Zhiheng shares the four practical issues of the "National Court Trial of Real Estate Development Enterprise Bankruptcy Case Summary".

Introduction On August 28, 2026, the five departments of the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, the General Administration of Financial Supervision, the People's Bank of China, and the China Securities Regulatory Commission issued eight documents on the same day, covering the commercial housing sales system, real estate credit management, various loan business rules, trust business and capital market financing, and established the institutional framework of the new model of real estate development from the three dimensions of sales, financing, financing, financing.

On September 18, 2026, the State Council Information Office held a series of thematic press conferences titled “Setting a Good Start for the 15th Five-Year Plan.” The Ministry of Housing and Urban–Rural Development stated that the real estate sector has entered the stock era, and the sale of completed homes is becoming the general trend [2]. How to say goodbye to the traditional "land-pre-sale-return-land" pre-sale cycle?

How to protect the interests of creditors accumulated under the development mode of "high debt, high leverage and high turnover" and how to clean up the debt problem? Under the "guaranteed building" policy, how to identify the "three generations" contract signed by the local government and how to repay the special loan for the guaranteed building? On September 7, 2026, the Supreme People's Court (hereinafter referred to as the Supreme Law) issued the "Minutes of the National Courts Trial of Bankruptcy Cases of Real Estate Development Enterprises" (Law [2026] No. 137) (hereinafter referred to as the "Minutes of the Meeting"). Most of the answers.

did not solicit public opinions, did not answer reporters' questions, and did not have a press release. However, for the real estate industry, the Minutes of the Meeting are no less important than the 2004 8.31 Restriction Order [3], the 2006 Exterior Order [4], the 2011 Restriction Order [5], and the 2020 Three Red Lines [6]; for the legal industry, they are no less important than the 20

19Nine People's Minutes [7].

Some scholars argue that the “Minutes of the Meeting” exceed the scope of the Enterprise Bankruptcy Law [8]; similarly, when the home-purchase restriction order was introduced in 2010, some scholars also contended that it contravened the Legislation Law [9]. The law remains silent. As a capital-intensive industry characterized by complex legal relationships, a high concentration of creditors, and extensive regulatory policies, the real estate sector has experienced profound adjustments. Consequently, real estate development enterprises (hereinafter referred to as “property developers”) have faced defaults, and litigation cases have surged. In the absence of specific statutory provisions governing the bankruptcy of property developers, courts lack a standardized approach.

The court may not refuse to hear the case. Following practical precedents such as the bankruptcy reorganizations of Jinke Shares and Suning Appliance, and after Evergrande Real Estate’s bankruptcy liquidation was officially accepted [10], the Supreme People’s Court has issued a definitive ruling—establishing the order of creditor priority. The minutes of the meeting are not perfect, but pragmatic and accurate, and meet the urgent needs of reality.

The provisions of the “Meeting Minutes” are actually nothing new. Since 2021, local courts have been dealing with various new matters of housing enterprises, the Supreme Law has been notifying and approving, and the Minutes of the Meeting only integrate the practices of the past five years of crisis management scattered in individual cases, approvals and local documents into a set of uniformly applicable rules [11].

"Meeting Minutes" has been interpreted by many institutions, and the author will briefly discuss the four practical issues of high concern in the current article. 1. late certification and late delivery of housing liquidated damages can reduce overdue, since 2020, the key words, overdue delivery, overdue payment, overdue repayment ......, the term of the contract has become a symbolic clause.

