The meaning of and criteria for determining business transfer;

Article 41 of the Commercial Act

Supreme Court Decision 96Da2644 Decided June 24, 1997 (Gong1997Ha, 2263) Supreme Court Decision 2002Da23826 Decided May 30, 2003 (Gong2003Ha, 1429) Supreme Court Decision 2005Da5812, 5829, 5836 Decided June 1, 2007 (Gong2007Ha, 972)

Korea Technology Credit Guarantee Fund (Law Firm Tae-ro, Attorneys Han-bong et al., Counsel for the defendant-appellant)

[Defendant-Appellant] Plaintiff 1 and 2 others (Law Firm Associate, Attorney Kim Jong-soo et al., Counsel for defendant-appellant)

Seoul Southern District Court Decision 2011Na7111 decided October 11, 2012

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

The transfer of business under the Commercial Act refers to a transfer of human and material resources to a company organized for a certain business purpose, i.e., a transfer of business as a whole while maintaining its identity. Whether a transfer of business has been made is not determined by what kind of business assets have been transferred, but by which the organization can function as a whole or an important part of its business organization. Thus, even if a transfer of business facilities without reservation of a part of its business assets has been made, the transfer of business can be deemed as a transfer of business if it is acknowledged under the social concept that the previous organization has been maintained even though it has been transferred, but even if the entire business assets have been transferred after dissolution of its organization, the transfer of business can not be deemed as a transfer of business (see Supreme Court Decisions 2002Da23826, May 30, 2003; 2005Da5812, 5829, 5836, Jun. 1, 2007).

According to the reasoning of the judgment below, the court below held that, in light of the fact that the defendant was established at the same location as the non-party company's license (12431-000953, hereinafter "non-party company"), the location of the factory is the same, the non-party company was changed to the same trade name as the non-party company while acquiring part of the business sector of the non-party company or purchasing shares of its subsidiary company and engaging in the same kind of business as that of the non-party company, and a considerable number of workers of the non-party company were employed and worked as the defendant after the non-party company retired from the non-party company, it may be deemed that the non-party company acquired tangible and intangible properties and economic values constituting the non-party company. However, in this case, since the business transfer under the Commercial Act is a claim for transfer of functional properties as an organic whole organized by a certain business purpose, it is difficult to find that the non-party company and the non-party company were transferred with the non-party company's industrial site within the non-party company and the non-party company.

In light of the above legal principles and records, although some of the reasoning of the court below is somewhat insufficient, it can be viewed that the business transfer of the non-party company was made in the same situation as the non-party company's business transfer over a period of about 10 months, and the non-party company's representative director and the defendant's representative director were entered into a business transfer contract between the non-party company's representative director and the defendant's representative director. According to such contract, it is difficult to see that the defendant received functional properties as sources of profit organized organically from the non-party company as a whole while maintaining its identity. Such judgment of the court below is acceptable. Contr to the allegations in the grounds of appeal, it did not err by exceeding the bounds of the principle of logic and experience and free evaluation of evidence, exceeding the bounds of the principle of free evaluation of evidence, or by misapprehending the legal principles

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Yong-deok (Presiding Justice)