[1] In a case where the re-appellant who filed an appeal against the authorization order of the rehabilitation plan is related to the requirements for authorization of the rehabilitation plan without any assertion by the appellate court, whether the re-appellant is subject to determination of whether the requirements for authorization of the rehabilitation plan (affirmative)

[2] The probative value of the content of the report prepared by the inspector appointed by the first instance court pursuant to Article 87 of the Debtor Rehabilitation and Bankruptcy Act on the matters to be inspected and the circumstances leading to the commencement of rehabilitation procedures by the debtor mentioned in the report of investigation prepared by the inspector

[3] In a case where an inspector appointed by the first instance court pursuant to Article 87 of the Debtor Rehabilitation and Bankruptcy Act submitted several times an investigation report which investigates the debtor's liability and amount of assets, and there is a difference in the outcome, whether to choose either of the investigation report belongs to the court's discretion (affirmative in principle)

[4] Whether it is unlawful for the court to divide the same type of right holder falling under each subparagraph of Article 236(2) of the Debtor Rehabilitation and Bankruptcy Act into two or more categories by classifying a provision for a resolution on a rehabilitation plan (negative in principle)

[5] Meaning of “fair and equitable” in the rehabilitation plan under the former part of Article 243(1)2 of the Debtor Rehabilitation and Bankruptcy Act as a requirement for authorization of the rehabilitation plan

[6] Meaning of “ability” under the latter part of Article 243(1)2 of the Debtor Rehabilitation and Bankruptcy Act as a requirement for authorization of a rehabilitation plan

[7] In a case where a rehabilitation plan that was rejected is deemed to satisfy the requirements of each subparagraph of Article 244(1) of the Debtor Rehabilitation and Bankruptcy Act by prescribing that the right holder of the group who already consented to distribute more than the liquidation value to the right holder of the group, whether the court is allowed to designate the provisions of the rehabilitation plan as the provisions for protection of rights for the right holder of the group who consented to (affirmative)

[1] The requirements for authorization of the rehabilitation plan shall be examined ex officio by the court, and the determination shall be based on the time of determining whether to grant authorization. Therefore, in the event an immediate appeal is filed against the authorization decision, whether the requirements for authorization of the rehabilitation plan are defective by all data submitted until the appellate trial is rendered should be determined ex officio. Therefore, even if the re-appellant who filed an appeal against the authorization decision of the rehabilitation plan becomes a new one of the re-appeals without any assertion by the appellate court, if the contents of the re-appeal

[2] An investigator appointed by the first instance court under Article 87 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Bankruptcy Act”) is obligated to investigate the matters provided for in Articles 90 through 92 of the Debtor Rehabilitation Act and Article 7 of the Established Rules on the Handling of Debtor Rehabilitation Cases (Republic 2006-5). The investigated matters include the circumstances leading to the commencement of rehabilitation procedures by the debtor, the debtor’s obligations and the amount of assets at the time of commencement of rehabilitation procedures. The probative value of the report, barring any special circumstance, such as that reporting of the circumstances leading to the commencement of rehabilitation procedures by the debtor entered in the report prepared by the investigating committee with the above duty, is inconsistent with the truth, cannot be readily rejected.

[3] An investigator appointed by the first instance court pursuant to Article 87 of the Debtor Rehabilitation and Bankruptcy Act shall be based on the financial statements and accompanying statements presented by the debtor as of the commencement date of rehabilitation procedures, and by applying generally accepted standards for accounting audit and rules, etc. Of assets, the amount of debtor's liabilities and assets is examined by examining the value considering possibility of recovery, other party's financial standing, etc. In cases of sales claims, the amount of debts also undergo comparison with the creditors' list, the creditors' report on claims filed by the administrator, and the creditors' report on claims. However, in cases where an investigator's report investigating the amount of debtor's liabilities and assets has been submitted several times and there is a difference in the outcome, unless it is clear that the investigation method, etc. is contrary to the empirical rule or unreasonable.

[4] Except for cases where rehabilitation creditors, rehabilitation secured creditors, shareholders, and equity right holders are to be classified into different categories, the court may classify persons falling under two or more subparagraphs into one group or persons falling under one subparagraph into two or more group, taking into account the nature of the rights and interests of the persons under each subparagraph of Article 236(2) of the Debtor Rehabilitation Act (Article 236(3) of the Debtor Rehabilitation Act), and recognize the court’s discretion as to the integration and subdivision under Article 236(3) of the Debtor Rehabilitation Act. Therefore, barring any special circumstance to deem that the court exceeded the scope of the court’s discretion, the court may not deem that the same type of right holders falling under each subparagraph of Article 236(2) of the Debtor Rehabilitation Act has not been subdivided into two or more groups.