Disputes arising from the delayed delivery of commercial housing sales contracts, disputes arising from delayed payments under construction project contracts, and disputes arising from delayed repayments under financial loan contracts… are frequently encountered in practice. Homebuyers are suing for breach-of-contract damages, leaving property developers overwhelmed, while the courts strive to strike a balance. Article 20 of the “Minutes of the Meeting” permits the administrator to reduce liquidated damages for delayed property registration and delayed delivery of houses on the ground that a profound adjustment in the real estate market constitutes force majeure; however, it neither defines what constitutes a “profound adjustment” nor specifies the extent to which such damages may be reduced. Nevertheless, the conclusion is clear: full liability cannot be attributed to the real estate developer.

is not attributable to the reduction of real estate enterprises. The last time was in 2009. Article 7 of the Notice of the Supreme People's Court Issuing the Guiding Opinions on Further Doing Well the Trial of Real Estate Dispute Cases under the Current Situation (Fa [2009] No. 42) stipulates that for real estate developers who fail to deliver houses on time due to temporary financial difficulties, the court can reasonably adjust the amount of liquidated damages according to law, the reason is the international financial crisis.

However, a large number of overdue delivery cases have been judged, and a large number of judgments have not realized the profound adjustment of the real estate market. Represented by the Notice of the Jiangxi Provincial Higher People's Court on Printing and Distributing Guidelines for the Trial of Cases of Disputes over Overdue Delivery of Houses and Certificates by Developers (June 9, 2020), local courts generally believe that the daily standard of liquidated damages for overdue delivery of houses is within the range of 1/10000 to 3/10000 of the paid house purchase price or the total house price (both inclusive), which is a reasonable agreement.

If the project construction period overlaps with the COVID‑19 pandemic, courts typically grant a grace period of 45 to 90 days, taking into account the number of days during which the local government had declared a public health emergency response. It is particularly challenging for counsel to further seek a reduction in the liquidated damages to 0.015% per day.

The cap clause of liquidated damages is recognized by some courts, while others think it is not recognized by the standard clause. In more extreme cases, some courts refuse to grant any exemption or reduction whatsoever, while others directly set the total liquidated damages at 20% of the purchase price. Henan, dare to be the first in the world, through the "Supreme People's Court's Reply on the Protection of Consumer Rights of Commercial Housing" (Fashi [2023] No. 1) (hereinafter referred to as Fashi [2023] No. 1) for buyers to apply to the Supreme Law Under the super priority; Henan, as long as the house can finally be delivered, one or two years overdue, basically no penalty.

Prioritize the right to survival; waive the penalty clause. When it comes to adjudicating disputes over commodity housing sales contracts involving financially troubled real estate developers, Henan has taken the lead over the Supreme People’s Court. However, whether in Henan, Guangdong, Beijing, Sichuan, or elsewhere, regardless of the amount of liquidated damages, real estate developers have long been subject to multiple rounds of asset seizures and freezes, leaving a large number of overdue court judgments unenforceable—ultimately relying on the insolvency administrators.

2. Unrepaid personal mortgage loans rank first in priority. For unrepaid personal mortgage loans, the lending bank has a lien on the property, and the real estate developer bears joint and several guarantee liability. In accordance with the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Contracts for the Sale of Commodity Houses (Revised in 2020)” (Fa Shi [2003] No. 7), where a house sale contract is terminated because the property cannot be delivered and there is no realistic possibility of delivery, the mortgage loan contract shall also be terminated.

Although the court does not support the cancellation of mortgage registration or mortgage advance notice registration in Article 18, paragraph 2 of the Minutes of the Meeting, the mortgage right of the loan bank cannot be realized because the house cannot be delivered. (2019) The Supreme Law Minzai No. 245 case [12] and Article 18, paragraph 3 of the Minutes of the Meeting do not support the loan bank to recover from the house buyers, and the real estate enterprise becomes the only recourse object of the loan bank.

Article 31 of the “Minutes of the Meeting” stipulates that the claims of the lending bank rank in first priority, which, while appearing to constitute a departure from the Enterprise Bankruptcy Law, is in fact an extension of Interpretation No. 1 of 2023. In the Interpretation of the Supreme People’s Court No. 1 of 2023, a super-priority right was established for the purchase price already paid by consumer homebuyers; personal mortgage loans, in essence, also constitute purchase price paid by consumer homebuyers and should likewise be afforded priority protection.

