The legal manager of the Debtor Rehabilitation and Bankruptcy Corporation (LLC, Kim & Lee LLC, Attorneys Choi Promotion et al., Counsel for the defendant-appellant)

Military Mutual Aid Association (Law Firm Sejong, Attorneys Kim Hong-ju et al., Counsel for the defendant-appellant)

March 24, 2016

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

As to the Plaintiff KRW 11,628,463,013 and KRW 10,00,000 among them, the Defendant shall pay 5% per annum for the remaining KRW 1,628,463,013 from December 24, 2012 to the service date of the duplicate of each of the instant complaint from January 22, 2013 to September 30, 2015, 20% per annum for the following day, and 15% per annum for the following day to the day of full payment.

1. Basic facts

A. Circumstances of the instant project

1) On December 22, 2009, the Nonparty knew the plan to move the Oraki and the U.S. military base to Guam, and explained the business of constructing a lodging and auxiliary facilities for construction workers in the Guam area (hereinafter “instant business”) and jointly with the ○○○ Global (hereinafter “○○ Global”) established by himself, requesting the Nonparty to operate the instant business. The debtor company entered into an agreement on the instant business on December 22, 2009, on condition that he participated in the project of the instant case as a part of the project. The key contents are as follows.

(2) On the condition that ○○○○ ○○ ○ ○○ ○ ○○ ○○ ○ ○ ○○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 5’s Loan Agreement and Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 5’s Loan 1’s Loan 1’s Loan 2’s Loan 1’s Loan 2’s Loan 1’s Loan 2’s Loan 2’s Loan 2’s Loan 1’s Loan 6’s Loan 1’s Loan 5’.

2) In accordance with Article 6 of the above Convention, the debtor company established the STX-○○ Constru Co., Ltd. (hereinafter “STX-○○”) which is a local pilot in Guam, by investing 51% of the share in accordance with the said Convention. On February 22, 2010, the debtor company changed the construction of the instant project from the debtor company to EE ○○○.

B. The details of the loan of this case and the amendment agreement

1) The instant loan

On January 20, 2010, the Defendant loaned KRW 100 billion per annum for the initial fund of the instant project to ○○○ Global on January 20, 201, setting the loan interest rate of KRW 11% per annum, and the repayment date on January 20, 201 (hereinafter “instant loan”), and the obligor Company jointly and severally guaranteed the instant loan to the instant project commencement.

(ii) modification Agreements 1 and 2;

Unlike expected, as the repayment date of the instant loan was impossible, the debtor company, the defendant, and the ○○ Global adjusted the interest rate of 11.5% per annum on January 20, 201 and extended the repayment date of the instant loan to July 21, 201 (hereinafter “the First Amendment Agreement”) by July 21, 201, and thereafter extended the repayment date of the instant loan by July 21, 201 (hereinafter “the second Amendment Agreement”) until July 21, 2012 (hereinafter “the second Amendment Agreement”), and on October 21, 2011, the said loan extended the repayment date by July 21, 2012 (hereinafter “the second Amendment Agreement”).

3) A third modification agreement

Meanwhile, as ○○ Global was unable to repay the instant loan by July 21, 2012 as stipulated in the second amendment agreement, the Defendant entered into an agreement with the debtor company on July 23, 2012 to receive KRW 20 billion from the remainder of KRW 80 billion out of the loan principal and to receive payment of KRW 10 billion on December 24, 2012, while 70 billion on July 24, 2013 (hereinafter “third amendment agreement”). The main contents of the third amendment agreement are as follows.

The borrower contained in the main sentence: The debtor company as joint and several sureties : The lender for the joint and several sureties 1: The amendment to the loan agreement under Article 2 (1) means the period from the date on which the loan is executed until July 24, 2013. The loan agreement means KRW 80 million (80,000,000) which is the limit on the lender for the loan for this project. The repayment date shall be the date on which the loan under this agreement is repaid and the principal of the installment shall be repaid to the lender on the date of the repayment under this agreement pursuant to the 30th anniversary of the repayment plan under Appendix 1 of this Agreement. The borrower excluded from the interest reservation agreement under Article 4 shall not withhold interest on the loan period extended under this 300,000,000,000 won which is the date on which the borrower has agreed to lend for the project, and the borrower shall pay the interest on the loan period calculated by applying the interest rate of 30,000,000,0000 won to the new loan agreement.

Note 1) Repayment Schedule

(1) A reimbursement schedule;

70,000,000,000 on the second repayment date of December 24, 2012, 200,000 on the first repayment date included in the main sentence of this paragraph, the first repayment date of December 24, 2012, including 80,000,000,000

Note 2).