[5] In order for a court to grant authorization of a rehabilitation plan, the rehabilitation plan should be fair and equitable in accordance with the former part of Article 243(1)2 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”). Specifically, considering the priority order of the rights stipulated under Article 217(1) of the Debtor Rehabilitation Act, the terms and conditions of the rehabilitation plan should be fairly and equally differentiated among the right-holder, and the conditions of the same type of rehabilitation plan should be equally differentiated among the right-holder as prescribed under Article 218(1) of the Debtor Rehabilitation Act. Here, equality refers to not only to formal equality but also to substantive equality that is not contrary to the concept of fairness and fairness. Accordingly, all rights in the rehabilitation plan ought to be equally divided into rights under Article 217(1)1 through 5 of the Debtor Rehabilitation and Bankruptcy Act and treated equally each type of rights, without reasonable distinction between the right-holder and the right-holder’s implementation of the rehabilitation plan and the right-holder’s implementation of the rehabilitation claim in light of the nature of the rehabilitation claim or the right.

[6] In order for a court to authorize a rehabilitation plan, the rehabilitation plan should be implemented pursuant to the latter part of Article 243(1)2 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”). The term “performance possibility” in this context means the possibility that the debtor is able to perform all the debt repayment plan and not enter the rehabilitation procedure again.

Article 243(1)6 of the Debtor Rehabilitation Act provides, “The matters requiring the permission, authorization, license or other disposition of an administrative agency under the rehabilitation plan shall not vary from the opinion of the administrative agency provided for in Article 226(2) in an important point of view,” as the requirements for authorization of the rehabilitation plan. This is the requirement for authorization of the rehabilitation plan, since the possibility of implementation of the rehabilitation plan may arise if the rehabilitation plan is based on the premise of the permission, etc. of the administrative agency.

Meanwhile, Article 226(2) of the Debtor Rehabilitation Act provides, “The court shall hear the opinion of the relevant administrative agency regarding the rehabilitation proposal that provides for the matters requiring the permission, authorization, license and other disposition of the administrative agency.” In a case where the court omits any opinion submission stipulated under Article 226(2) of the Debtor Rehabilitation Act, it does not satisfy the requirement that “the rehabilitation procedure conforms to the provisions of the Act” under Article 243(1)1 of the Debtor Rehabilitation Act among the requirements for authorization of the rehabilitation plan, and cannot be deemed as failing to satisfy the requirements under Article 243(1)6 of the Debtor Rehabilitation Act relating to the feasibility of implementation of the rehabilitation plan.

[7] Where a court decides to grant authorization pursuant to Article 244(1) of the Debtor Rehabilitation and Bankruptcy Act, it shall set a provision on the protection of rights to all entitled persons of a group who did not consent in a manner that protects the right holder by granting the substantive value of the right to minimize damage, in accordance with the fair and equitable manner, by means of a method falling under any of the subparagraphs of the above Article or any other similar method, to ensure that the right is not infringed upon in essence and to minimize damage. However, in order to determine the protection clause of rights, the court is not necessarily required to revise the rehabilitation plan. If the rehabilitation plan that was rejected is deemed to have been rejected by providing that the right holder of the group who already consented to distribute more than the liquidation value to the right holder of the group, thereby satisfying the requirements under each subparagraph of Article 244(1) of the Debtor Rehabilitation and Bankruptcy Act, the court is also allowed to designate

[1] Articles 243, 247(1) and (7) of the Debtor Rehabilitation and Bankruptcy Act, Article 442 of the Civil Procedure Act / [2] Articles 87, 90, 91, and 92 of the Debtor Rehabilitation and Bankruptcy Act, Article 7 of the Rules on the Handling of Debtor Rehabilitation Cases (Re-Koreans 2006-5), Article 202 of the Civil Procedure Act / [3] Article 87 of the Debtor Rehabilitation and Bankruptcy Act / [4] Articles 217(1), 218(1), and 243(1)2 of the Debtor Rehabilitation and Bankruptcy Act / [5] Articles 226(2), 243(1)1, and 243(1)2 of the Debtor Rehabilitation and Bankruptcy Act / [6] Articles 27(1), 236(1), (2), and 243(1)2 of the Debtor Rehabilitation and Bankruptcy Act