In this arrangement, the mortgage loan is paid by the lending bank on behalf of the borrower and collected by the lending bank upon repayment. While this approach appears to bypass the commercial housing sales contract and the mortgage loan contract, it achieves logical consistency with Interpretation No. 1 of 2023 and ensures substantive fairness. The lending bank loses its right of recourse against the individual purchaser in exchange for an institutional priority in the bankruptcy liquidation sequence.

Upon weighing the two options, the lending bank remains the beneficiary in the majority of cases [13]. 3. Priority Protection of Claims for Construction Project Payments Construction project payment claims are a priority right stipulated in Article 807 of the Civil Code, and the "Minutes of the Meeting" also emphasizes and highlights this point in multiple sections. 1. During the phase of ensuring project delivery, although the priority right of payment for construction project costs is superseded by the super-priority right of consumer homebuyers, the Supreme People’s Court has granted contractors another right that brings them closer to their claims—priority over funds held in pre-sale escrow accounts.

Notice of the Supreme People's Court, the Ministry of Housing and Urban-Rural Development and the People's Bank of China on Regulating the People's Courts' Preservation and Execution Measures to Ensure the Pre-sale Funds of Commercial Houses Used for Project Construction (Law [2022] No. 12) (hereinafter referred to as Law [2022] No. 12) ensures that the funds in the pre-sale funds supervision account of real estate enterprises will not be deducted by other cases after the thunderstorms, it can be earmarked to pay for construction progress, materials and equipment.

Law [2022] No. 12 has become a sharp weapon for local housing and urban-rural construction departments to fight against other non-construction project price creditors and complete the task of guaranteeing the delivery of buildings. In the bankruptcy stage, the recovery of funds stipulated in Article 7 of the Minutes of the Meeting shall be given priority to the resumption of construction and the claim on the price of the construction project stipulated in Article 26, paragraph 2, of the Minutes of the Meeting shall take precedence over the claim on the financing of the construction project, which is the extension of the priority of the construction project price stipulated in the Law [2022] No. 12 and the Civil Code in the bankruptcy and continuation stage.

2. The subrogation declaration of creditor's rights of actual constructors stipulated in Article 21 of the Minutes of Meeting continues the Interpretation (I) of the Supreme People's Court on the Application of Law in the Trial of Disputes over Construction Contracts (Fa Shi [2020] No. 25), which belongs to the extension of the rights of actual constructors in the bankruptcy stage of real estate enterprises.

3. Regarding migrant workers and the pressing difficulties and concerns in the construction engineering sector, the “Minutes of the Meeting” naturally provide them with preferential protection. Before the bankruptcy of real estate enterprises, local governments often broke through the relativity of construction contracts due to the pressure of migrant workers' letters and visits, and the local courts used the "Regulations on Guaranteeing the Payment of Migrant Workers' Wages" (State Council Order No. 724th) as a reason, requiring or adjudicating that real estate enterprises pay directly.

The provision in Article 21, Paragraph 3 of the “Minutes of the Meeting,” which stipulates that wages of migrant workers shall be repaid on par with employee creditors’ claims, although appearing for the first time in a judicial document, has already been precedent in bankruptcy case adjudication practice at the local court level [14] [15]; this approach also represents a summary of judicial experience. 4. Article 14 of the Minutes of the Meeting, six months before the bankruptcy application is accepted, the project funds paid off by way of a house-to-house debt agreement are originally a contract that can be revoked under Article 32 of the Enterprise Bankruptcy Law. The court does not support the revocation. The contractor enjoys exemption and does not have to worry about the risk of the manager's reverse investigation.

5. If the purchaser meets one of the three requirements of "full payment", "advance notice registration" or "legal possession", the administrator can be restricted from rescinding the contract and taking back the house. Articles 9, 11 and 12 of the Meeting Minutes actually give the non-consumer purchaser the protection of similar super priority, and other creditors may think that it will cause the liquidation of assets to shrink [16].

