XML 13 R27.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies [Abstract]

Commitments and Contingencies

21.

Commitments and Contingencies

(i)

Capital Commitments

As of December 31, 2018 and September 30, 2019, the Company had the following contracted capital commitments:

	December 31,		September 30,
	2018		2019
For construction of buildings	$	3,439,794	$	3,309,613
For purchases of equipment		2,226,776		335,502
Capital injection to CBAK Power and CBAK Trading (Note 1)		20,400,000		23,900,000
	$	26,066,570	$	27,545,115

(ii)

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. Other than the legal proceeding set forth below, the Company is currently not aware of any such legal proceedings or claims that the Company believe will have an adverse effect on our business, financial condition or operating results.

On July 7, 2016, Shenzhen Huijie, one of the Company's contractors, filed a lawsuit against CBAK Power in the Peoples' Court of Zhuanghe City, Dalian, for the failure to pay pursuant to the terms of the contract and for entrusting part of the project to a third party without their prior consent. The plaintiff sought a total amount of $1,179,318 (RMB 8,430,792), including construction costs of $0.9 million (RMB6.1 million, which the Company already accrued for at June 30, 2016), interest of $29,812 (RMB0.2 million) and compensation of $0.3 million (RMB1.9 million). On September 7, 2016, upon the request of Shenzhen Huijie for property preservation, the Court of Zhuanghe froze CBAK Power's bank deposits totaling $1,179,318 (RMB 8,430,792) for a period of one year. On September 1, 2017, upon the request of Shenzhen Huijie, the Court of Zhuanghe froze the bank deposits for another one year until August 31, 2018. Further on August 27, 2018, the court of Zhuanghe froze the bank deposits for another one year until August 27, 2019, upon the request of Shenzhen Huijie. On August 27, 2019, the court of Zhuanghe again froze the bank deposits for another one year until August 27, 2020, upon the request of Shenzhen Huijie.

On June 30, 2017, according to the trial of first instance, the Court of Zhuanghe ruled that CBAK Power should pay the remaining contract amount of RMB6,135,860 (approximately $0.9 million) claimed by Shenzhen Huijie as well as other expenses incurred including deferred interest, discounted charge on bills payable, litigation fee and property preservation fee totaled $0.1 million, the Company has accrued for these amounts as of September 30, 2018. On July 24, 2017, CBAK Power filed an appellate petition to the Intermediate Peoples' Court of Dalian ("Court of Dalian") challenging the lower court's judgement rendered on June 30, 2017. On November 17, 2017, the Court of Dalian rescinded the original judgment and remand the case to the Court of Zhuanghe for retrial. The Court of Zhuanghe did a retrial and determined an appraisal to be performed by a third-party appraisal institution on the construction cost incurred and completed by Shenzhen Huijie on the subject project. On November 8, 2018, the Company received from the Court of Zhuanghe the construction-cost-appraisal report which determined that the construction cost incurred and completed by Shenzhen Huijie for the subject project to be $1,277,106 (RMB9,129,868). On May 20, 2019, the Court of Zhuanghe made a judgment that Shenzhen Huijie should pay back to CBAK Power $248,198 (RMB 1,774,337) (the amount CBAK Power paid in excess of the construction cost appraised by the appraisal institution) and the interest incurred since April 2, 2019. Shenzhen Huijie filed an appellate petition to the Court of Dalian. As of September 30, 2019, the Company has already paid $1.5 million (RMB11.0 million) and accrued $0.9 million (RMB 6.1 million) for the construction cost incurred and completed by Shenzhen Huijie.

In late February 2018, CBAK Power received a notice from the Court of Zhuanghe that Shenzhen Huijie filed another lawsuit against CBAK Power for the failure to perform pursuant to the terms of a fire-control contract. The plaintiff sought a payment of RMB244,942 ($34,263), including construction costs of RMB238,735 ($33,795) and interest of RMB6,207 ($868). The Company has accrued for these amounts as of September 30, 2018. On October 16, 2018, the Court of Zhuanghe issued a judgment that because certain items as stipulated in the fire-control contract were not completed by Shenzhen Huijie, the Company is liable to pay RMB77,043 ($10,777) and interest thereon accruing from July 24, 2017 to Shenzhen Huijie. On January 29, 2019, the Court of Dalian dismissed the appeal by Shenzhen Huijie and affirmed the original judgement.

