amount of approximately 21.965 billion yuan. Among them, from August 1st to August 16th, Baoneng Real Estate was executed a total of 8 times, with the largest executed amount reaching 976 million yuan.

Can I get my commission back?

In the downward cycle of the real estate industry, being owed commissions is no longer the first time. In 2014, employees of Zhongyuan Real Estate pulled banners on the streets to collect debts from real estate developers.

Li Yaozhi, then General Manager of Zhongyuan Real Estate in South China, stated that including developers in Hong Kong, the total amount of agency commissions owed by developers to Zhongyuan Group was nearly HKD 3 billion.

At present, some of the key real estate developers sued by Shenzhen Zhongyuan have exploded and are undergoing debt restructuring. Especially for China Evergrande, which is already insolvent, even if it wins the lawsuit, it is uncertain when it will ultimately receive the commission.

Specifically, whether the commission can be recovered is mainly related to the financial payment system of the developer/agent.

"The industry is facing difficulties, and there are no winners in the entire chain." Industry insiders say that many suppliers, big and small, who have advanced commissions, have already gone bankrupt in the entire real estate industry chain.

The board of directors of Zhongyuan Group has decided to establish a major project commission follow-up task force from today, responsible for the follow-up commission work.

Employee salary arrears still unresolved

In August 2023, a video about Shenzhen Zhongyuan employees demanding commissions was released, and multiple employees of Shenzhen Zhongyuan gathered in the office of Zheng Shulun, the general manager of Shenzhen Zhongyuan. Can an employee ask if they can receive a commission first? Some commissions have been overdue for six or seven years, and we hope to find a solution.

In the announcement, Zhongyuan Group stated that it requested Shenzhen Zhongyuan to advance commission payments in advance without receiving sales commissions from developers/agents. Even if only the commission payments were made to grassroots employees, the amount of funds required to advance would exceed 400 million yuan, which would make the company's operations more difficult.

According to the convention in the real estate sales industry, sales personnel's income includes basic salary and commission commissions, which need to be paid after receiving sales commissions from developers/agents.

The notice states that since its establishment 45 years ago, Zhongyuan Group has been implementing the commission distribution system mentioned above. The basic salary of employees is paid in full and on time on a monthly basis, and there has never been any delay or malicious arrears of salary.

According to the company's official website, Zhongyuan Group currently has more than 55000 employees, 2500 directly operated shops, and has established branches in 60 cities around the world. Its business radiates to 100 cities and has become a pioneer and leader in the real estate agency industry.

It is reported that Zhongyuan Group and Shenzhen Zhongyuan do not have the prerequisite to advance employee commissions and partner commissions in advance, as they have not yet received sales commissions from developers/agents.

Considering the survival difficulties of some employees in special difficulties, the Board of Directors of Zhongyuan Group has decided to provide special hardship compensation to employees in special difficulties. Employees with special needs and difficulties can submit applications according to the process, which will be reviewed and approved by the Zhongyuan Group Employee Association.

"The company will immediately pay employee commissions and partner commissions the following month after receiving the commission," mentioned in the above notice.

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