[1] Where the parties to an existing claim and obligation agree to make the object of a loan for consumption, the interpretation of such agreement

[2] The case holding that the identity cannot be acknowledged between convertible bonds and existing loan claims where creditors take over convertible bonds issued by the debtor and the debtor pays the existing loan obligations to the creditor with the acquisition price

[1] A quasi-loan for consumption is established when both parties are liable to provide money and other substitutes, not by a loan for consumption, at the time when the parties agree to provide the subject matter as the object of a loan for consumption. Thus, in the case of a contract extinguishing an existing obligation and establishing a new obligation, it is identical to a novation. However, in the case of a quasi-loan for consumption, it is not identical with an existing obligation, but as a matter of principle, in the case of a quasi-loan for consumption, there is a difference between the existing obligation and a new obligation. If the parties agree to regard the subject matter as the object of a loan for consumption, then the agreement shall be deemed a novation or a quasi-loan for consumption. If the intent of the parties is not clear, unless there is any special circumstance, it shall be deemed that the creditor loses its identity, barring any special circumstance, and thus, it shall be deemed a quasi-loan for consumption, and thus, if the new obligation is not a loan for consumption, or if it is not identical with the existing obligation, it shall not be deemed a quasi-loan for consumption.

[2] The case holding that the identity cannot be recognized between convertible bonds and existing loan claims where creditors take over convertible bonds issued by the debtor and the debtor has repaid the obligations of existing loans to the creditor with the acquisition price

[1] Articles 500, 505, and 605 of the Civil Act / [2] Article 605 of the Civil Act

[1] Supreme Court Decision 80Da1363 decided Dec. 22, 1981 (Gong1982, 170) Supreme Court Decision 89Meu2957 decided Jun. 27, 1989 (Gong1989, 1159)

Dongyang Total Financial Securities Co., Ltd. (Law Firm Namsan, Attorneys Park Dong-jin, Counsel for the plaintiff-appellant)

Defendant 1 and one other (Law Firm Gyeong & Yang, Attorneys Kim Ji-young, Counsel for the bankruptcy) in bankruptcy of the bankrupt construction corporation, a trustee of the non-party in charge of the reorganization construction corporation.

Seoul District Court Decision 2001Na52574, 71933 delivered on May 3, 2002

The appeal is dismissed. The costs of appeal are assessed against the plaintiff (Counterclaim defendant).

1. Regarding ground of appeal No. 1

A quasi-loan for consumption is established when both parties are liable to provide money, or any other substitute, not by a loan for consumption, and the parties agree to provide the subject matter as the object of a loan for consumption. However, in the case of a contract establishing a new obligation by extinguishing the existing obligation and establishing a new obligation, it is identical to the previous obligation, but in the case of a quasi-loan for consumption, it is not identical in principle with the previous obligation, while in the case of a quasi-loan for consumption, it is not identical. If the existing obligation and the parties agree to provide the subject matter as the object of a loan for consumption, it is determined by the parties' intention first or as a quasi-loan for consumption. If the parties' intent is not clear, it is determined by the parties' intention. If the parties' intent is not clear, it cannot be viewed as a quasi-loan for consumption, barring any special circumstance, that the creditor loses its identity and expressed his intent to disadvantage himself as if the obligor loses its defense, and thus, it cannot be viewed as a quasi-loan for consumption (see Supreme Court Decision 89Meu2957, Jun. 27, 1989).

In light of the above legal principles, although the Plaintiff’s loan claim amounting to KRW 7 billion against the new construction company before bankruptcy (hereinafter “new construction”) remains, on August 10, 1999, acquired the non-registered convertible bonds amounting to KRW 2 billion, which was issued by the new construction, the contract was concluded with the non-party 1, who entered into a guarantee convertible bonds with the face value of KRW 30 billion from the new construction. The following day was the actual payment of the acquisition price of the bonds. After the new construction made a withdrawal of KRW 2 billion equivalent to the acquisition price and repaid the loan claim against the Plaintiff, it cannot be concluded that the money was only part of the total subscription price of KRW 30 billion and the amount paid by the Plaintiff cannot be concluded as the transfer price of the bonds. On the other hand, since the existing convertible bonds were issued, distribution, redemption, rights of bondholders and the right of bondholders to collateral security and the right to collateral security can not be viewed as the transfer price of the bonds, the transfer price of the bonds can not be seen as the transfer price of the bonds.

The judgment of the court below to the same purport is just, and there is no error of law as to quasi-loan for consumption.

2. Regarding ground of appeal No. 2

This part of the grounds of appeal is about the judgment of the court below under the assumption that the convertible bonds also have the effect of collateral against the existing loans, and as seen earlier, the judgment of the court below that the convertible bonds in this case do not have the effect of collateral against the existing bonds is just, the ground of appeal on this part is not examined further

3. Conclusion

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 Son Ji-yol (Presiding Justice)