[1] Supreme Court Order 2013Ma1306 Decided February 21, 2014 / [2] Supreme Court Order 2001Ma1305 Decided June 18, 2004 / [4/5] Supreme Court Order 2014Ma1427 Decided May 25, 2016 (Gong2016Ha, 835) / [5] Supreme Court Order 2002Ga121 Decided December 10, 2004 (Gong2005Ha, 227) / [7] Supreme Court Order 2007Ma919 Decided October 11, 2007 (Gong207Ha, 1757)

Creditor 1 and five others (Law Firm Bupyeongan, Attorneys Ahn Dai-hee et al., Counsel for the plaintiff-appellant)

Gyeongwon Employment Co., Ltd.

Daejeon High Court Order (Cheongju) 2016Ra1007 dated May 10, 2016

All reappeals are dismissed.

The grounds of reappeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the first ground for reappeal

A. The requirements for authorization of a rehabilitation plan shall be examined ex officio by the court, and the determination shall be based on the time of determining whether to grant authorization. Thus, in a case where an immediate appeal is filed against a decision of authorization, whether the requirements for authorization are defective by all data submitted until the appellate trial is determined ex officio (see Supreme Court Order 2013Ma1306, Feb. 21, 2014). Therefore, even if the re-appellant who filed an appeal against the decision of authorization of the rehabilitation plan becomes a new argument without the allegations asserted in the appellate trial, if the contents of the re-appeal are related to the requirements for authorization of the rehabilitation plan, it shall be subject to determination

An investigator appointed by the first instance court under Article 87 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”) is obligated to investigate the matters prescribed in Articles 90 through 92 of the Debtor Rehabilitation Act and Article 7 of the Established Rules on the Handling of Debtor Rehabilitation Cases (Republic 2006-5). The matters to be examined include the circumstances leading to the commencement of rehabilitation procedures by the debtor, and the amount of the debtor’s obligations and assets at the time of the commencement of rehabilitation procedures. The probative value of an investigation report prepared by the investigating committee under the aforementioned duty cannot be readily rejected unless there are special circumstances, such as that a report on the circumstances leading to the commencement of rehabilitation procedures by the debtor mentioned in the investigation report prepared by the investigating committee under the duty as above contravenes the truth (see Supreme Court Order 201Da135, Jun. 18, 2004).

B. According to the records, the investigator appointed by the first instance court may find out the following facts: (a) the main cause causing the commencement of rehabilitation procedures is ① the weakening of business environment due to the supply of golf courses and the second imposition of individual consumption tax; (b) the lack of original equity capital and the decrease in profitability due to the excessive sale of membership rights; (c) the rapid increase in the demand for return of security deposits and the claim for return of security deposits at maturity; (d) the occurrence of bankruptcy crisis due to the abolition of the previous rehabilitation procedure; and (e) the investigation and report that the debtor did not constitute a violation of the laws and regulations or the articles of incorporation. There is no special circumstance to reject the investigation by the

C. Examining these facts in light of the legal principles as seen earlier, the obligor cannot be deemed to have caused the commencement of the rehabilitation procedure in this case due to the act attributable to the company’s director, etc., and thus, the rehabilitation plan in this case cannot be excluded pursuant to Article 231-2 of the Debtor Rehabilitation Act. Therefore, the lower court’s maintenance of the first instance court’s decision authorizing the rehabilitation plan without excluding the rehabilitation plan in this case, did not err by misapprehending the legal principles as to Articles 231 and 231-2 of the Debtor Rehabilitation Act, as otherwise alleged in the grounds of reappeal

2. As to the second ground for reappeal

A. A resolution of a rehabilitation plan is classified into each category of the subparagraphs of Article 236(2) of the Debtor Rehabilitation Act, including the group of shareholders and equity right holders. However, when the total amount of all obligations of the debtor exceeds his/her total amount of assets at the time the rehabilitation procedure commences, shareholders and equity right holders shall not have voting rights (Article 146(3) of the Debtor Rehabilitation Act). In order to authorize a rehabilitation plan, the requirements for a resolution under Article 237 of the Debtor Rehabilitation Act shall be met by group at the meeting of interested persons for resolution of the rehabilitation plan. However, even if a group of persons with voting rights at the court or at least the number of persons with voting rights fails to obtain consent, the court may revise the rehabilitation plan and determine to grant authorization of the rehabilitation plan by prescribing provisions to protect the rights of the rehabilitation creditors, rehabilitation secured creditors, shareholders and equity right holders of the group (Article 244(1) of the Debtor Rehabilitation Act), and even

