[2] Where a bankruptcy creditor files a lawsuit for revocation after the debtor is declared bankrupt, whether the trustee in bankruptcy can take over the lawsuit (affirmative), and whether it is legitimate that the trustee in bankruptcy changes into the lawsuit for avoidance after the succession of the lawsuit (affirmative)

[3] In a case where a trustee in bankruptcy takes over a creditor revocation lawsuit pending in the first instance court and alters it to a lawsuit for denial, whether it falls under the exclusive jurisdiction of the court with pending bankruptcy (affirmative)

[2] Even where a lawsuit for revocation filed by a creditor after the declaration of bankruptcy is illegal, the trustee in bankruptcy may take over such lawsuit and exercise the avoidance power by means of a claim alteration. In this case, the court does not deem that the revocation power that is mutually changed after the succession of the lawsuit is illegal solely on the ground that the lawsuit taken over by the trustee in bankruptcy was illegal.

[3] The exclusive jurisdiction of the court with pending bankruptcy [the] exclusive jurisdiction of the court with pending bankruptcy [the court with pending bankruptcy (the "court with pending bankruptcy" other than the "court with pending bankruptcy" before being amended by Act No. 14472, Dec. 27, 2016]. Therefore, if the court with pending bankruptcy is not the court with pending bankruptcy, the court shall transfer the case to the court with pending bankruptcy, which is the competent court. Even if the creditor’s revocation lawsuit filed by the bankruptcy creditor is pending before the appellate court and exercises the avoidance power, the court with the authority to review and determine the lawsuit is not subject to Article 396(3) of the Debtor Rehabilitation Act, and the appellate court has the authority to take over the lawsuit with pending bankruptcy. However, if the bankruptcy trustee takes over the creditor revocation lawsuit pending in the first instance court and changes it to the lawsuit for avoidance, Article 396(3) of the Debtor Rehabilitation Act applies.

1. In the instant case, first of all, the issue arises as to whether the inheritance creditor files a lawsuit for revocation after the declaration of bankruptcy, whether the succession to the lawsuit is permitted, whether the change to the lawsuit for avoidance is legitimate, and whether the bankruptcy creditor violates the jurisdiction over the lawsuit for avoidance.

A. (1) If the debtor commits a fraudulent act against the creditor, the creditor may exercise the right of revocation pursuant to Article 406 of the Civil Act. However, after the debtor is declared bankrupt, the trustee in bankruptcy may exercise the right of avoidance on behalf of the bankrupt estate (Articles 391 and 396 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”). After the bankruptcy procedure is declared bankrupt, taking into account the fact that the bankruptcy procedure is a collective and universal procedure for the equal and fair repayment to the creditors, the right of avoidance may be exercised by a trustee in bankruptcy, who is not a bankruptcy creditor. Accordingly, after the bankruptcy is declared, the trustee in bankruptcy shall exercise the right of avoidance aimed at equal repayment to the total creditors, and the trustee in bankruptcy may not file a lawsuit for the revocation of the creditor’s claim on the basis of individual compulsory execution (see Supreme Court Decision 2010Da37141, Sept. 9, 2010).

In this context, when a creditor’s revocation lawsuit filed by a bankruptcy creditor is pending at the time that such lawsuit is declared bankrupt, the said lawsuit shall be interrupted until the takeover of the lawsuit or the termination of the bankruptcy procedure and the trustee in bankruptcy may take over the lawsuit (Articles 406 and 347(1) of the Debtor Rehabilitation Act).

(2) After the bankruptcy is declared, the bankruptcy creditor is unable to file a lawsuit for revocation against the beneficiary or subsequent purchaser, but the bankruptcy trustee is equally able to file a lawsuit for revocation of the creditor (see Supreme Court Order 2013Ma4020, Jun. 27, 2013). The detailed reasons are as follows.

(A) Articles 406 and 347(1) of the Debtor Rehabilitation Act provide that the trustee in bankruptcy may take over the creditor revocation lawsuit pending at the court at the time bankruptcy is declared. The purpose of this provision is to promote a uniform settlement of bankruptcy proceedings with the aim of fairly realizing and distributing the debtor’s property by absorbing the creditor’s individual right of revocation into the form of an extension of the bankruptcy estate, namely, the exercise of the right of avoidance by the trustee in bankruptcy who performs duties for the common interest of all the bankruptcy creditors (see Supreme Court Decision 2015Da33656, Jul. 29, 2016). However, the same applies not only to cases where the creditor revocation lawsuit is pending in the court at the time bankruptcy is declared, but also to cases where the creditor revocation lawsuit

(B) Article 396(1) of the Debtor Rehabilitation Act provides, “The avoidance power shall be exercised by the trustee in bankruptcy in the manner of filing a lawsuit, a claim for avoidance, or a defense.” The term “action” refers not to cases where the trustee in bankruptcy files a lawsuit for avoidance, but also to cases where the trustee in bankruptcy exercises the avoidance power by taking over the existing lawsuit and changing it to the lawsuit for avoidance. In cases where a lawsuit for revocation filed by the creditor in bankruptcy is pending in the court at the time the bankruptcy is declared, the provisions on the interruption of the lawsuit and the succession of the lawsuit filed by the trustee in bankruptcy are prohibited by taking over the lawsuit for revocation filed by the creditor after the bankruptcy is declared.

