[1] Whether a change in the repayment plan after authorization of the repayment plan is possible in the individual rehabilitation procedure under Article 619(1) of the Debtor Rehabilitation and Bankruptcy Act only where a cause for change in the authorized repayment plan, such as a change in the debtor's income or property, arises after authorization of the repayment plan (affirmative)

[2] In a case where a debtor in a personal rehabilitation case filed prior to the enforcement of the amended provisions of Article 611(5) of the Debtor Rehabilitation and Bankruptcy Act (amended by Act No. 15158, Dec. 12, 2017) submitted a draft amendment to the repayment plan that reduces the repayment period after authorization of the repayment plan, whether the ground for changing the repayment period prescribed in the authorized repayment plan can be deemed to have occurred solely on the ground that the amendment was made (negative); and in such case, matters to be deliberated and determined by the court (negative)

[1] Article 619(1) of the Debtor Rehabilitation and Bankruptcy Act provides that “A change in the repayment plan after authorization is granted in the individual rehabilitation procedure,” and does not limit the grounds for submitting an authorized draft repayment plan before the repayment is completed according to the repayment plan. However, a change in the authorized repayment plan is based on the premise that a change in the authorized repayment plan takes place after authorization is granted. Therefore, it cannot be deemed that the above provision allows a change in the repayment plan without any limit even in cases where a change in the matters determined in the authorized repayment plan, such as the debtor’s income or property change, takes place after authorization of the repayment plan, and it is reasonable to deem that a change in the authorized repayment plan is possible without the above grounds for change in the repayment plan only when it is extremely difficult to implement the stable repayment plan, and the procedure for authorization is unreasonable to deem that a change in the repayment plan becomes possible after authorization of the repayment plan is made pursuant to Article 610(2) of the Debtor Rehabilitation Act.

[2] Article 611(5) of the former Debtor Rehabilitation and Bankruptcy Act (amended by Act No. 15158, Dec. 12, 2017) provides that the repayment period stipulated in the repayment plan shall not exceed five years from the date of repayment. However, as the former provisions were amended by Act No. 15158, Dec. 12, 2017, the upper limit of the repayment period was reduced so as not to exceed three years in principle. This is intended to ensure that the viable debtors return to active production activities as soon as possible in accordance with the purport of the introduction of the individual rehabilitation system.

However, the Addenda of the amended Act stipulates that the amended provisions of Article 611(5) (hereinafter “amended provisions”) shall apply to the individual rehabilitation case for which the first application is filed after the enforcement of the amended provisions (Article 1 proviso), and Article 2(1) of the amended provisions shall apply to individual rehabilitation cases filed prior to the enforcement of the amended provisions (hereinafter “non-application cases”). This is limited to the application in order to protect the trust of interested parties, such as individual rehabilitation creditors, etc., on the existence of the provisions prior to the amendment, as it deems that the trust of the individual rehabilitation creditors, etc., on the existence of the provisions prior to the amendment is more protected than the public interest demand on the application of the amended provisions.

In light of the purport of the provisions of the Addenda to the amended Act and the scope of the application of the amended Act, etc., where an obligor in the case excluded from application submits a draft change to the repayment plan that reduces the repayment period after authorization of the repayment plan, it cannot be deemed that the cause for changing the repayment period prescribed in the approved repayment plan has occurred solely on the ground that the above amended Act was amended. However, even in the case of non-applicable cases, where it is deemed that the cause for changing the repayment period has occurred, such as the change in the debtor’s income or property, after authorization of the repayment

Therefore, in cases where a debtor in a case excluded from application submits a draft change to a repayment plan that reduces the repayment period among matters prescribed in the repayment plan after authorization of the repayment plan, the court shall examine the debtor’s income, property, etc. after authorization of the repayment plan, and in light of the foregoing, examine and determine whether grounds for change have occurred, such as where the repayment period prescribed in the authorized repayment plan is unreasonable. In such a case where it is not acknowledged as a result of the examination, it shall be deemed that the requirements for authorization of the repayment plan under Article 614(1)1 of the Debtor Rehabilitation and Bankruptcy Act for “the repayment plan conforms to the provisions of this Act,” and thus, it is unnecessary to authorize the draft change to the repayment plan.

In addition, in order to authorize a draft change in the repayment plan, other authorization requirements provided for in Article 614 of the Debtor Rehabilitation Act should be satisfied as of the time of authorization (Article 619(2) and Article 614 of the Debtor Rehabilitation Act). Therefore, the court should also examine and determine whether the draft change in the repayment plan satisfies such requirements for authorization.

