Starbucks Enforced to Pay Over 10.87 Million Yuan in Rent Arrears?!

Today, Starbucks once again became a trending topic. The reason was that Tianyancha (a Chinese corporate information platform) showed that Guangdong Starbucks Coffee Co., Ltd. had newly added information as an executed person, with an execution target of 10.877142 million yuan. The executing court was the People's Court of Tianhe District, Guangzhou, and the related case was a lease contract dispute.

Could such a large company as Starbucks really be behind on rent? So we looked up the judgment in this case. After opening the judgment, we were immediately overwhelmed. For details of the case, everyone can check on China Judgments Online, but we won't provide detailed explanations due to the excessive content.

In this case, Starbucks was not the defendant, nor was Starbucks sued. The entire case was basically caused by "successive subletting." According to the statements in the judgment, the content can be roughly summarized as: Starbucks rented a shop space from the third landlord, but because the third landlord was in a lawsuit with the second and first landlords, Starbucks did not pay rent during this period. This enforcement application was to require Starbucks to pay the outstanding rent.

The property rights of the Starbucks shop space involved in this case belong to Bank of Guangzhou. Bank of Guangzhou initially rented the space to Company A, and then Company A subleased it to Company B. After obtaining the bare space, Company B invested a large amount of money in renovation and division, and then subleased it to multiple merchants including Starbucks. This case was about Company A being in arrears with rent to Bank of Guangzhou. If Company B terminated the lease, it would suffer significant losses! So it agreed to repay the money on behalf of Company A. Later, during the repayment process, Company B felt that the rent amount and interest amount demanded by Bank of Guangzhou were too high, so after repaying a portion, it was unwilling to continue repaying. Therefore, Bank of Guangzhou, through the court, required Company A, Company B, and the merchants subleased by Company B to quickly settle the rent and vacate the shop space for return.

In its defense in this incident, Starbucks emphasized that the company has always been paying rent normally. The reason for not paying rent during this period was simply that they felt the lease might be terminated, so they didn't know who to pay the rent to. They wanted to wait until after the lawsuit was concluded, determine who the rent recipient was, and then make the payment. For this reason, Starbucks exercised the right of insecure defense and suspended rent payments.

In this lawsuit, Bank of Guangzhou ultimately terminated the lease contract with Company A. Company B and the subleased merchants were required to pay the outstanding rent from during the lawsuit to Bank of Guangzhou. Due to Company A's withdrawal, if Company B and the subleased merchants wanted to continue using the commercial space, they would need to sign a new lease with Bank of Guangzhou, otherwise they would have to move out.

Theoretically, this lawsuit had little to do with Starbucks. Starbucks was only a third party with the obligation to assist in returning. However, Starbucks may not have actively paid the outstanding rent after the lawsuit results were out, which is why Bank of Guangzhou applied to the court for enforcement.

Image source: Network, Starbucks Guangzhou Weibo

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