Perspective | Legal Wisdom in Entrepreneur Divorce Cases: Three-Step Strategy Helps the Woman Secure Over 30 Million Yuan in Marital Property
Published:
2024-11-05
In early 2007, Mr. Li established X Tian Company with an initial registered capital of 500,000 yuan, in which Mr. Li held 80% of the shares and contributed 400,000 yuan. In September 2008, Mr. Li married Ms. Zhang, and they had a son and a daughter after marriage. During their marriage, X Tian Company underwent four rounds of capital increase, with Mr. Li's contribution rising to 18 million yuan, holding 90% of the shares, and his actual contribution reaching 14 million yuan, while Ms. Zhang was not registered as a shareholder of the company. X Tian Company served as the main business for both spouses, and they subsequently established more than ten other enterprises. Additionally, during the marriage, Mr. Li purchased 18 properties (including one overseas property) in his personal name, while Ms. Zhang's income mainly came from her monthly salary of 15,000 yuan from working at X Tian Company, and she had no knowledge of the scale and situation of Mr. Li's assets. In October 2023, due to a breakdown in their relationship, Ms. Zhang decided to entrust the lawyers of this team to file for divorce in court. After accepting the commission, the team lawyers completed the online filing on October 16, 2023, but during the pre-litigation protection process, it was discovered that on October 19, 2023, Mr. Li transferred all the shares of X Tian Company to Y Hai Company, which he controlled. In December 2023, the court ruled against the divorce between Mr. Li and Ms. Zhang.
Basic Case Facts
In early 2007, Mr. Li established X Tian Company with an initial registered capital of 500,000 yuan, of which Mr. Li held 80% of the shares and contributed 400,000 yuan. In September 2008, Mr. Li married Ms. Zhang, and they had a son and a daughter after marriage. During their marriage, X Tian Company underwent four rounds of capital increase, with Mr. Li's contribution rising to 18 million yuan, holding 90% of the shares, and his actual contribution reaching 14 million yuan, while Ms. Zhang was not registered as a shareholder of the company. X Tian Company served as the main business for both parties, and they subsequently established more than ten other enterprises. Additionally, during the marriage, Mr. Li purchased 18 properties (including one overseas property) in his personal name, while Ms. Zhang's income mainly came from her monthly salary of 15,000 yuan from working at X Tian Company, and she had no knowledge of the scale and situation of Mr. Li's assets. In October 2023, due to a breakdown in their relationship, Ms. Zhang decided to entrust our team of lawyers to file for divorce in court. After accepting the commission, the team lawyers completed the online filing on October 16, 2023, but during the pre-litigation preservation process, it was discovered that Mr. Li transferred all shares of X Tian Company to Y Hai Company, which he controlled, on October 19, 2023. In December 2023, the court ruled against the divorce between Mr. Li and Ms. Zhang.
Case Handling Process
When the team lawyers took over the case, the shareholders of X Tian Company had not changed. The initial solution we provided to the client was still a relatively traditional approach of filing for divorce along with litigation preservation, intending to comprehensively grasp the assets under the male party's name and those controlled by him through litigation preservation.
(1) Facing the challenge of share transfer, quickly adjust strategy and initiate counter litigation.
The team lawyers promptly retrieved the business registration files of X Tian Company and found that the transfer price of Mr. Li's shares was far below the actual market value, and the transferee was Y Hai Company controlled by Mr. Li. After fully analyzing the pros and cons and obtaining Ms. Zhang's consent, we filed a separate lawsuit to confirm the contract invalidity, requesting the court to declare the "Share Transfer Agreement" invalid and require Y Hai Company to return all shares of X Tian Company to Mr. Li's name by completing the change registration procedures. At the same time, the team lawyers also applied for asset preservation to prevent the shares from being transferred again. The purpose of filing this lawsuit was to return the most valuable company shares of both parties to the male party's name for direct division in the divorce litigation; otherwise, the female party could only divide the value of the shares controlled by Mr. Li in Y Hai Company, which is essentially a shell company. This action of changing the share registration by the male party increased the difficulty for the female party to realize the division of company share value, and through this lawsuit, it could also be determined that the male party had transferred marital property after the female party filed for divorce, which could help the female party claim a larger share of the property in future divorce litigation (the Supreme Court's guiding case is a 6:4 division), rather than a general equal division of property.