4) During the process of concluding a third modification agreement, the debtor company requested EEex Heavy Industries Co., Ltd. (hereinafter “EEex Heavy Industries”) to provide joint and several guarantee for the instant loan. EEex Heavy Industries jointly and severally provided joint and several guarantee for the instant loan on July 23, 2012 following the resolution by the board of directors on July 19, 2012.

C. The debtor company's repayment of this case

On December 24, 2012, the date of the first repayment pursuant to the amendment agreement, the debtor company remitted KRW 10 billion to the defendant on December 24, 2012, and on January 22, 2013, remitted KRW 1,628,463,013 to the defendant as interest on the instant loan (hereinafter “instant repayment”).

(d) Commencement of rehabilitation procedures for the debtor company;

On April 26, 2013, the debtor company received a decision to commence rehabilitation procedures on May 8, 2013 after filing an application for commencing rehabilitation procedures with Seoul Central District Court 2013 Gohap85.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 5, 6, 9, 22, 23 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. Summary of the parties' arguments;

A. The plaintiff

① The instant repayment act performed by a debtor company within six months from April 26, 2013, which was the date of application for commencement of rehabilitation procedures, constitutes a gratuitous avoidance under Article 100(1)4 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”); or ② an act of undermining rehabilitation creditors or an act of undermining rehabilitation creditors, and thus constitutes an intentional avoidance under Article 100(1)1 of the Debtor Rehabilitation Act.

Therefore, as a result of the exercise of the right to set aside, the Defendant is obligated to refund to the Plaintiff KRW 11,628,463,013 as well as damages for delay after the date of each payment of money.

B. Defendant

① The instant repayment act does not constitute a gratuitous act in accordance with the principal act, and ② the obligor’s company’s normal act that performed the guaranteed obligation to continue its business and maintain its company cannot be acknowledged as harmful to its normal act, and thus is not subject to avoidance on its will. ③ In addition, deeming the instant repayment act to have been lent by the obligor company to the ○○ Global on the ground of accounting management of the ○○○ Global does not accord with the factual basis.

3. Whether the act of repayment in this case is subject to gratuitous avoidance

A. Gratuitously, an obligor’s act is a gratuitous act or an act for consideration that can be deemed as identical to that of a gratuitous act, and the obligor is an act of payment suspension, etc. or within six months prior thereto. The instant act of payment was conducted on December 24, 2012 and January 22, 2013, which was within six months prior to the date of application for commencement of rehabilitation procedure of the obligor company. As such, the instant act of payment constitutes a gratuitous act, and thus, the issue is whether the instant act of payment constitutes a gratuitous act.

B. Whether the instant repayment constitutes a gratuitous act

1) Comprehensively taking account of the overall purport of the arguments in Gap evidence Nos. 13 and Eul evidence Nos. 2, the debtor company held 48% of the shares of ○○○○ Rop, a business executor of the instant business, and disposed of the shares as of the end of 2012). The debtor company can recognize the fact that it transferred the status of construction work to e.g., e., e., the local contractor of the instant business to e.g., the local contractor of e., the Gu that participated in the instant business and invested 51%

(State 4) According to the statement in Eul evidence No. 8, the composition of the shareholders of a corporation as of July 17, 2012 is as follows:

6,666 33% OTRX 5,050 25% 20% Nonparty 3,8388 19% Dovid 3,838 Dogbu 4,040 20% of the equity shares of the nominal shareholder’s capital (USD) included in the main sentence, 6,666 30% of the equity shares of the ○○○○○○ 4,050 10% of the total 20,200% of the equity shares of the stock holders located in the main sentence

2) In light of the following circumstances acknowledged in light of the above facts and evidence No. 8, the act of repayment in this case does not constitute an act of gratuitous reduction of positive property without payment by the debtor company. Accordingly, the plaintiff's allegation in this part is without merit.

① Although the act of repayment by the debtor company in this case basically reduces the debtor company’s positive property, it cannot be deemed that the debtor company has reduced active property without receiving any consideration as it reduces the debtor company’s obligation.

② The repayment period of the instant loan was January 20, 201, but the period of repayment was postponed as of January 20, 201, through an agreement for modification to the first, second, and three terms of the instant loan, respectively. If the debtor company did not perform the instant repayment, the debtor company should pay in lump sum more than KRW 80 billion and waive the instant project.

③ The Plaintiff asserts that the debtor company was unable to expect all the economic benefits or construction benefits of the instant project because it completely renounced the instant project at least at the end of 2011 or at least prior to the instant repayment. As the U.S. military base relocation plan was reduced, the instant business size is deemed to have been reduced compared to the initial expectation, but according to the agenda referred to the debtor company’s board of directors around July 2012, when the joint and several surety of the EEX industry was discussed, the instant business is included in the group joint business PJT, and the instant project was conducted to minimize losses by selling the instant business site and maintaining the housing development project, etc. at the city of Gu, along with the instant project, at the time of the instant repayment, cannot be said to have fully renounced the economic benefits of the instant project.

