In cases where a claim which had been pending at the time rehabilitation procedures commence is reported and confirmed as a rehabilitation claim and is recorded in the table of rehabilitation creditors, whether there is the benefit of lawsuit in the pending lawsuit (negative)

Any rehabilitation creditor who intends to participate in rehabilitation procedures pursuant to the Debtor Rehabilitation and Bankruptcy Act shall report a rehabilitation claim (Article 148 (1)), when an objection is raised against any reported rehabilitation claim, all of the objectors may file an application for the final claim inspection judgment with the court (Article 170 (1)), and any person who is dissatisfied with the judgment may file an objection against the final claim inspection judgment with the court (Article 171 (1)): Provided, That where a lawsuit on rehabilitation claims is pending at the time rehabilitation procedures commence, any rehabilitation creditor shall file the report on the rehabilitation claim and all of the objectors shall take over the litigation procedures with the other party (Article 172 (1)). Meanwhile, if no objection is raised against the reported rehabilitation claim, any entry of the reported rehabilitation claim in the table of rehabilitation creditors is effective as the final and conclusive judgment (Article 168).

Article 248 of the Civil Procedure Act (Institution of Lawsuit), Article 148(1) of the Debtor Rehabilitation and Bankruptcy Act, Article 166 subparag. 1, Article 168, Article 170(1), Article 171(1), and Article 172(1) of the Debtor Rehabilitation and Bankruptcy Act

Dongyang Securities Co., Ltd. (Law Firm Sejong, Attorneys Yu Sung-hun et al., Counsel for the defendant-appellant)

See Attached List of Intervenor joining the Plaintiff (Law Firm Sejong, Attorneys Yu Sung-hun et al., Counsel for the plaintiff-appellant)

The defendant who is the receiver of Korea-Japan Construction Corporation, the receiver of Korea-Japan Construction Corporation

Seoul High Court Decision 2011Na95962 decided January 23, 2013

The part of the judgment of the court below regarding the principal claim shall be reversed, and this part of the judgment of the court of first instance shall be dismissed. The remainder of the appeal shall be dismissed. The part arising between the plaintiff and the defendant out of the total costs of the lawsuit shall be borne by the plaintiff, and the part arising from the participation of

1. We examine ex officio the legitimacy of the part claiming principal among the instant lawsuit.

A. Any rehabilitation creditor who intends to participate in rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”) shall report a rehabilitation claim (Article 148(1) of the Debtor Rehabilitation Act); when an objection is raised against the reported rehabilitation claims, all of the objectors as other parties may file an objection to the final claim inspection judgment with the court (Article 170(1)); and any person who is dissatisfied with the judgment may file an objection to the final claim inspection judgment with the court (Article 171(1)) (Article 171(1)): Provided, That where a lawsuit on the rehabilitation claims is pending at the time rehabilitation procedures commence, any rehabilitation creditor shall file a report on the rehabilitation claim, and if an objection is raised against the reported rehabilitation claims, all of the objectors as other parties to the lawsuit (Article 172(1)). Meanwhile, if no objection is raised against the reported rehabilitation claims, the entry of the reported rehabilitation claims in the rehabilitation creditors’ list becomes effective as in the final and conclusive judgment (Article 168).

B. According to the records, the Plaintiff filed a lawsuit against Hanil Construction Co., Ltd. (hereinafter “Korea Construction”), claiming payment of the amount of KRW 20 billion in bills and damages for delay. The first instance court dismissed the Plaintiff’s claim on the ground that the Council of the instant case did not have arrived at the maturity date pursuant to the former Corporate Restructuring Promotion Act (amended by Article 2(1) of the Addenda; hereinafter “former Corporate Restructuring Promotion Act”) until December 31, 2014. The lower court dismissed the Plaintiff’s appeal by citing the first instance judgment. Upon the commencement of rehabilitation procedure for Hanil Construction after the lower judgment was sentenced, the Plaintiff reported the claim of KRW 20 billion in bills and its damages for delay as rehabilitation claims, and the claim of KRW 20 billion in bills and its damages for delay was confirmed as stated in the rehabilitation creditors list, without any objection to the claim of KRW 20 billion in bills and its damages for delay as stated in the said Act.

C. According to the above facts, the part seeking payment of KRW 20 billion in the instant lawsuit was determined as stated in the rehabilitation procedure and entered in the list of rehabilitation creditors, and thus, the benefit of the lawsuit was nonexistent. Accordingly, the conclusion of the first instance court and the lower court, which premised on the legitimacy of the lawsuit as to the said part, may no longer be maintained.

2. The grounds of appeal are examined (excluding the part on the claim amounting to 20 billion won).

The lower court, based on its stated reasoning, determined that the main text of Article 3(1) of the Regulations on Supervision of Financial Institutions for Corporate Restructuring Promotion did not exclude financial institutions from the credit extension by the creditor financial institutions which purchased commercial papers according to specified money trusts, and thus, did not exceed the scope of delegation under Article 2 subparag. 6 of the Promotion Act, and that the purchase of each of the instant commercial papers under a specified money trust contract concluded by the Plaintiff, which was a financial institution, constituted credit extension by the creditor financial institutions under Article 2 subparag. 6 of the Promotion Act.

In light of the relevant legal principles and records, the above determination by the court below is just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles regarding specified money trusts, credit extension under Article 2 subparagraph 6 of the Promotion Act, and the validity of delegated legislation.

3. Therefore, the part of the judgment of the court below regarding the amount of KRW 20 billion is reversed, and this part of the case is sufficient for this court to directly render a judgment, and thus, the judgment of the court of first instance is revoked, and this part of the lawsuit is dismissed, and the remainder of the appeal is dismissed, and the part concerning the plaintiff and the defendant among the total costs of the lawsuit is borne by the plaintiff, and the part concerning the participation by the plaintiff's supplementary intervenor is borne by the plaintiff's supplementary intervenor.

[Attachment] List of Intervenors to the Plaintiff: Omitted

Justices Kim Yong-deok (Presiding Justice)