Based on my experience, once a property developer faces a liquidity crisis, using properties as collateral for debt becomes a common payment method. Contractors are the primary recipients of such property-for-debt arrangements, particularly for commercial and office properties. In this scenario, the contractors are actually the biggest beneficiaries, as they help maintain the stability of contracts with non‑consumer buyers.

4. the work achievement of "building guarantee", which was confirmed in the Minutes of Meeting. Under the background of "building guarantee, people's livelihood and stability", the government has stabilized the wave of shutdown, unfinished business and collective loan suspension of home buyers starting from 2021 by administrative means, the Supreme Law passed the Notice on Conscientiously Implementing the Work Plan on Supporting the Construction and Delivery of Sold and Overdue Residential Projects through Special Loans (Law [2022] No. 217) [17] [18] [19] and the Notice on Issues Concerning the Implementation of Preservation Measures for White List Real Estate Projects (Law [2024] No. 154) to grant special loans and new loans from the judicial policy level priority, "New and old cut-off", "last-in, first-out", do not take seizure, freezing, withholding, disposal and other measures to ensure the safety of the bail-out loan funds.

The Minutes of the Meeting continued to consolidate the achievements of the work of guaranteeing the delivery of buildings. The third paragraph of Article 26 provides reassurance to the local government platform companies and financial institutions that provide special loans to Thunder Housing Enterprises before their bankruptcy. The "three-generation" contract is an important measure for the local government to guarantee the delivery of buildings. Due to its policy attribute, few creditors challenge the validity of the contract at the stage of guaranteeing the delivery of buildings. Article 8 of the minutes of the meeting defines the "three-generation" contract and gives the "three-generation" contract immunity from Articles 18, 31, 32 and 33 of the bankruptcy law, so that the "three-generation" contract is subject to judicial protection.

The "three generations" contract is not canceled, the special loan is paid off according to the common benefit debt, the policy and practice of Baojiao building are transformed into judicial rules, and the results of the four-year Baojiao building disposal work leading group of local government, platform company and problem real estate are confirmed by justice.

Conclusion

From December 22 to 23, 2025, the National Conference on Housing and Urban-Rural Development announced that the task of ensuring timely delivery of pre-sold housing has been fully completed [20]. The pressure of real estate enterprises is transferred to managers. The eyes of the government, buyers, contractors, migrant workers, financial institutions and workers are all focused on the court. Trillion debts are cleared. 36 "minutes of the meeting" unify the thinking of judgment, stabilize the reasonable expectations of the society, support and do not support. The supreme law points out the direction for the trial of subsequent bankruptcy cases.

The end of the song, a pattern that will end, the way of ending the curtain is not important anymore. We always have to say goodbye. Thirty years of real estate will eventually become a distant and vague memory. Let us ride the tide together, hoping that more property developers and creditors will be reborn through restructuring and continue to maintain a competitive edge in the new round of industry consolidation.

