The purport of the provisions of Article 37-3 of the Korea Technology Credit Guarantee Fund Act and whether extending the maturity period of the principal obligation in the rehabilitation plan constitutes “reduction or exemption of the principal obligation” as prescribed in the above provision (affirmative)

Notwithstanding Article 250(2) of the Debtor Rehabilitation and Bankruptcy Act, Article 37-3 of the Korea Technology Credit Guarantee Fund Act, where a creditor is the Korea Technology Credit Guarantee Fund, joint and several liability obligations shall be reduced or exempted at the same rate if the principal obligation is reduced or exempted at the time when the rehabilitation plan is authorized by the Korea Technology Credit Guarantee Fund, and the rehabilitation plan provides for exceptions to Article 250(2) of the Debtor Rehabilitation Act, which provides that the scope of the guarantor, etc.’s liability shall not be affected. This is intended to ensure that, where the principal obligation of a small and medium enterprise using rehabilitation procedures is reduced or exempted pursuant to the rehabilitation plan for the Korea Technology Credit Guarantee Fund, the effect of such reduction is limited to the representatives, etc. who jointly and severally guaranteed the principal obligation

In full view of the contents and legislative intent of Article 37-3 of the Korea Technology Credit Guarantee Fund Act, the extension of the due date for the principal obligation constitutes “reduction or exemption of principal obligation” as prescribed in the above provision.

The Korea Technology Credit Guarantee Fund Article 37-3

Korea Technology Credit Guarantee Fund (Law Firm Rotex, Attorneys Cho Han-soo et al., Counsel for the defendant-appellant)

Defendant 1 and one other (Law Firm Lee & Lee, Attorneys Lee Jae-soo, Counsel for the defendant-appellant)

Seoul High Court Decision 2015Na2046551 decided March 31, 2016

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

The grounds of appeal are examined.

Notwithstanding Article 250(2) of the Debtor Rehabilitation and Bankruptcy Act, where a creditor is the Korea Technology Credit Guarantee Fund, joint and several liability obligations shall be reduced or exempted at the same rate if the principal obligation is reduced or exempted at the time when the rehabilitation plan is authorized by the Korea Technology Credit Guarantee Fund, and the rehabilitation plan provides for exceptions to Article 250(2) of the Debtor Rehabilitation Act, which provides that the scope of the guarantor, etc.’s liability shall not be affected. This is to ensure that, where the principal obligation of a small and medium enterprise using rehabilitation procedures is reduced or exempted pursuant to the rehabilitation plan, the effect of such reduction is limited to the representative, etc. of the small and medium enterprise, etc. who jointly and severally and severally guaranteed the relevant principal obligation.

In full view of the contents, legislative purport, etc. of the provisions of this case, it is reasonable to view that the extension of the maturity period of the principal obligation constitutes “reduction or exemption of principal obligation” as stipulated in the provisions of this case.

In the same purport, the court below erred in the misapprehension of legal principles as to the defendants' obligations, a joint guarantor, under the provisions of this case, were reduced to KRW 310,816,743 (principal principal amount to KRW 304,724,308 and interest amount to KRW 6,092,435), excluding the debt-equity swap amount to KRW 488,40 (principal principal amount to KRW 478,829,660 and interest amount to KRW 9,573,370 prior to commencement), six times every six years from the fifth year (2019) to the tenth year (2024), respectively, on December 30 of the pertinent year.

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 Park Sang-ok (Presiding Justice)