An investigator appointed by the first instance court under Article 87 of the Debtor Rehabilitation Act shall be based on the financial statements and accompanying statements presented by the debtor as of the commencement date of rehabilitation procedures, and by applying generally accepted standards for accounting audit, general rules, etc. In cases of sales claims among assets, the amount of obligations and assets of the debtor shall be examined by examining the possibility of recovery, taking into account the other party’s financial standing, etc., and the amount of liabilities and assets of the debtor are also evaluated in accordance with the general standards for accounting audit, and the liabilities are also conducted comparison with the list of creditors and the claims reported by the administrator, etc. However, in cases where an investigator who investigated the amount of obligations and assets of the debtor are submitted several times and there is a difference in the outcome, whether to choose any one of each investigation report is subject to the court’s discretion, in principle, unless it is clear that the method of investigation,

B. The record reveals the following facts.

(1) While the instant rehabilitation procedure is in progress, investigators appointed by the first instance court submitted an investigation report three times. Accordingly, at the time of the commencement of the instant rehabilitation procedure, the debtor’s assets were not changed to approximately KRW 109 billion, whereas the amount of the debt was changed to approximately KRW 110.1 billion, approximately KRW 108.4 billion, and KRW 11.9 billion.9 billion.

(2) The first instance court granted the right to vote to the shareholders of the debtor at the assembly of related persons for the resolution of the instant rehabilitation plan. Accordingly, the resolution of the rehabilitation plan divided into the group of shareholders and rehabilitation creditors, thereby satisfying the requirements for a resolution with the consent of 100% in the group of shareholders, but only 61.31% in the group of rehabilitation creditors did not meet the requirements for a resolution.

(3) The first instance court decided to authorize the instant rehabilitation plan in accordance with Article 244(1) of the Debtor Rehabilitation Act on the grounds that the rehabilitation creditor’s Article was rejected, but the resolution was passed in the same group by the shareholder.

(4) Meanwhile, while investigating the debtor’s assets, the investigating committee assessed that the amount of sales claims against the debtor’s artificial development as at the time of commencement of the instant rehabilitation procedure. However, the audit report submitted by the debtor in 2015 at the lower court was KRW 4.245 billion based on the amount of sales claims as at December 31, 2015.

C. As can be seen by the facts and records, the amount of the debtor’s assets and liabilities at the time of the commencement of the rehabilitation procedure as in this case was assessed differently by each investigation report, and even if the amount of claims reported subsequently, the difference falls short of 2% of the total amount of liabilities, and even if considering the amount of claims reported subsequently, all creditors including the debtor himself/herself, up to the reappeal trial did not dispute the contents of the investigation report. The presiding judge of the first instance trial did not object to the interested parties present at an assembly for the resolution of the rehabilitation plan in this case, considering that the total amount of assets and liabilities of the debtor exceeds the total amount of liabilities of the debtor at an assembly for the resolution of the rehabilitation plan in this case, but did not raise any objection against the voting rights of the parties present at an assembly for the resolution of the rehabilitation plan in this case, unless it is evident that

The lower court held that the obligor’s total amount of liabilities does not exceed total amount of assets at the commencement of rehabilitation procedures, and maintained the first instance court’s decision that granted the obligor’s voting rights to the obligor’s shareholders at the assembly of related persons for resolution of the rehabilitation plan as is, and accordingly, approved the rehabilitation plan. In so determining

3. As to the ground of re-appeal No. 3

A. A resolution on a rehabilitation plan shall be based on the provisions of the Debtor Rehabilitation Act and the provisions classified by the court’s decision (Article 236(1) of the Debtor Rehabilitation Act). In principle, rehabilitation creditors, rehabilitation secured creditors, shareholders, and equity right holders shall be classified into rehabilitation secured creditors (Article 236(1)1), rehabilitation creditors holding general preferential rights (Article 23), other rehabilitation creditors (Article 3), shareholders and equity right holders holding shares or equity shares having preferential rights in relation to the distribution of residual assets (Article 236(2)4), and other shareholders and equity right holders (Article 236(5)5 of the Debtor Rehabilitation Act: Provided, That the same shall not apply to cases where rehabilitation creditors, rehabilitation secured creditors, shareholders, and equity right holders are classified into different groups, and the court does not divide persons falling under at least two subparagraphs into one group or the persons falling under one subparagraph into at least two groups into two groups for the purpose of adopting the rehabilitation plan into more than two groups (Article 236(2)2 of the Debtor Rehabilitation Act).