(2) To prevent the male party from transferring cash and other assets, utilize the situation of transferring marital property to initiate counter litigation.
In December 2023, after the court's first divorce ruling denied the divorce between Mr. Li and Ms. Zhang, the team lawyers faced the urgent situation of the court about to lift the asset preservation measures. To prevent Mr. Li from transferring marital property, especially cash in bank accounts, we quickly initiated a third lawsuit—division of marital property during marriage—using Mr. Li's unauthorized transfer of shares without Ms. Zhang's consent during the first divorce litigation as a starting point, and successfully froze Mr. Li's properties, bank accounts, and funds again before all assets in the divorce litigation were unfrozen, effectively preventing the male party from transferring marital property.
(3) Keep a close eye on case information to provide valuable legal analysis for the client.
While waiting for the second divorce lawsuit, the team lawyers continuously monitored the public information of the enterprises awaiting division in the divorce, discovering that Mr. Li attempted to use litigation to transfer all shares of Z Rui Company held by Y Hai Company back to an individual who appeared unrelated to the couple. Upon inquiring with Ms. Zhang, it was found that this individual shareholder of Z Rui Company was actually an employee subordinate to Mr. Li. The male party's actions were clearly aimed at avoiding the division of the value of Z Rui Company held by Y Hai Company in the divorce litigation, but he was also worried that directly registering the share transfer to an individual would lead to the female party suing to confirm the transfer invalid. Therefore, he had to resort to filing a false lawsuit to obtain a judgment, making it impossible for the female party to raise objections to his share transfer case. After analyzing the case, the team lawyers immediately reported this information to Ms. Zhang, who then reported the situation to the court and public security authorities. Ultimately, the public security authorities initiated an investigation into the male party and others for suspected false litigation.
Six months after the court's first ruling against the divorce, the team lawyers filed a second divorce lawsuit on behalf of Ms. Zhang. Due to the excessive number of properties under Mr. Li's name and the numerous enterprises operated by both parties, and since Mr. Li and Ms. Zhang could not reach an agreement on the property prices and the value of company shares, the team lawyers analyzed that if the properties and company shares were assessed according to the court's legal procedures and then auctioned, their values would inevitably depreciate significantly, consuming a lot of time, energy, and financial resources. Therefore, the team lawyers actively engaged in mediation work, which lasted three months, involving more than 20 negotiations and discussions, ultimately facilitating a consensus between the couple on the distribution of enterprises, properties, and other assets. Finally, four months after the online filing of the second divorce lawsuit, both parties signed a mediation agreement under the court's facilitation and officially divorced. According to the market's lowest valuation, Ms. Zhang received a total property value exceeding 30 million yuan, far exceeding her expectations.
Insights from the Case Lawyers
This case highlights the importance and necessity of divorce litigation lawyers possessing legal wisdom and practical experience. Divorce litigation is not an ordinary small case; it involves the personal rights of the parties, family relationships, and even substantial marital property, which relates to the vital interests of the parties. Therefore, clients must entrust professional family lawyers to handle divorce litigation cases to maximize their interests.
When handling divorce disputes, lawyers must closely track asset dynamics to prevent the other party from transferring assets, while also anticipating and investigating the other party's strategies, timely adjusting their own strategies to ensure the safety of uncontrolled assets. Moreover, lawyers must pay attention to "timeliness," ensuring that pre-litigation preservation is executed in one step and timely promoting mediation work to reduce the litigation cycle, saving various costs for the parties. Additionally, the design of the divorce mediation agreement and the details of its implementation are equally important, such as property transfer, share changes, tax liabilities, compensation payments, and child visitation arrangements, all of which need to be meticulously planned to ensure that the parties' rights are not harmed during the implementation process.
For entrepreneurs who are particularly concerned about family dispute resolution, wealth planning, and wealth inheritance, the involvement and assistance of a professional team of lawyers are crucial. Only by leveraging professional expertise can wealth be safeguarded and sustainably inherited.
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