Korea Technology Finance Corporation (Law Firm Doel, Attorney Lee In-hee, Counsel for defendant-appellant)

The current state of the debtor debtor corporation Nuri river management administrator

Suwon District Court Order 2011 Ma60 dated September 17, 2012

1. The appeal of this case is dismissed.

2. Costs of appeal shall be borne by the appellant;

The decision of the first instance shall be revoked. The appropriate decision shall be revoked for the rehabilitation debtor corporation, Nuri river, and another appropriate decision shall be made again.

1. Basic facts

According to the records of this case, the following facts are recognized:

(a) Details of the decision to authorize the rehabilitation plan;

1) On June 27, 2011, the rehabilitation debtor, Native Technology Co., Ltd. (hereinafter “debtor”) filed an application for commencement of rehabilitation proceedings with the Suwon District Court for commencement of rehabilitation proceedings on July 28, 201, based on the financial imminent situation in which cash liquidity cannot be repaid within a short time due to the increase of driving funds following the expansion of facilities, etc. as a company engaging in the manufacture of automobile parts (hereinafter “debtor”), and was issued a decision to commence rehabilitation proceedings on July 28, 201 by the same court as 2011 Gohap60.

2) On September 12, 2012, the rehabilitation court held a meeting of interested persons for the examination and resolution of the rehabilitation plan. The rehabilitation secured creditors’ meeting submitted by the debt-subsidiary obtained consent of at least 3/4 of the statutory requirements, subject to the consent of the voting right holders equivalent to at least 1,647,448,153 won out of total voting rights of at least 2,127,057,850 won, among total voting rights of at least 2,647,448,153, among total voting rights of at least 4,59,739,739,747 won, which is at least 53.05% of total voting rights of at least 2,349,335,385 won, among total voting rights of at least 4,59,747 won.

3) On September 17, 2012, the rehabilitation court prescribed the provisions on the protection of rights for the protection of rehabilitation creditors who have not consented pursuant to Article 244(1)4 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Act”), and made a decision to authorize the rehabilitation plan (hereinafter “decision to authorize the rehabilitation plan of this case”).

(b) The occurrence of claims for indemnity by the appellant;

1) On February 20, 2009, the appellant entered into a credit guarantee agreement with the debtor company on February 20, 2009, with a credit guarantee agreement of KRW 195,00,000 for the guaranteed amount (hereinafter “the instant credit guarantee agreement”), and the debtor company borrowed KRW 300,000,000 from the Industrial Bank of Korea under the instant credit guarantee agreement (hereinafter “the instant loan”).

2) Since a credit guarantee accident occurred due to delinquency in paying interest on the instant loan by a debt subsidiary, the appellant subrogated to the Industrial Bank of Korea for KRW 199,416,380 of the instant principal and interest of the loan based on the credit guarantee agreement on July 28, 2011 (hereinafter “instant indemnity claim”).

3) On February 11, 2011, the appellant and five other creditor banks (national banks, the Korea Development Bank, the Korea Exchange Bank, the Industrial Bank of Korea, and the Han Bank) agreed to establish and operate the Voluntary Council on the Fast-Traccccck Program, which is a major creditor bank of the Industrial Bank of Korea, with respect to the debtor on February 11, 201.

(c) Change, etc. of a appellant's right to indemnity, claims, etc.;

1) On September 15, 2011, the appellant filed a subsequent report on rehabilitation security rights by asserting that the appellant has KRW 271,848,176 and the rehabilitation claim KRW 407,796,260 against the debtor company. The custodian of the debtor company subsequently files an objection to the total amount of the rehabilitation security rights reported to be supplemented, and the total amount of the rehabilitation claims are the rehabilitation claims.

2) On October 20, 2011, the appellant filed an application for the final claim inspection judgment with the Suwon District Court 201 Preamble491, which was filed against the administrator of the debtor company. Of KRW 271,848,176, the administrator of the debtor company, who raised an objection to the total amount, KRW 52,209,69,697, which was the debtor company, withdrawn the objection, and the remainder of KRW 219,638,479, which was the rehabilitation claim. Accordingly, the appellant withdrawn the application for the final claim inspection judgment on February 7, 2013.

3) Meanwhile, according to the authorization decision of the instant rehabilitation plan, the amount of rehabilitation security rights to be repaid by a debt subsidiary to a appellant is KRW 52,209,69,697, and the amount of rehabilitation claims (compensation obligations) is KRW 627,437,739 (i.e., the amount of rehabilitation claims at issue + KRW 407,796,260, and the amount of rehabilitation claims at issue after delay plus KRW 219,638,479). The method of changing the rights and paying the same is as indicated in attached Form 1 (i). The total amount of rehabilitation claims (lease obligations) to be repaid by a debt subsidiary, and the method of changing rights and paying them are as indicated in attached Form 1 (i).

