A. B Co., Ltd. (hereinafter referred to as the “instant company”) was established in December 199, and was engaged in video conference and video-recording site software development business, etc., and the main business was 'C’’’’’’’’’s website operation, and video conference-related business (D’). The representative director of the instant company was E, but the F took office as the representative director around August 201.

B. From the end of 2010, the instant company was suffering from business difficulties while a financial institution was unable to extend the loans amounting to KRW 260 million and taking measures to recover, while the case where the reduction of users of the C site and the sales of D programs and the operation of the website have been led to a sudden increase in sales, and the vice president embezzleds KRW 410 million of company funds around April 201. The instant company was unable to pay wages to its employees, including the Plaintiff, from the beginning of 2012, and did not pay interest on loans to financial institutions ( KRW 260 million) and did not pay taxes and premiums for four major insurance.

D. On May 31, 2012, the representative F of the instant company established a new corporation called G Co., Ltd. (hereinafter referred to as “G”) on May 31, 2012 for the extension of loans and the repayment of debts that did not extend loans to a financial institution after his/her inauguration (the representative is the company director H according to the corporate register of the instant company). The employees of the instant company and J retired from the instant company as of July 31, 2012 as of July 31, 2012, and entered G as of August 1, 2012.

E. Meanwhile, around December 24, 2001, the Plaintiff joined the instant company. Since around 2012, the Plaintiff was unable to receive adequate wages, and on November 30, 2012, the Plaintiff retired on November 30, 2012 from the company with two other employees and one accounting employee who performed the video conference-related work.

F. On June 28, 2012, the employees of the instant company, including the Plaintiff, filed a petition for F to the Defendant on suspicion of delayed payment of wages, but the petition was withdrawn on August 12, 2013.

G. Since June 28, 2013, the Plaintiff filed an application for recognition of the fact of bankruptcy, etc. with the Defendant. On December 13, 2013, the Defendant: (a) established G to repay debts; (b) paid data usage fees that the instant company should pay to K; and (c) is operating the instant company’s business; and (d) retired from the instant company as of July 31, 2012 as of July 31, 2012 and continued to work in G as of August 1, 2012; (b) on the premise that the instant business owner operated two corporations without dividing them into the same office; and (c) the Plaintiff’s application for recognition of bankruptcy cannot be deemed as having been de facto discontinued on the ground that the instant company’s business was discontinued by changing only the name of the corporation while maintaining its human and material identity.

[Based on Recognition] Facts without dispute, Gap evidence 1 to 7, 20 through 23, 31, Eul evidence 1, Eul evidence 2, Eul evidence 3 to 6, Eul evidence 8, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Defendant: (a) deemed the instant company to continue its business by changing only the name of the legal entity while maintaining the identity of its human resources and material resources; and (b) recognized the bankruptcy of the instant company. However, in light of the overall circumstances related to the instant company, the instant company is in the process of discontinuance of its business or discontinuance of its business. Therefore, the instant disposition, which practically recognized bankruptcy, is unlawful

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Facts of recognition

1) As of June 24, 2013, when the Plaintiff filed an application for recognition of bankruptcy, etc. with the Defendant, the Plaintiff’s delinquent benefits amounted to KRW 9,790,527, and retirement benefits amount to KRW 32,187,342.

2) According to the Defendant’s investigation, the Defendant’s employees, including the Plaintiff, who were in arrears with six employees of the instant company, were in total of KRW 160,66,280, and the expected substitute payment among them was approximately KRW 52,80,000. 3) From the end of November 2012, employees, who were engaged in video conference-related business among the businesses of the instant company, were suspended from their retirement.

4) Meanwhile, employees who had been engaged in the work related to the operation of the C site in the instant company were I and J two, but they retired from the instant company as of July 31, 2012, and entered G as of August 1, 2012. However, both and J performed the work related to the operation of the C site at the same place, without any difference between the previous one. [This case and J were retired from G on April 19, 2013. Since then, both and J were to perform the work related to the operation of the C site in the Arabic form, but did not receive wages properly.