(C) Since a creditor’s revocation lawsuit is not a party to a debtor who is declared bankrupt, even if the debtor is declared bankrupt, the cause for succession does not arise to the party. However, given that the result of the lawsuit may directly affect the increase or decrease of the bankruptcy estate, when the creditor’s revocation lawsuit filed by the bankruptcy creditor is pending in the court at the time bankruptcy is declared, the litigation procedures are suspended and the trustee in bankruptcy takes over the lawsuit. Therefore, it is distinguishable from cases where a party’s death during the lawsuit is pending, and thus, it is difficult to view that the Civil Procedure Act provisions established to regulate such cases apply to the lawsuit for revocation

(3) Therefore, even if a lawsuit for revocation filed by a creditor after the declaration of bankruptcy is illegal, the trustee in bankruptcy may take over such lawsuit and exercise the avoidance power by means of a claim alteration. In this case, the court does not deem that the revocation right is unlawful solely on the ground that the lawsuit taken over by the trustee in bankruptcy was illegal.

B. The exclusive jurisdiction of the court with pending bankruptcy [the] exclusive jurisdiction of the court with pending bankruptcy [the court with pending bankruptcy¡± (Article 396(3) and (1) of the Debtor Rehabilitation Act (amended by Act No. 14472, Dec. 27, 2016)]. Therefore, Article 396(3) of the Debtor Rehabilitation Act shall apply where the court with pending bankruptcy proceeding is not the court with pending bankruptcy proceeding. If the creditor’s revocation lawsuit is pending before the appellate court, the court shall transfer the case to the court with competent jurisdiction. Even if the creditor’s revocation lawsuit filed by the creditor is pending before the appellate court and the bankruptcy trustee exercises the right to set aside upon taking over the lawsuit, even if the creditor’s revocation lawsuit is pending before the appellate court, the court is not subject to Article 396(3) of the Debtor Rehabilitation Act and the appellate court has the authority to review and determine the lawsuit (see Supreme Court Decision 2017Da205073, May 30, 2017).

2. According to the reasoning of the lower judgment and the record, the following facts are revealed.

A. On February 25, 2014, the Nonparty: (a) filed with Defendant 2, on February 25, 2014, a provisional registration of the right to claim ownership transfer on the ground of “sale reservation on February 24, 2014” or “sale reservation on February 12, 2014” (hereinafter “the provisional registration of this case”); and (b) on June 30, 2014, Defendant 1 filed for the registration of ownership transfer on the ground of “sale on June 24, 2014” (hereinafter “instant ownership transfer registration”).

B. On July 6, 2015, the Nonparty was declared bankrupt by the Gwangju District Court 2015Hadan68, and the Plaintiff’s attorney was appointed as the Nonparty’s trustee in bankruptcy.

C. On September 30, 2015, the Plaintiff, a bankruptcy creditor, filed a lawsuit against the Defendants, claiming that each of the above sales and purchase agreements entered into between the Nonparty and the Defendants constituted a fraudulent act, and that the said sales and purchase agreement constitutes a fraudulent act.

D. On May 19, 2016, the Plaintiff’s trustee in bankruptcy, filed a motion to resume the instant lawsuit on May 19, 2016, and on the same day, the Plaintiff filed a motion to modify the purport of the claim and the cause of the claim that exercises the right to set aside under Article 391 Subparag. 1 of the Debtor Rehabilitation Act (the written application for modification of the purport of the claim and the cause of the claim stated that the right to set aside is to seek cancellation of the provisional registration of this case and the registration of transfer of ownership on the ground of the exercise of the right to set aside, but the Plaintiff’s obligee filed a motion to seek implementation

E. The first instance court rendered a judgment citing the claim of the Plaintiff’s applicant for taking over the lawsuit.

3. The lower court dismissed the Plaintiff’s lawsuit of denial that was exchangedly changed after the Plaintiff’s taking over the lawsuit for the following reasons.

According to Articles 391 and 396 of the Debtor Rehabilitation Act, a fraudulent act committed by the debtor after the debtor is declared bankrupt is only subject to the exercise of the avoidance power by the trustee in bankruptcy, and the creditor cannot file a lawsuit for revocation of creditor’s right. Therefore, the instant lawsuit filed after the Nonparty and the Defendants declared bankrupt by asserting that each of the aforementioned pre-sale and sales agreements entered into between the Nonparty and the Defendants were fraudulent acts is unlawful.

4. However, examining the reasoning of the lower judgment in light of the aforementioned legal principles and factual relations, the lower court’s determination cannot be accepted for the following reasons.

The revocation suit filed by the Plaintiff is unlawful, since it was filed after the bankruptcy was declared against the Nonparty, who is the debtor. However, the avoidance power was exercised by the Plaintiff’s trustee at the first instance court, who is the Nonparty’s trustee in bankruptcy, after lawfully taking over the lawsuit at the court of first instance, changing the claim to be denied. Accordingly, the continuation of the previous claim becomes extinct and the revocation suit became

The lawsuit for denial falls under the exclusive jurisdiction of the court with pending bankruptcy. Therefore, the court below should revoke the judgment of the first instance which rendered a judgment on the merits of the lawsuit for denial and have transferred the case to the court with pending bankruptcy, which is the competent court. Nevertheless, the court below dismissed the lawsuit for denial which is altered on the ground that the said lawsuit taken over by the party with the lawsuit of the first instance was an unlawful lawsuit. In so determining, the court below erred by misapprehending the legal principles on exclusive jurisdiction.

5. Therefore, without further proceeding to decide on the grounds of appeal, the judgment of the court of first instance is reversed, and the judgment of the court of first instance is revoked. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Kim Chang-suk (Presiding Justice)