In May 2017, CBAK Power filed a lawsuit in the Court of Zhuanghe against Pingxiang Anyuan Tourism Bus Manufacturing Co., Ltd., ("Anyuan Bus") one of CBAK Power's customers, for failure to pay pursuant to the terms of the sales contract. CBAK Power sought a total amount of RMB18,279,858 ($2,661,676), including goods amount of RMB17,428,000 ($2,437,867) and interest of RMB851,858 ($119,160). On December 19, 2017, the Court of Zhuanghe determined that Anyuan Bus should pay the goods amount of RMB17,428,000 ($2,437,867) and the interest until the goods amount was paid off, and a litigation fee of RMB131,480 ($18,392). The judgement went into effect in February 2018 and is currently in the execution phase. On June 29, 2018, the Company filed an application with the Court of Zhuanghe for enforcement of the judgement against all of Anyuan Bus' shareholders, including Jiangxi Zhixin Automobile Co., Ltd, Anyuan Bus Manufacturing Co., Ltd, Anyuan Coal Group Co., Ltd, Qian Ronghua, Qian Bo and Li Junfu. On October 22, 2018, the Court of Zhuanghe issued a judgment supporting the Company's application that all the Anyuan Bus' shareholders should be liable to pay the Company the debt as confirmed under the trial. On March 29, 2019, the Company received judgment from the Court of Zhuanghe that all these six shareholders cannot be added as debtors. On April 11, 2019, the Company filed an appellate petition to Court of Dalian challenging the judgment from the Court of Zhuanghe. On October 9, 2019, the Court of Dalian dismissed the appeal by the Company and affirmed the original judgment.

As of December 31, 2018 and September 30, 2019, the Company had made a full provision against the receivable from Anyuan Bus of RMB17,428,000 ($2,437,867).

On July 25, 2019, the Company received notice from Shenzhen Court of International Arbitration that Shenzhen Xinjiatuo Automobile Technology Co., Ltd filed arbitration against the Company for the failure to pay pursuant to the terms of the contract. The plaintiff sought a total amount of $0.16 million (RMB1,112,269), including equipment cost of $0.14 million (RMB976,000) and interest of $0.02 million (RMB136,269). As of September 30, 2019, the Company has accrued the equipment cost of $0.14 million (RMB976,000). On August 7, 2019, the Company filed a counterclaim arbitration against Shenzhen Xinjiatuo Automobile Technology Co., Ltd for return of the prepayment due to the unqualified equipment, and sought a total amount of $0.28 million (RMB 1,986,400), including return of prepayment of $0.2 million (RMB 1,440,000), liquidated damages of $67,143 (RMB480,000) and litigation fees of $9,294 (RMB66,440). On August 9, 2019, upon the request of Shenzhen Xinjiatuo Automobile Technology Co., Ltd, Shenzhen Court of International Arbitration froze CBAK Power's bank deposits totaling $0.16 million (RMB1,117,269), including equipment cost $0.14 million (RMB976,000), interest $0.02 million (RMB136,269) and litigation fees of $699 (RMB5,000) for a period of three months. The Company believes that the plaintiff's claims are without merit and intend to vigorously defend themselves in this proceeding.

In early September, 2019, several employees of CBAK Suzhou files arbitration with Suzhou Industrial Park Labor Disputes Arbitration Commission against CBAK Suzhou for failure to pay their salaries in time. The employees seek for a payment including salaries of $89,295 (RMB 638,359) and compensation of $75,956 (RMB 543,000), totaling $0.17 million (RMB 1,181,359). In addition, upon the request of the employees, the court of Suzhou Industrial Park ruled that the bank deposits of CBAK Suzhou totaling $0.17 million (RMB 1,181,359) should be frozen for a period of one year. As of September 30, 2019, $52,990 (RMB378,820) was frozen by bank. On September 5, 2019, CBAK Suzhou and the employees reached an agreement that CBAK Suzhou will pay these salaries and compensation.