[1] Articles 610(2) and 619(1) of the Debtor Rehabilitation and Bankruptcy Act / [2] Article 611(5) of the former Debtor Rehabilitation and Bankruptcy Act (Amended by Act No. 15158, Dec. 12, 2017); Articles 611(5), 614, and 619 of the Debtor Rehabilitation and Bankruptcy Act; Articles 1 and 2(1) of the Addenda (Amended by Act No. 1212, Dec. 12, 2017)

[1] Supreme Court Order 2015Ma95 dated June 26, 2015 (Gong2015Ha, 1061)

Korea Light Asset Management Loan Co., Ltd.

The debtor

Seoul Rehabilitation Court Order 2018Ra100208 dated September 13, 2018

The order of the court below is reversed, and the case is remanded to the Seoul Rehabilitation Court Panel Division.

The grounds of reappeal are examined.

1. A. Article 619(1) of the Debtor Rehabilitation and Bankruptcy Act provides that “A change in the repayment plan after authorization is granted in the individual rehabilitation procedure,” and does not restrict the grounds for submitting a draft change in the authorized repayment plan (see, e.g., Supreme Court Order 2015Ma95, Jun. 26, 2015). However, a change in the authorized repayment plan is naturally premised on the fact that a reason for changing the matters determined in the repayment plan arises after authorization of the repayment plan. Therefore, it cannot be deemed that the above provision allows a change in the repayment plan without any restriction even where any reason for changing the matters determined in the authorized repayment plan, such as a debtor’s income or property change, arises after authorization of the repayment plan. On the contrary, it is unreasonable to deem that a change in the repayment plan is difficult to deem that it is difficult to revise the authorized repayment plan without any limit prior to the change in the repayment plan, not only because it is extremely difficult to revise the authorized repayment plan, but also because it is difficult to deem that there is a change in the repayment plan.

B. Article 611(5) of the former Debtor Rehabilitation and Bankruptcy Act (amended by Act No. 15158, Dec. 12, 2017) provides that the repayment period stipulated in the repayment plan shall not exceed five years from the date of repayment. However, as the former provisions were amended by Act No. 15158, Dec. 12, 2017, the upper limit of the repayment period was reduced so that the former provisions do not exceed three years in principle. This is intended to ensure that the viable debtors return to active production activities as soon as possible in accordance with the purport of the introduction of the individual rehabilitation system.

However, the Addenda of the amended Act stipulates that the amended provisions of Article 611(5) (hereinafter “amended provisions”) shall apply to the individual rehabilitation case for which the first application is filed after the enforcement of the amended provisions (Article 1 proviso), and Article 2(1) of the amended provisions shall apply to individual rehabilitation cases filed prior to the enforcement of the amended provisions (hereinafter “non-application cases”). This is limited to the application in order to protect the trust of interested parties, such as individual rehabilitation creditors, etc., on the existence of the provisions prior to the amendment, as it deems that the trust of the individual rehabilitation creditors, etc., on the existence of the provisions prior to the amendment is more protected than the public interest demand on the application of the amended provisions.

In light of the purport of the provisions of the Addenda to the amended Act and the scope of the application of the amended Act, etc., where an obligor in the case excluded from application submits a draft change to the repayment plan that reduces the repayment period after authorization of the repayment plan, it cannot be deemed that the cause for changing the repayment period prescribed in the approved repayment plan has occurred solely on the ground that the above amended Act was amended. However, even in the case of non-applicable cases, where it is deemed that the cause for changing the repayment period has occurred, such as the obligor’s change in the debtor’s income, property, etc. after authorization of

Therefore, in cases where a debtor in a case excluded from application submits a draft change to a repayment plan that reduces the repayment period among the matters prescribed in the repayment plan after authorizing the repayment plan, the court shall examine the debtor’s income, property, etc. after authorizing the repayment plan, and in light of the foregoing, examine and determine as to whether grounds for change have occurred, such as where the repayment period prescribed in the authorized repayment plan is unreasonable. In such a case where it is not acknowledged as a result of the examination, the grounds for change to the repayment period prescribed in the authorized repayment plan should be deemed as not meeting the requirements for authorization of the repayment plan under Article 614(1)1 of the Debtor Rehabilitation Act, and thereby, authorization of the draft repayment plan should be denied.