Slide down to read footnotes: [1] Li Haifu's "Jun's Law Review, Five Ministries and Eight Documents, the Institutional Framework of the New Model of Real Estate Development Landing", Jun He Law Review WeChat Public Number, August 31, 2026; [2] Ministry of Housing and Urban-Rural Development: Real Estate Enters the Stock Era, Existing House Sales Is the General Trend ", CCTV News WeChat Public Number, September 18, 2026; [3] Article 2 of the Notice of the Ministry of Land and Resources and the Ministry of Supervision on Continuing to Carry out the Law Enforcement and Supervision of the Transfer of Commercial Land Use Rights by Bidding, Auction and Listing (No. 71 [2004] of the Ministry of Land and Resources), after August 31, 2004, no more transfer of commercial land use rights by agreement on the grounds of historical problems shall be allowed; [4]" Opinions on Regulating the Access and Management of Foreign Investment in the Real Estate Market "(Jian Housing [2006] No. 171), foreign investment in the real estate market is restricted; [5]" The General Office of the State Council on Further Doing a Good Job in the Real Estate Market Regulation "Notice" (Guo Ban Fa [2011] No. 1), the purchase restriction order began to be implemented; [6] "[China Housing Research Association]" Three Red Lines, debt reduction is the current primary task of real estate enterprises, "China's real estate market research hot spots", No. 101, 2020; [7] Notice of the Supreme People's Court on Printing and Distributing the Minutes of the National Court's Civil and Commercial Trial Work Conference (Law [2019] No. 254), the Supreme Law unifies the judicial thinking on the disputes existing in the trial of corporate disputes, contract disputes, guarantee disputes, financial disputes, bankruptcy disputes and other cases; [8] "[Interview] Chen Xiahong and Shan Yuxiao: Breakthrough and Limitations of the Minutes of the Bankruptcy of Real Estate Enterprises in the Supreme Court | Caixin Network", Bankruptcy Law Express WeChat Public Number, September 11, 2026; [9] Zheng Shaohua's Legal Interpretation of "Purchase Restriction Order", in Law No. 4, 2011; [10] Evergrande Real Estate Bankruptcy Liquidation Case, Accepted by Guangzhou Intermediate People's Court According to Law, news broadcast WeChat Public Number, August 21, 2026; [11] Sun Haotian, Wu Jia and others "New Real Estate Model Series, How Will We Say Goodbye to the Old Model?

-- Interpretation of the Summary of the National Symposium on the Trial of Bankruptcy Cases of Real Estate Development Enterprises by the Courts (Law [2026] No. 137), the official account of Windu Research WeChat, September 10, 2026; [12] Wang mou 2, Wang mou 3, Wang mou 1 and Qinghai branch of China construction bank co., ltd. and Qinghai yuezhou real estate development co., ltd. dispute over financial loan contract "civil judgment" (2019) supreme fa min re -245; [13] Chen Jianjie and Lu Yuanting's "Jin Dao Original | Housing Enterprise Bankruptcy, What about Bank Mortgage Loans?

-Practical Answers to Mortgage Banks from the Minutes of Supreme Law No. 137 ", WeChat Public Number of Jindao Law Firm, September 8, 2026; [14]" The Worry of Multiple Annual Salary Will Finally Be Solve by Judicial Escort Warms the People's Heart-Yuzhong Court's "Model Judgment Batch Mediation" Efficiently Solving Disputes of Over Hundred Migrant Workers' Wages ", Chongqing Yuzhong District People's Court, official Website, March 11, 2026; [15] Chongqing No.5 Intermediate People's Court" Civil Judgment of Second Instance on Dispute over Confirmation of Bankruptcy Creditor's Rights between Li Moumou and Employees of a Construction Company in Chongqing "(2025) Yu 05 Min Zhong No. 3792; [16] Li Yue and Zhang Zhong" The New Discipline of Bankruptcy of Real Estate Enterprises Should Pay off Project Payment and Financial Creditor's Rights and the Response | Execution Column ", Jianling Chengda WeChat Public Number, September 15; [17] Dong Yanqing et al." Award-winning Excellent Papers | Protection and Balance of Interests of Common Interest Debt Investors and Mortgage Creditors in Bankruptcy Reorganization of Real Estate Enterprises ", WeChat Public Number of Dehe Heng Research Institute, February 9, 2025; [18] Jiangxi Higher People's Court" Civil Judgment of Second Instance on Disputes over Construction Contracts of Nanchang Real Estate Co., Ltd. and Jiangsu Group Co., Ltd. "(2025) Gan Min Zhong No. 240; [19] The Intermediate People's Court of Chengdu City, Sichuan Province," Chen Mou and Kaifeng Company's Reconsideration of the Implementation of the Objection Ruling by the Lower Court "(2025) Chuan 01 Zhifu No. 345; [20]" National Housing and Urban-Rural Construction Work Conference Held in Beijing ", China Construction News WeChat Public Number, December 23, 2025.

Attorney Profile: Xie Botao, Partner at Zhiheng Beijing Law Firm. Practice Areas: Real Estate, Corporate Affairs, and Dispute Resolution.