4. Whether the instant repayment constitutes a person subject to intentional avoidance

(a) Fraudulent act;

(i) harmfulness of the act;

“Act performed by an obligor with knowledge that it would compromise rehabilitation creditors or rehabilitation secured creditors” under Article 100(1)1 of the Debtor Rehabilitation Act includes not only so-called fraudulent act absolutely reduced the general property of a company becoming joint security of all creditors, but also so-called biased act contrary to equity with other rehabilitation creditors, such as repayment to a specific creditor (see Supreme Court Decision 2014Da214885, Sept. 25, 2014, etc.).

It is true that the dividend rate of rehabilitation creditors due to the repayment act of this case by the debtor company is lower due to the debtor company's act of repayment of this case.

2) Whether the act is reasonable or not

Even if the act subject to avoidance under rehabilitation procedures is harmful to rehabilitation creditors, etc., there may be cases where it may be deemed that rehabilitation creditors, etc. need to suffer the reduction of their assets or unfair business practices as it is socially necessary and reasonable or inevitable, depending on the individual and specific circumstances at the time of the act. In such exceptional cases, it shall not be subject to the exercise of the right to set aside under Article 100(1) of the Debtor Rehabilitation Act in light of the guiding ideology or the concept of justice of the law, such as equality of creditors, the protection of debtors and the coordination of interests. Here, whether such act is reasonable should be determined specifically in light of the principle of good faith and the idea of fairness, in light of the source of the repayment fund, relationship between the rehabilitation company and creditors, and whether the creditor in collusion with the rehabilitation company or exercised influence over the rehabilitation company, etc. (see, e.g., Supreme Court Decision 2009Da75291, May 13, 2011).

In light of the following circumstances acknowledged by comprehensively taking into account the aforementioned legal principles and evidence Nos. 2, 17, 20, 31, and evidence No. 16, the instant repayment act cannot be subject to the exercise of avoidance power under Article 100(1) of the Debtor Rehabilitation Act, as it is deemed socially necessary and reasonable or inevitable.

① The purpose or intent of the debtor company’s act of repayment in this case was to have the repayment period of the instant loan worth KRW 80 billion postponed normally in accordance with the third modification agreement. In the event the debtor company fails to perform its obligation in accordance with the normal repayment schedule, it was difficult for the debtor company to waive the execution right for the instant project and to maintain the company itself because it was faced with the situation where the obligor company should discharge its obligation in full due to loss of the benefit of time.

② In relation to the instant repayment act, the Defendant did not appear in collusion with the debtor company, and did not exercise any influence over compelling repayment beyond the normal range, such as sending out a letter demanding repayment of loans to the debtor company.

③ Rather, the Defendant could exercise a right under a bill or seek payment of the full amount of a guaranteed obligation at the time of maturity for the instant loan. However, the obligor company’s request was postponed three times or more at the obligor company’s request. However, it is against the good faith principle or the ideology of fairness to deem that the obligor company’s act of partially repaying the repayment of the third modification agreement passed through the resolution of the board of

④ The source of the repayment amounting to KRW 10 billion paid by the debtor company to the defendant on December 24, 2012 is the construction cost, etc. that the debtor company received through its business and does not lend funds from a third party, such as a financial institution, etc.

(b) A deceased noble doctor;

1) In order to be recognized as an intentional person, a company needs to be aware of the harm of rehabilitation creditors as a subjective element. In a case where a biased act to repay to a specific creditor is subject to an intentional avoidance, it is necessary to recognize that the company will make repayment to a specific creditor in order to avoid the principle of equality of creditors applied when rehabilitation procedures commence in order to prevent a type of act subject to denial under the Debtor Rehabilitation Act and to ensure the balance between transaction safety and and balance (see Supreme Court Decision 2004Da46519, Jun. 15, 2006, etc.).

2) The above legal principles and evidence No. 6, which are acknowledged as a whole with the purport of the entire pleadings, are as follows: (a) the instant repayment act is not a repayment of the entire obligation of the debtor company of this case, but a repayment of about KRW 10 billion and interest KRW 1.6 billion, which is a part of the debtor company, in order to be deferred from the repayment period of the obligation of KRW 80 billion; (b) the debtor company obtained the benefit of the deferment of the repayment period through the instant repayment act and prevented the debtor company's bankruptcy; and (c) the defendant had already extended three times or more in relation to the instant loan; and (d) the instant repayment act was a normal progress in accordance with the repayment schedule of the third amendment agreement, it is difficult to deem that the debtor company at the time of the instant repayment act was aware of the repayment to the defendant, who is a specific creditor, to avoid the principle of creditor equality

