The "Friendship Defense Battle" Behind the 520k Yuan Equity Dispute

This article is reproduced from: Jiangsu Legal News

Recently, a dispute over the transfer of equity with a total amount of 520k yuan was efficiently resolved through coordinated mediation between the Suzhou Wuzhong District Court and a mediation organization. Ms. Tan wrote a letter to express her thanks to the parties involved.

Ms. Tan and Mr. Zhao have been friends for many years and jointly started a business by establishing a company. In 2023, Ms. Tan transferred the 37% equity she held to Mr. Zhao, and both parties signed an “Equity Transfer Agreement,” stipulating that the transfer payment would be made in installments. After Ms. Tan completed the equity change registration as agreed, Mr. Zhao was unable to pay the remaining amount on time due to difficulties in the company’s capital turnover. Before filing the lawsuit, Mr. Zhao still owed the equity transfer payment of 520k yuan. After repeated demands proved unsuccessful, Ms. Tan brought a lawsuit to the court, requesting Mr. Zhao to pay the remaining amount and liquidated damages for breach of contract.

After accepting the case, the presiding judge found that although the dispute appeared on the surface to be a debt owed for an equity transfer, in reality it intertwined multiple factors such as friendship, partnership, and business operations. A simple judgment could clarify the debts, but might also completely sever the bond between the two parties and affect the company’s stable operation. After obtaining the parties’ consent, the court entrusted the case to a mediation organization for preliminary mediation.

During back-to-back communications, through emotional guidance, the two sides returned from confrontation to dialogue and consultation. The mediator promptly requested professional guidance from the presiding judge. The judge carefully and accurately reviewed the effectiveness of the agreement, the determination of liability for breach of contract, the feasibility of installment performance, and other issues, clarifying that the agreement was legal and valid, that Mr. Zhao’s late payment constituted a breach of contract, and that the mediation plan needed to balance the protection of parties’ rights and interests with the ability to perform. With the judge’s guidance throughout the process, the mediation plan was both consistent with legal requirements and practical to implement.

On this basis, the mediator quickly organized negotiations between both parties. Mr. Zhao took the initiative to acknowledge his wrongdoing and was willing to assume corresponding responsibility, while Ms. Tan agreed to waive the high liquidated damages. Ultimately, both parties reached a mediation agreement: Mr. Zhao would pay the 520k yuan equity transfer payment in installments, and would appropriately compensate for the interest loss. If any installment was overdue, Ms. Tan would have the right to apply for compulsory enforcement of all remaining amounts, effectively strengthening the binding force of the agreement. After the agreement was signed, both sides shook hands and made peace. This mediation agreement was judicially confirmed by the court, granting it enforceability.