In addition, in order to authorize a draft change in the repayment plan, other authorization requirements provided for in Article 614 of the Debtor Rehabilitation Act should be satisfied as of the time of authorization (Article 619(2) and Article 614 of the Debtor Rehabilitation Act). As such, the court should also examine and determine whether the draft change in the repayment plan satisfies such requirements for authorization.

2. The reasoning of the lower judgment and the record reveal the following facts.

A. On February 14, 2014, the debtor filed an application for commencement of individual rehabilitation procedures (2014da32208) with Seoul Rehabilitation Court on February 14, 2014, and on May 19, 2014, the individual rehabilitation procedure was commenced.

B. The debtor calculated the monthly average income as KRW 1,027,417 on the basis of two households, based on which the monthly average living cost is KRW 1,200,00,000, and the monthly average living cost is calculated as KRW 1,027,417, and then submitted a draft repayment plan to the court of the first instance to the effect that the debtor would repay KRW 172,585,100 each month over 60 times from May 10, 2014 to April 10, 2019. The first instance court approved the above repayment plan on October 7, 2014.

C. When the former provisions were amended by Act No. 15158 on December 12, 2017, the Seoul Rehabilitation Court established and implemented the “Business Guidelines for Handling Cases Before the enforcement of the amended Act on the Reduction of Period for Individual Rehabilitation (hereinafter “instant Business Guidelines”) in order to enhance the business efficiency with respect to cases excluded from application on January 8, 2018. The main contents of the instant Business Guidelines are as follows.

(1) The instant work guidelines shall apply only to cases where the debtor in a case excluded from application submits a draft change in the repayment plan that reduces the repayment period established according to the authorized repayment plan. Where the debtor applies for change in the repayment plan that changes the available income, etc., it shall be dealt with according to the previous precedent.

(2) Where a debtor in a case exempt from application performed repayment without any unpaid amount for not less than 36 months according to the authorized repayment plan, the debtor may submit a draft change to the repayment plan that reduces the repayment period set forth in the authorized repayment plan to the month following the submission of a draft change to the repayment plan. In such cases, the requirements for authorization, such as “guarantee of liquidation value” and “all input of household income,”

D. On February 1, 2018, the debtor submitted a draft revision to the repayment plan that reduces the repayment period that is set in the authorized repayment plan from May 20, 2014 to March 20, 2018.

E. The first instance court served a draft change in the repayment plan on individual rehabilitation creditors, etc., and notified the debtor, individual rehabilitation creditors, etc. of the date of the meeting of individual rehabilitation creditors and the summary of the draft change in the repayment plan. The re-appellant stated an objection against the draft change in the repayment plan submitted by the debtor at the meeting of individual rehabilitation creditors held on May 1, 2018.

F. On May 15, 2018, the debtor submitted the register of automobiles and the certificate of subscription to the National Pension Fund as a recommendation by the rehabilitation commissioner for the correction of the rehabilitation commissioner. According to this, the debtor's income has increased to KRW 2,600,000 (the pre-tax amount) after the decision to authorize the repayment plan, and the amount of assets has increased compared to the time when the repayment plan is authorized after receiving a donation of a motor vehicle from a type of sale. As above, the above increased income amount among the income was not submitted.

G. On May 16, 2018, the first instance court approved the amendment of the above repayment plan submitted by the debtor.

3. We examine these facts in light of the legal principles as seen earlier.

In this case, since the case is an exception to the application filed before the amended provisions enter into force, it cannot be deemed that there was a need to change the repayment period set in the authorized repayment plan solely on the ground that there was an amendment to reduce the upper limit of the repayment period after the draft repayment plan set as 60 months was approved. However, even in the case of non-applicable cases, where it is deemed that there was a cause for change, such as that the repayment period set in the authorized repayment plan becomes unreasonable after the approval of the repayment plan was granted, the repayment period can be changed. As such, the first instance court should examine the situation of change in the debtor's income, property, etc. after the authorization of the repayment plan, and in light of this, examine and determine whether there was a cause for change, such as that the repayment period set in the authorized repayment plan becomes unreasonable. In addition, it is also necessary to examine and determine whether the draft repayment plan submitted by the debtor satisfies the requirements

Nevertheless, the first instance court, without examining the above circumstances, authorized a draft change of the repayment plan submitted by the debtor in accordance with the business guidelines in this case, and the lower court determined that the first instance court was justifiable in so doing. Therefore, the lower court erred by misapprehending the legal doctrine on the requirements for authorization of the draft change of the repayment plan, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The grounds for reappeal pointing this out are with merit.

4. Therefore, the order of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)