See Attached List of Plaintiffs (Law Firm Seohae, Attorneys Shin Jae-hwan, Counsel for the plaintiff-appellant)

The bankruptcy trustee of Pyeongtaek-si Co., Ltd., and Defendant 1 and six others (Law Firm LLC et al., Counsel for the bankruptcy trustee)

March 18, 2016

Seoul Central District Court Decision 2013Gahap92731 Decided April 17, 2015

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the court of first instance is revoked. The Defendants shall pay to the Plaintiffs the amount corresponding to the “amount claimed” stated in the separate sheet of claim amount and the amount calculated by the rate of 20% per annum from the day following the day of service of a copy of the complaint of this case to the day of full payment.

1. Quotation of the first instance judgment

The reasoning for the court's explanation concerning this case is as follows: ① (1) of the judgment of the court of first instance, the "amount" in Section 18 of Section 13, and ② "the sum" in Section 10 of Section 15, ② "(the amount corresponding to the items stated in the "amount claimed in the attached sheet" shall be added to the "amount claimed in the attached sheet; (2)"; and (3) "(the amount shall be KRW 86,416,710, KRW 65:7,96,370, and KRW 86,416,710, KRW 65: 73,96,370, and KRW 420 of the Civil Procedure Act" shall be cited as it is in accordance with the main sentence of Article 420 of the Civil Procedure Act, except for the addition of the following determination as to the matters alleged by the plaintiffs in the trial of first instance.

2. Additional matters to be determined;

A. The Plaintiffs, in substance, are identical to the distribution schedule under Article 507(1)1 of the Debtor Rehabilitation Act. Therefore, the Plaintiffs’ preferential right to payment under Article 415(1)2 of the Debtor Rehabilitation Act was exercised at the same time as the realization of each of the instant houses by the Plaintiffs’ application for conversion for sale in lots (the instant sales contract). Accordingly, the Plaintiffs asserted that the Plaintiff paid the deposit for each of the instant houses for sale in lots at the same time as the deposit for sale in lots was preferentially paid, and that the Defendant trustee in bankruptcy should be deemed to have received the full amount of the deposit for sale in lots from the Plaintiffs.

On the other hand, the pre-sale agreement of this case does not constitute a distribution schedule under Article 507(1) of the Debtor Rehabilitation Act, and as long as the sales contract of this case is not the realization and distribution procedure of the bankrupt estate under Chapter 5 (Management, Exchange and Distribution of Bankruptcy Estate) of the Debtor Rehabilitation Act, the Plaintiffs cannot be deemed to have received preferential payment of the deposit for the instant case. Thus, the pre-sale Plaintiffs’ aforementioned assertion on a different premise is without merit without further review.

B. The Plaintiffs are entitled to preferential reimbursement of the instant rental deposit under Article 415(1) of the Debtor Rehabilitation Act, and thus, “the agreement to deduct the claim for the refund of the instant rental deposit from the obligation for payment of the price of the instant sales contract,” which the Plaintiffs and the Defendant trustee in bankruptcy, was unlikely to prejudice other bankruptcy creditors. The court confirmed that the agreement to deduct the instant rental deposit from the payment obligation of the instant sales contract was not an issue of equity with other bankruptcy creditors, and that the court allowed the agreement to grant the deduction of the instant rental deposit, so the agreement to deduct the instant rental deposit does not violate Article 422 subparag. 1 of the Debtor Rehabilitation Act.

However, solely on the fact that the Plaintiffs are entitled to preferential reimbursement of the instant rental deposit under Article 415(1) of the Debtor Rehabilitation Act, it cannot be deemed that the agreement on the deduction of the instant rental deposit does not violate Article 422 subparag. 1 of the Debtor Rehabilitation Act. Therefore, the said assertion by the Plaintiffs is groundless.

C. The plaintiffs asserted that, if the agreement on deduction of the security deposit of this case is null and void, the plaintiffs are obligated to pay the amount equivalent to the security deposit of this case to the defendant bankruptcy trustee as the price of the sales contract of this case, and therefore, the plaintiffs should ultimately pay the amount exceeding the approval price of the conversion for sale in lots

On the other hand, the plaintiffs did not pay the price of the sales contract of this case to the defendant trustee in bankruptcy in excess of the approval price of the conversion for sale in lots of this case. The part of the price of the sales contract of this case which exceeds the approval price of the conversion for sale in lots of this case is null and void, and the amount which the plaintiffs are to pay to the defendant trustee in bankruptcy is the remainder after deducting the above invalid portion from the equivalent amount of the deposit for sale in this case. Thus,

D. The plaintiffs asserted that the remaining defendants except the defendant bankruptcy trustee did not sell the apartment of this case, and therefore, the part of the intermediate payment of the sales contract of this case divided by the conversion agreement of this case should be returned to the plaintiffs as there are no legal grounds.

On the other hand, the plaintiffs paid the price to the defendant bankruptcy trustee by the contract of this case. The plaintiffs cannot be deemed to have paid the price of this case to the remaining defendants by the contract of this case conversion for sale in lots. Thus, the plaintiffs' assertion is without merit.

