Beijing King of Party, a famous karaoke club and moneymaker, now delayed waiter salary. Technical bankruptcy?

Beijing King of Party was opened in 2015. The business area is divided into three floors with a total area of 5,500 square meters, including 63 private rooms and interactive bar areas. The 3D Mapping projection technology combined with box entertainment technology was pioneered.

King of Party went viral in March 2016. At that time, the media reported that Wang Sicong, a famous rich second generation, spent 2.5 million yuan a night there, which was a hot search on Weibo (MicroBlog).

According to DaZhongDianPing, a popular search & score portal in China, the store has a per-capita consumption of around 2,100 yuan, making it the No. 1 spot on the list of Beijing's most popular entertainment clubs, with frequent visits from celebrities.

From the website of Jin Lin Rd. flagship store of King of Party in Huangpu district of Shanghai, its KTV entertainment brand is held by Shanghai Zhong Guan Hui Du Catering Entertainment Co., Ltd., which has opened four outlets across the country so far. The first King of Party KTV flagship store was formally opened in Shanghai in June 2013, which was designed and planned by international famous designers.

According its official website, the company's shareholders are made up of British, Hong Kong, Taiwan and Macao professionals, including well-known Hong Kong artists, who personally participate in overall interior decoration design and decoration details of VIP rooms.

After opened its first store in Shanghai, it then opened stores in Beijing, Wuhan and other areas through franchising.

Recently, the news that Beijing King of Party will terminate the labor contract with all employees triggered hot discussion.

An internal letter notes from King of Party that the company had a bad year in 2019 and was planning to re-launch in 2020 when it was hit by a new epidemic that has crippled the offline sector. Crowded and space closed KTV can only choose to shut down! Meanwhile, Beijing King of Party has decided to terminate the labor contract with all employees on February 9, 2020.

In the internal letter, Beijing King of Party made three arrangements for the payment of salary and social security.

Pay 50% of the salary of January 2020 before the end of February, and make up 50% of the remaining salary within 2 months after the resumption of work;

The company has actively paid the employee's social security in January 2020. After the termination of the labor contract with you, the company will transfer it out in time, so as not to delay your continuous social security and tax payment;

If more than 30% of the employees do not approve the plan, the company will be forced into bankruptcy liquidation procedures;

If the company went bankrupt, King of Party shareholders would only have to take on 1 million yuan of registered capital in debt (including employee salaries, social security and foreign debt), which would be far less than the income they would get from terminating their labor contracts.The letter also stressed that the company is willing to give priority to old employees and give them a little compensation and reward after the large-scale resumption of work in first-tier cities.

This suggests that Beijing King of Party is in financial trouble, but not so much as bankrupt. It is more like a means to cut staff expenses and reduce costs without revenue.The people who support the company's decisions have a chance to come back to work later, and if they don't, they go bankrupt, the shareholders lose less, and the employees lose more than they get out of the contract.

The problem is : pay 50% of the January salary by the end of February and make up 50% of the remaining salary within two months after returning to work. King of Party's operations in January had little to do with the outbreak, but employees were not paid in January!Generally speaking, the salary of January should be paid on February 15 or so, become now, the 50% of salary of January is paid before the end of February, waiting for 2 months after resuming work.

The company's business situation is indeed difficult!In recent two years, large KTV and clubs has run into trouble because of policy, etc. Beijing King of Party should make a lot of money in 2016 and 2017, but in 2018 and 2019, it was hard.

Under the epidemic, it will be pretty good for Beijing King of Party if can reopen in May. However, during this period, the company's operating pressure is indeed difficult, and its rent costs, decoration costs amortization, etc., are not small numbers.

In the spread of the epidemic, the KTV industry, which relies heavily on offline traffic, became one of the first affected industries.

Nuo Di suggests to consult a professional liquidation lawyer for liquidation, instead of simply thinking that the liquidation can be completed only by assuming the debts within the registered capital.

In case of bankruptcy liquidation, do the shareholders of King of Party really just need to bear the debt of only 1 million yuan of registered capital? Is the payment of tax legal? Have shareholders occupied the company's assets by means of expenses, loans and other means during the company's operation for many years? Has the other legal responsibility to be performed been fulfilled?A number of other factors will affect whether the enterprise can complete the liquidation legally.

This needs to be done by a team of professional lawyers, not by the corporate lawyers who say they only need to take on the registered capital of 1 million yuan in debt, as described in the internal letter.

The enterprises in the face of the same problem please consult professional lawyers in the first time, in order to avoid greater losses.

Shanghai Nuo Di Law Firm

Address: 32/F, Federation of Industry Building, No.55 East Yan’an Road, Shanghai, China

Tel: 02153085022    

Website: http://www.shndlaw.com