More than 26 million yuan in bonus seized? Shenzhen big seller sued again

After going through the era of wild growth and crazy money-making in the industry, only a few of the former prominent figures in the cross-border circle are still standing at the top. Most of them are deeply mired in the quagmire of declining performance and increasing losses, and some senior executives are involved in constant lawsuits.

These big sales are still the topic of conversation among cross-border practitioners, but the topic has changed from the glorious past to the mess today, from envy to sigh ...

Xinghui and Zebaocheng are sued, and the 26 million bonus has not been paid yet

On November 13, Zebao's parent company Xinghui Shares issued an announcement stating that it had received a subpoena from the Longhua District People's Court of Shenzhen. Zebao's founder Sun Caijin, Tan Zhizhen, Tan Xiangmin, Wu Yi, Li Chengmin, Zhang Wenmin and other six plaintiffs once again took Xinghui Shares and Zebao Technology to court over a contract dispute.

The case has been accepted by the court, with the case number ( 2023 ) Yue 0309 Minchu 12531 , and the trial date has not been determined.

It is reported that this case originated in 2018.

On July 17, 2018 , in order to implement a major asset reorganization, Xinghui Co., Ltd. signed the "Agreement on Issuing Shares and Paying Cash to Purchase Assets" with Zebao and Zebao's original shareholders ( 27 parties including Sun Caijin), stipulating that Xinghui Co., Ltd. will purchase 100% of the equity of Zebao Technology held by the original shareholders of Zebao Technology by issuing shares and / or paying cash .

In this agreement, Sun Caijin and others promised that in the three years from 2018 to 2020 , Zebao's net profit will not be less than 108 million yuan, 145 million yuan and 190 million yuan respectively. If this is not achieved, Sun Caijin and other parties who made the promise will need to compensate Xinghui Shares.

Coinciding with the three years of crazy growth in cross-border e-commerce, Sun Caijin and other parties to the agreement not only achieved the agreed net profit, but also exceeded it.

According to the annual financial reports from 2018 to 2020, its actual cumulative excess profits are no less than 75.6319 million yuan. Therefore, according to the agreement, the promisor should enjoy the corresponding excess performance rewards, with the amount reaching at least 26.4712 million yuan .

However, in the past few years, Zebao has not fulfilled the bonus promise, which led to this lawsuit. Why is the parent company Xinghui Shares also a defendant? Sun Caijin and others believe that they have the responsibility to urge Zebao to fulfill the promise but have not done so.

According to the lawsuit request, Sun Caijin asked Xinghui and Zebao to compensate for losses of 10,000 yuan and the preservation guarantee fees incurred in this case; in addition, Xinghui Holdings and Zebao need to pay a total of RMB 26.471165 million in excess performance rewards to the five remaining management personnel (Sun Caijin did not stay), as well as delayed payment of losses of RMB 319,800 ; including case acceptance fees and preservation fees.

The total amount involved in the case has reached 26.801 million yuan , of which the loss caused by delayed payment is only calculated until December 5, 2022. If the payment time is further extended, the number will be larger.

At the same time, on November 8, the equity of Xinghui Co., Ltd. and Zebao was also frozen by the Longhua District Court of Shenzhen. Xinghui’s equity in Zebao was frozen at an amount of 11 million yuan, and Zebao’s equity in Shenzhen DanYa Technology Co., Ltd. was frozen at an amount of 20 million yuan. The freezing period is 3 years.

This is not the first lawsuit to arise from the agreement.

In July this year , Xinghui Shares was sentenced to lift the restrictions on the sale of shares of Zebao by several shareholders. After completing the gambling content in the agreement, the shares of Zebao shareholders failed to enter the market as scheduled, and were forced to "pay" for the decline in performance starting with the "Amazon account blocking wave".

So in September 2021, Zebao founder Sun Caijin and several shareholders joined forces to go to court against Xinghui Shares . The amount involved in the lawsuit was 14.8342 million yuan . Until July this year , Xinghui Shares lost the case and was ordered to pay 20.4823 million yuan in compensation .