5) Thereafter, from July 2013 to January 2014, J had prevented the operation suspension of the said website while performing the work at F’s request. From February 2014, the said website was eventually suspended due to J’s failure to perform the work. 6) A site was not a database management for site operation, and it was not a normal operation when accessing the website, such as “DB access failure”, and it was not impossible to access the website from May 14, 2014, to indicate “it is impossible to indicate the web page on the website access site.”

7) The instant company had a previous place of business in Seocho-gu Seoul Metropolitan City L office’s rent was set aside as lease deposit, and used part of the company’s office operated by F’s father from October 2012 as the office space.

8) In an investigation report for recognition of bankruptcy, etc. prepared by the Defendant around December 2013, the Defendant confirmed that the Plaintiff did not immediately recoverable or recoverable sales claims or movable property at the business place of the instant company, by taking into account the corporate passbook, financial statements, statements by the business owner of the instant company, opinions on the financial status of certified public accountants, etc., and determined that the said business place did not have the ability to pay wages, etc.

A) According to the investigation conducted on November 14, 2013 by the labor inspector affiliated with the Defendant visiting the Mapo-gu Seoul Building No. Ma, a place of business of the instant company, the said place of business, as an officetel of the instant company, confirmed that the said office of business was used by the instant company as an officetel of the instant company, and that the office of business, etc. was still used by the said company, but did not have any actual work.

B) The instant company failed to report the closure of its business because it was unable to change the nominal owner of the server into G due to the delinquency in paying approximately KRW 7 million of the monthly data usage fee of two months to K, and the data usage fee is located in G, but K issues a tax invoice in the name of the instant company.

C) There is no balance in the account in the majority of the accounts in the name of the instant company, even if there is balance, there is no balance in the passbook 1,024,469 won as the head of the instant bank is seized, and the deposit in the post office passbook 550,030 won is not seized and there is no balance.

D) In addition, real estate owned by the instant company is not owned by the instant company, and the office is used temporarily by the F’s father as an executive officer with the F’s temporary loan, not the office leased by the instant company.

E) The instant company is delinquent in national taxes of KRW 24,083,40 as of August 22, 2013, and four premium of KRW 7,012,340 as of May 6, 2013.

F) As a result of a certified public accountant’s review of the financial statements of the instant company, it seems clear that, although cumulative losses amount to KRW 3.1 billion, exceed its assets, investment securities do not have any market value, lease deposit was set-off and extinguished, financial institutions’ borrowings are repaid out by the funds of the relevant company (G) and the company’s reorganization procedure is completed. As such, it is apparent that most of the liabilities including wage claims cannot be paid in the status that most of them are impossible to pay.

9) Meanwhile, the employees of the instant company failed to secure the claim for wages or retirement allowances separately.

[Reasons for Recognition] A without dispute, Gap evidence 1-3, 7, 17 through 19, 24 through 30, 32-38, Gap evidence 2, Gap evidence 3-1 through 3, Gap evidence 5-1 through 3, Gap evidence 5-1 through 6, Gap evidence 6-1 through 6, Eul evidence 2, Eul evidence 7-1 through 3, Eul evidence 7-1 through 10, Eul evidence 10, and the purport of whole pleadings

D. Determination

1) According to Article 7(1) of the former Wage Claim Guarantee Act (amended by Act No. 12528, Mar. 24, 2014; hereinafter “Guarantee of Wage Claim Guarantee Act”), the Minister of Employment and Labor shall pay, on behalf of the employer, unpaid wages, etc. if a retired worker claims the payment of unpaid wages, etc. in cases where the employer falls under grounds prescribed by Presidential Decree, such as bankruptcy (Article 7(2); hereinafter the same shall apply).

