Society

Till debt us do part

Are wives in China liable for their husband’s debts?

Galloping-Horse-w

There’s more than Terracotta Warriors in the massive mausoleum of the First Qin Emperor (which was built in 246 BC).

The man who unified the ancient Middle Kingdom also had his entire harem of wives and concubines – some inherited from the six other states he conquered – accompany him into his afterlife. Many of these women, young and fair, were buried alive to perform their duty of conjugal piety.

This rather harrowing burial practice, which yoked together the fate of husbands and wives, was only finally abolished during the reign of the Kangxi emperor in the seventeenth century.

Another marital shackle was also dismantled last week when the Supreme People’s Court gave a new interpretation to Article 24 of the country’s Marriage Law.

The top tribunal ruled that debts incurred during married life would no longer have to be paid off jointly by the couple. They would be considered to be shared liabilities only if both partners signed the original paperwork.

The landmark ruling came in the wake of a high-profile court case involving Beijing Galloping Horse Group, a local film and television production house that was once an investor darling valued at Rmb$3.6 billion ($560 million). Among its cinematic achievements included Reign of Assassins, an acclaimed wuxia movie distributed in North America and South Africa by The Weinstein Company.

The unfortunate death of its founder Li Ming in 2014, however, led to the collapse of the family-run business. It also meant that a startling debt of Rmb200 million became the responsibility of his wife Jin Yan (see WiC260).

The studio was known for making profitable blockbusters such as The Eternal Moment (see WiC115), but the staggering debt was less to do with poor business acumen, and more the outcome of a deal with China Construction Bank’s culture fund back in 2011.

The Tianjin-based investment unit of CCB injected Rmb450 million into Galloping Horse for a 15% stake and got a group of investors to pledge a further Rmb750 million too. But the transaction was made with a key condition: that the family-run company would go public by the end of 2013, or else it would have to buy back all those shares and pay a compound interest rate of 10% to CCB on the amount.

The flotation did not pan out and Li died in early 2014. Subsequently Galloping Horse’s valuation plunged nearly 90% (to Rmb380 million) following an exodus of senior executives and star directors that had lost faith in the company. (Li reportedly died of a heart attack, but more recent reports suggested he passed away in police custody during a corruption probe of Li Dongsheng, formerly a senior figure at state broadcaster CCTV and vice-minister of public security, according to The Hollywood Reporter.)

Last September a court in Beijing ruled that the controlling parties of Galloping Horse had to repay Rmb635 billion to CCB. That included Li’s two sisters, who have been running the company, as well as Jin the widow, despite her having being ousted from the board soon after assuming the role of chairperson upon Li’s death. Jin was required to repay the debt in her deceased husband’s place, thanks to Article 24 of the Marriage Law.

“I did not sign that contract [with CCB]. Neither was that huge investment deployed in our marital lives,” Jin said on her weibo. “I haven’t even had a stake in Beijing Galloping Horse, so why should I bear all this,” she groaned, noting that the flawed Article 24 had entrapped a lot of other “innocent” women too.

Jin’s case, dubbed Article 24’s biggest “miscarriage of justice” online, has caused huge reverberations in the country, especially among those mired in debts left by their ex-spouses. These cases more than doubled to 160,000 between 2014 and 2016, according to Southern Metropolis Daily.

An online poll in October 2016 revealed that among 285 respondents who were forced to pay off their spouse’s clandestine borrowings, 89% were women. Around 42% of these debts were incurred through gambling, while 28% were because of expensive extramarital affairs, according to China Daily.

Since it was enacted by Chinese lawmakers in 2004, Article 24 has been designed to protect the rights of creditors against the backdrop of rising cases of debt evasion. Some couples had tried to escape repaying by having one party declare bankruptcy while the other person kept all the money. There were even those who faked divorces, reports the South China Morning Post.

The move this month to revise Article 24, some say, reflects President Xi Jinping’s desire to shore up family values – and avoid penalising one spouse for the other half’s philandering.

As a result of the recent reinterpretation Jin looks likely to be exonerated of her husband’s debts. Another beneficiary will be Gan Wei, who is settling the debts of her husband Jia Yueting, founder of insolvent tech firm LeEco (See WiC363).


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