(c) Good faith of beneficiaries;

1) A custodian of rehabilitation procedures may deny an act performed by the debtor with the knowledge that the debtor would harm rehabilitation creditors or rehabilitation secured creditors. In such cases, where a person who received any benefit from each act was unaware of the fact that the rehabilitation creditors, etc. were harmed at the time of the act, such act cannot be denied, but such act is presumed to have been committed in bad faith by the beneficiary, and thus, the beneficiary bears the burden of proof for his/her good faith (see, e.g., Supreme Court Decision 2009Da7529

2) In light of the following circumstances acknowledged by comprehensively taking account of the aforementioned legal principles, Gap evidence Nos. 13, and Eul evidence Nos. 10 through 13, the defendant, who is a beneficiary, was unaware of the facts that harm rehabilitation creditors, etc. at the time of the instant repayment act.

① The Plaintiff asserted that the debtor company’s liabilities under the financial statements as of the end of 2012, exceed KRW 77.1 billion in its assets, and that as of May 8, 2013, the debtor company’s liabilities were in excess of KRW 455.7 billion in its assets. However, the audit report on the financial status of the debtor company was prepared and published around April 2013, and was not known to the Defendant at the time of the instant repayment act.

② Rather, at the time of the instant repayment, the debtor company publicly announced the purport that it guarantees or accepts a large number of debts, and its key contents are as follows. Most of the debts guaranteed or assumed by the debtor company were financial institutions such as credit unions, savings banks, etc., and it was difficult to view that the debtor company suffered financial crisis.

On September 6, 2012, 2012, the debtor and transaction partner’s disclosure date included in the main text, the debt guarantee amounting to KRW 5.2 billion in the debt guarantee amounting to KRW 8,389,920,000,000,000,000,000,000,000,000,000,000,000,000,000 on November 9, 2012, the debt amounting to KRW 13.42,00,000,000,000,000,000,000,000,000. The debt amounting to KRW 5.74,44,000,000,000,000,000,000,000,000,000,000,000.

③ In light of the fact that the Defendant additionally requested the joint and several sureties industry’s joint and several sureties in addition to the debtor company’s joint and several sureties around July 2012, the Plaintiff asserted that it had been sufficiently aware of the circumstances where the debtor company’s financial condition was not good at the time of the instant repayment, and the Defendant’s request for joint and several sureties industry’s joint and several sureties industry is likely to be unable to receive all principal and several 10 billion won from the debtor company. In light of the fact that the instant repayment act constitutes approximately 15% of the total debt, it is difficult to view that the instant repayment act would directly undermine the principle of equality of creditors.

5. Whether the instant repayment constitutes a loan to ○○○ Global

According to the evidence evidence No. 7, the fact that ○○○ Global was treated as lending KRW 10 billion and KRW 1,628,463,013 from the debtor company can be acknowledged. However, the above circumstance alone does not necessarily mean that the act of repayment in this case constitutes lending to ○○○ Global, and there is no other evidence to acknowledge it otherwise. Rather, comprehensively taking account of the overall purport of the pleadings in each of the evidence Nos. 8 and 9, the debtor company shall designate the remitter as the “STX Construction” and the payee as the “Military Mutual Aid Association,” and the debtor company shall pay KRW 10 billion on December 24, 2012, and KRW 1,628,463,013 on January 22, 2013, and thus, the debtor company directly repaid the above amount to the defendant. Therefore, the plaintiff’s aforementioned assertion is without merit.

6. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Lee Jong-hee (Presiding Judge)

Note 1)

(2) If any of the causes for nonperformance under Article 10 (2) of the Loan Agreement occurs, the lender may take the following measures. (a) The lender may, by notifying the borrower, declare that the obligation of the lender, including the obligation of the loan, has been extinguished by the notification to the lender. (b) The lender may, by notification to the lender, declare that all of the amounts to be paid to the lender under this Agreement have come to the maturity immediately because the principal and interest of the loan and the borrower have ceased to be due and payable to the lender. (c) The lender may, as a result of the default, take or exercise other measures such as the exercise of the security rights or other rights given to the lender under this Agreement, by means of the collateral agreement, or by law or regulations or otherwise, by notification to the borrower and the lender. (d) The lender may request the borrower and the lender to transfer the right to implement the Project to the lender and the person designated by the lender, and all of the rights and obligations related to the Project are transferred to the alternative executor.

3) 3) As the background of the joint and several guarantee in the above application for joint and several sureties, the following are stated: (1) the successful implementation purpose of the project promoted jointly with the STX construction - the strategy for fostering the growth engine of next generation in the group, plant sector - the PTR&P for the Group PHT Industries “E&P”, the department in charge of STX Construction “C”, the PDVSA and the North Peace PJT, etc.

Note 4)