2) According to such delegation, Article 5(1) of the former Enforcement Decree of the Wage Claim Guarantee Act (amended by Presidential Decree No. 25630, Sep. 24, 2014) provides that the Minister of Employment and Labor may recognize that an employer has no ability to pay unpaid wages, etc. upon a request of retired workers without receiving wages, etc. from the employer (hereinafter “recognition of bankruptcy, etc.”). Of them, Article 5(2) provides that “where the business is discontinued or is discontinued due to any of the following reasons”, “where the main business facility is seized, provisionally seized, or transferred for debt repayment under the suspension of production or business activity of the business,” “where the authorization, permission, registration, etc. of the business has been revoked or cancelled”, “where the main production or business activity of the business has been suspended for at least one month” (c).

3) As examined earlier, the representative director F of the instant company established G, a new corporation. The Defendant deemed the instant company and G as the same company in substance, and that G continued its business. On the other hand, the Defendant determined that the instant company’s bankruptcy cannot be recognized.

4) In the lower court, we examine whether the instant disposition that rejected recognition of facts, such as bankruptcy, based on the aforementioned Wage Claim Guarantee Act and the regulatory structure and content under the Enforcement Decree of the same Act is legitimate.

5) The circumstances revealed in the above facts are as follows.

① The instant company engaged in video conference or video-recording site software development business, etc., among them.

In particular, the main business was to operate the Internet site called ‘C' and operate the Internet site called ‘D' and sell the program.However, the business of ‘D' was suspended from the end of November 2012 when the employee retired from the video conference, including the plaintiff, and ‘C' was suspended on or around April 19, 2013 when the operation of the Internet site was retired from I and JI as the employee in charge (i.e., the operation of the above Internet site even after the withdrawal, but it was temporarily conducted at the request of F, it is difficult to view that they were fixed and continued to operate the above business, and there is no other evidence to view that the main business activities of the company of this case were all interrupted). In the end, the main business activities of the company of this case were suspended.

② Although the Defendant pointed out that F had established G and repaid all the liabilities of the financial institution of the instant company, there is no evidence to verify whether F had continued to conduct G business and repaid all the liabilities of the instant company with its profits, or whether the name of the obligor was changed or not.

③ The Defendant asserts that F, a real representative of the instant company, has sufficient financial capacity as an attorney-at-law and that there is intent to continue the instant business. However, there is no evidence to verify F’s financial capacity, and even if F, even if F had sufficient financial capacity to continue the instant company’s business, the corporation and its representative director, as a separate right holder, can in principle be deemed as the company’s capital or assets, and it cannot be deemed that the said company’s business will continue to exist on the basis of the aforementioned fact. Furthermore, in light of the fact that the employees of the instant company, including the Plaintiff, etc., were not entirely operating the C Site from May 2014 after their withdrawal, it is difficult to deem that F had intent to continue the business.

④ The account in the name of the instant company does not remain at present, and the lease deposit was locked due to the failure to pay the rent of the Seoul Seocho-gu Seoul L office where the previous place of business was located, and was used as the office space by lending part of the office of the F’s father from October 2012. However, according to the Labor Inspector’s confirmation as of November 14, 2013, it appears that it is difficult to maintain the business, such as that the labor inspector belonging to the Defendant did not have any actual work.

⑤ As a result of the review of financial statements by a certified public accountant, the Defendant determined that the instant company was unable to pay wage claims, based on such circumstances as the actual employees’ wages, national taxes, and insurance premiums are in arrears for a considerable period of time. Even according to such determination, the possibility of continuing the instant company’s business is rare, while the need to protect the employees who were not paid wages seems to be high.

6) In full view of the foregoing circumstances, it is reasonable to view that the instant company’s business was already discontinued or its main production or business activity was discontinued for not less than one month, and that the business was discontinued. Accordingly, the instant disposition should be revoked as it is unlawful on a different premise.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is decided as per Disposition.

Judge Lee Jin-hun

Judges Park Jong-young

A person shall be appointed.