(d) An immediate appeal by the appellant;

On September 28, 2012, the appellant filed an immediate appeal against the approval decision of the rehabilitation plan in this case.

2. Determination on whether the appeal of this case is appropriate

Article 13(1) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Act”) provides that “Any person who has an interest in any trial pursuant to the provisions of this Act may file an immediate appeal only when otherwise provided for in this Act.” Article 247(1) of the Act provides that “The immediate appeal may be filed against a decision on whether to grant authorization of the rehabilitation plan: Provided, That this shall not apply to rehabilitation creditors, rehabilitation secured creditors, shareholders and equity right holders who are not entered in the list or not reported.”

An appellant may file an immediate appeal on the ground that the appellant is a rehabilitation secured creditor and a rehabilitation creditor who later filed a supplementary report and has an interest in the authorization decision of the rehabilitation plan of this case, even though it is not stated in the list.

3. Judgment as to whether the instant appeal is justifiable

A. The appellant's assertion

1) On September 15, 2011, the appellant filed a subsequent report on the instant claim for reimbursement with a rehabilitation security right, and the debtor company custodian denied the rehabilitation security right on the ground that there is no security right and recognized it as a rehabilitation claim. Article 19(1) main text of the instant Directive provides that “The Fast-Tk Program grants a creditor bank’s right to repayment in preference to the creditor bank’s claims following the statutory security right, and even if the support company has converted into a joint management company of the creditor banks pursuant to the Credit Bank Operating Convention, the contents determined by the Voluntary Council pursuant to the Fast-Tk Program shall continue to exist.” Thus, in relation to the Bank of Korea, the National Bank, and the K DF Specialized Credit Guarantee Co., Ltd. (the Korea Development Bank), the appellant has a right to preferential reimbursement within the scope of the principal of the instant loan out of the instant claim for reimbursement, taking into account this, the appellant and the above 4 rehabilitation creditor shall again count the amount to be paid in accordance with the instant rehabilitation plan’s authorization order.

2) Therefore, even though the issue of priority allocation pursuant to the instant guidelines ought to be reflected in the rehabilitation plan, such circumstance was not entirely reflected in the rehabilitation plan, and thus, the instant rehabilitation plan is unlawful in violation of the principle of fairness and fairness.

(b) Markets:

1) According to Article 243(1) of the Act, the rehabilitation plan must be fair and equitable. Specifically, the term “fair and equitable” means that the terms and conditions of the rehabilitation plan should be fair and equitable, taking into account the ranking of the rights set forth in Article 217(1) of the Act, and the conditions should be equal between the right holders of the same kind, as prescribed in Article 218(a) of the Act.

In addition, the equality here refers to the substantive equality that does not go against the concept of fairness and equity, not the formal sense of equality. Thus, in the rehabilitation plan, all rights must be divided into five kinds of rights as stipulated in Article 217 of the Act and treated equally. In addition, even if the rights of five kinds are subdivided by considering reasonable reasons, such as the difference in the nature of rehabilitation claims and rehabilitation security rights, and even if they are differentiated, they may be differentiated within a reasonable scope (see Supreme Court Order 9Da35, Jan. 5, 200; Supreme Court Order 2002Da121, Dec. 10, 2004, etc.).

2) In the instant case, ① Claims for indemnity of this case asserted by the appellant do not fall under rehabilitation security rights or general preferential rights, but fall under the same priority rehabilitation claims as loans provided by the Industrial Bank of Korea, the National Bank, and the KDF limited liability company specialized in securitization [the rehabilitation claims with general preferential rights are claims with general preferential rights under the Civil Act and the Commercial Act, and thus, claims for indemnity of this case constitute preferential rights (Articles 468 and 33 of the Commercial Act) and preferential rights to special reserve (the claims for indemnity of this case do not fall under such claims). ② The appellant’s claims for indemnity of this case are decided to retain preferential rights to reimbursement compared to the loans provided by the Industrial Bank of Korea, the National Bank, the KDF, and the limited liability company specialized in securitization. Even if there are somewhat differences between the appellant’s claims for indemnity of this case and the Industrial Bank of Korea, it is difficult to readily conclude that the creditors’ claims for indemnity of this case violate the principle of fair and reasonable rehabilitation plan, by taking into account the aforementioned circumstances, that they were not subdivided into account the rehabilitation plan.

4. Conclusion

Therefore, the decision of the court of first instance that approved the rehabilitation plan of this case is just, and the appellant's assertion against this is without merit, so the appeal of this case is dismissed and it is so decided as per Disposition.

[Attachment]

Judges Kim Dong-ok (Presiding Judge) Kim Sung-won Kim Sung-do