Note that the 26 million yuan involved in this lawsuit is not a large amount. Xinghui Co., Ltd. has another ongoing lawsuit involving up to 86 million yuan.

There is also a case involving a litigation amount of 86 million yuan in the second instance.

On November 8, Xinghui Co., Ltd. also issued an announcement on the progress of the lawsuit, which was a lawsuit that lasted for two years and had already been judged in the first instance.

After the second instance court ruled, the first instance judgment was revoked and sent back to the first instance court for retrial. Xinghui Co., Ltd. also changed from the defendant in the first instance to the appellant in the second instance. The lawsuit is worth 86.1014 million yuan .

The story begins in 2018.

In 2018 , Xinghui Holdings acquired Zebao , and Sunvalley E-commerce (HK) Limited (hereinafter referred to as: Sunvalley E-commerce) was one of the transaction parties and also one of the performance commitment parties.

At the time of the acquisition , Sun Valley E-commerce held 8.6796% of Zebao's equity, so Xinghui shares had to pay it 132.7976 million yuan, including 53.119 million yuan in cash and 79.6786 million yuan in shares. In February 2019 , Xinghui shares completed the share payment, but did not pay 53.119 million yuan in cash to Sun Valley E-commerce .

Therefore, in May 2021 , Xinghui Co., Ltd. received a subpoena from the Shenzhen Intermediate People's Court . Sun Valley E-Commerce requested payment of the cash consideration for equity transfer and liquidated damages for late payment, and the company was required to bear the plaintiff's attorney fees, litigation fees and preservation fees incurred in this case, totaling 72.871519 million yuan .

Xinghui shares stated that the reason for the failure to complete the payment was that Sun Valley E-commerce was a foreign shareholder and needed to go through a series of cumbersome business registrations , and the certificates were completed in October 2020. However, due to the discovery that the French store under Sun Valley E-commerce was at risk of being subject to tax and fines , the cash consideration was temporarily suspended .

After Sun Valley E-Commerce filed a lawsuit, Xinghui Holdings ’ account was frozen by the court for 73.020369 million yuan .

It was not until June last year that the first instance of the case ended and Xinghui Co., Ltd. received a "Civil Judgment" issued by the court: it was required to pay Sun Valley E-Commerce a cash consideration of 53.119 million yuan for the equity transfer and a penalty for late payment , and bear the first instance case acceptance fee, litigation preservation fees of 3.65541 million yuan and 4,500 yuan , with a cumulative amount of 79.2491 million yuan .

Dissatisfied with the ruling, Xinghui Co., Ltd. filed an appeal, requesting the Guangdong Higher People's Court to suspend the lawsuit, or to remand the case for retrial, or to change the judgment to dismiss all the claims of Sun Valley E-Commerce .

In March this year , Xinghui Co., Ltd. received the "Notice of Acceptance of Case" from the court , but it was not until November that it received the "Civil Ruling" from the second-instance court: the first-instance result was revoked and the case was sent back to the first-instance court for retrial.

The retrial of the case has not yet opened, but the amount involved has increased from the initial 72.8715 million yuan to 86.1014 million yuan today , an increase of nearly 13.23 million yuan in two years .

In addition to the above, Xinghui Co., Ltd. also issued an announcement stating that as of July , in addition to the disclosed litigation matters, the company and its subsidiaries, as defendants /respondents , have been involved in cumulative litigation and arbitration matters in the past year , involving an amount of 17.2292 million yuan.

Global Easybuy , Zebao, and Jiazhilian , these once popular cross-border sellers that went public through backdoor listings are now in a mess, and some have even left the market with a sigh. The situation of Zebao, which is still struggling in the quagmire, is not optimistic. In the first three quarters of this year, its revenue fell by 31.91% year-on -year , and its net loss was nearly 50 million yuan.

Will Zebao follow the path of Global Easy Shopping, or will it be able to survive and regain its glory? It will take time to find the answer.

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