E. The plaintiffs asserted that the defendant bankruptcy trustee paid the full amount of the sales contract of this case, since the first and second deposits for the National Housing Fund loans and the second deposits for the refund of security deposits are repaid or distributed, and the remainder is paid to the defendant bankruptcy trustee.

On the other hand, the plaintiffs paid the price (the total amount of intermediate and outstanding payments) to the defendant bankruptcy trustee under the sales contract of this case, and Article 4 of the agreement for conversion for sale in lots of this case set the priority order to appropriate the expenditure details of the agreement for conversion for sale in lots of this case, and it cannot be deemed that the plaintiffs paid or distributed loans and security deposits under Article 4 (1) and (2) of the agreement for conversion for sale in lots of this case pursuant to Article 4 of the agreement for sale in lots of this case, and the plaintiffs did not pay the total amount of the sales contract of this case. Therefore, the above plaintiffs' assertion

F. The plaintiffs asserted that the defendant bankruptcy trustee's direct receipt of the price of the sales contract of this case from the plaintiffs and the repayment of the first and second loans to the defendant bankruptcy trustee's repayment of the first and second deposits for the convenience of the defendant bankruptcy trustee, which dealt with the sale of the apartment of this case in a manner that the plaintiffs would refund the first and second deposits for the sale of this case, and that the plaintiff's claim that the plaintiff did not receive the full payment of the price of the sales contract of this case from the plaintiffs is against the good faith principle

However, as seen earlier, the plaintiffs cannot be deemed to have repaid loans and deposits for lease stipulated in Article 4(1) and (2) of the Agreement on the Conversion for Sale in Lots pursuant to Article 4 of the said Agreement. Thus, the above assertion by the prior plaintiffs on a different premise is without merit.

G. The plaintiffs asserted that the plaintiffs' right to preferential purchase of each of the houses of this case under Article 21 (1) 3 of the former Rental Housing Act (wholly amended by Act No. 13499, Aug. 28, 2015; hereinafter "former Rental Housing Act") is a right under the condition that the right to preferential purchase conversion, which the plaintiffs held with respect to each of the houses of this case, is subject to the termination of the mandatory lease term immediately after the conclusion of the lease contract, and this is established before the usual land was declared bankrupt, the obligation to pay the purchase price of this case is allowed by the latter part of Article 417 (1) of the Debtor Rehabilitation Act.

On the other hand, even if the plaintiffs' right to claim the preferential purchase conversion under Article 21 of the former Rental Housing Act is a condition precedent, the plaintiffs' right to claim the purchase conversion against the defendant bankruptcy trustee pursuant to the sales contract of this case cannot be deemed as a condition precedent established prior to the declaration of bankruptcy. Thus, the plaintiffs' above assertion is without merit.

H. The plaintiffs asserted that the conversion agreement in this case that the defendants except the defendant bankruptcy trustee paid the amount exceeding the approval price of conversion in lots in this case to the defendant bankruptcy trustee as part payment, and that the conversion in lots in this case that the defendants, except the defendant bankruptcy trustee, did not divide the excess amount, is null and void

However, as seen earlier, the plaintiffs did not pay to the defendant bankruptcy trustee the amount exceeding the approval price of the conversion for sale in lots in this case, so the above assertion by the plaintiffs is without merit.

3. Conclusion

Therefore, the plaintiffs' claims against the defendants in this case are dismissed as it is without merit, and the judgment of the court of first instance is just in this conclusion, and the plaintiffs' appeal is dismissed as it is without merit.

[Attachment]

Judges Kang Young-soo (Presiding Judge) (Presiding Judge)

(1) Article 507 of the Debtor Rehabilitation and Bankruptcy Act (Preparation of Distribution Schedule) (1) A trustee in bankruptcy shall prepare a distribution schedule stating the following matters:

2) A lessee who meets the requirements for counterclaim provided for in the provisions of Article 415 (1) of the Debtor Rehabilitation and Bankruptcy Act and has obtained a fixed date on the lease agreement document shall have the right to be repaid security deposit in preference to any junior creditor and other creditors from the proceeds of realizing the housing (including the site) that belongs to the bankrupt estate.

(3) Article 21 of the former Rental Housing Act (wholly amended by Act No. 13499, Aug. 28, 2015) (1) In cases where a rental business operator sells a publicly constructed rental house built with approval of a project plan pursuant to Article 16 of the Housing Act for sale in lots after the expiration of a mandatory rental period, he/she shall first convert the house into lots to sale in lots to any of the following lessees:

4) The claim of a bankruptcy creditor under Article 417 of the Debtor Rehabilitation and Bankruptcy Act (Offset of claims, such as the time limit and condition subsequent, etc.) may be offset even when the time limit or condition subsequent, or the claim provided for in Article 426, is a time limit or condition subsequent, at the time bankruptcy is declared. The same shall apply where the obligation is concerning the time limit, condition subsequent,