B. The lower court determined as follows with respect to the illegality of the decision on the division of the first instance court’s protocol. Claims related to the trust of agricultural cooperatives assets management company, Seoul Agricultural Cooperatives, and Nonghyup Bank Co., Ltd. (hereinafter “agricultural cooperatives, etc.”) who are the first beneficiary of a security trust agreement do not have the right to receive preferential repayment from the debtor’s property. Therefore, the first instance court’s classification decision cannot be deemed unlawful on the ground that the first instance court classified the agricultural cooperatives, etc. and other rehabilitation creditors as the group of rehabilitation creditors under Article 236(2)3 of the Debtor Rehabilitation Act, on the ground that the first instance court did

C. Examining the aforementioned legal principles and records, the lower court did not err by misapprehending the legal doctrine on the division of rehabilitation procedures, contrary to what is alleged in the grounds of reappeal, thereby adversely affecting the conclusion of the judgment.

4. As to the ground of reappeal Nos. 3 and 4, which violated the principle of equality

A. In the rehabilitation procedure, the court may decide to grant authorization of the rehabilitation plan only when the rehabilitation plan satisfies the requirements stipulated under each subparagraph of Article 243(1) of the Debtor Rehabilitation Act. The purport of the strict provision of the requirements for authorization of the rehabilitation plan is to ensure that the contents of the rehabilitation plan should be made in a fair and equitable manner between interested parties, as the priority order in the rehabilitation procedure is changed by a resolution of different creditors, thereby ensuring that the content of the rehabilitation plan is made in a fair and equitable manner, and at the same time, efficient rehabilitation of the debtor or the business

Therefore, in order to authorize a rehabilitation plan, the rehabilitation plan ought to be fair and equitable in accordance with the former part of Article 243(1)2 of the Debtor Rehabilitation Act. Specifically, considering the priority order of the rights stipulated under Article 217(1) of the same Act, the terms and conditions of the rehabilitation plan should be set at a fair and equitable level, and the conditions of the rehabilitation plan should be equal as prescribed under Article 218(1) of the same Act among the right holders of the same type, as well as the conditions of the rehabilitation plan. The equality refers to not a formal meaning of equality, but a substantive equality that does not go against the concept of fairness and equity. Accordingly, all rights in the rehabilitation plan need not be equally treated as five kinds of rights under Article 217(1)1 through 5 of the same Act. In the inside of five kinds of rights, the same shall not apply where there is a difference in the nature of the rehabilitation claim or the rehabilitation security right of the debtor, or where there is no reasonable difference in the nature of the rehabilitation claim or the right to repayment of the debtor.

B. The record reveals the following facts.

(1) The main contents of the instant rehabilitation plan are as follows.

(A) Of rehabilitation creditors, 11% of the members’ claims for the refund of membership fees shall be paid in cash in 2015, and the remainder shall be allocated a debt-to-equity swap in lieu of payment, and 35.96% of them shall be the preferential share for repayment, and the remainder shall be converted into common share.

(B) The 100% of the principal amount shall be paid in cash in 2025 and part of interest shall be paid after the commencement of the secured trust contract.

(C) General loan creditors and commercial creditors’ rights are to pay 40% of the principal in cash from 2016 to 2025, and the remainder shall be allocated new equity swap in lieu of repayment.

(2) After the authorization of the instant rehabilitation plan, the debtor retired all common shares issued to rehabilitation creditors, excluding the preferential share for repayment allocated to the members pursuant to the rehabilitation plan, and issued new shares to a third party with the permission of the court.

(3) The rehabilitation plan provides that there is no voting right to preferential repayment, and when the right to repayment is exercised, the shareholders, membership holders, receive cash dividends or exist as common shareholders with voting rights.

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

The claims of the first beneficiary of a security trust agreement or the claims for refund of membership fees of its members, etc., which are entitled to be paid in preference to other general creditors from the debtor's property, constitute "general rehabilitation claims" under Article 217 (1) 2 of the Debtor Rehabilitation Act, not "general preferential rehabilitation claims" under Article 217 (1) 3 of the same Act, and in principle, the same type of claims should be treated as the same order of priority (see Supreme Court Order 2014Ma1427, May 25, 2016). However, the first beneficiary of a security trust agreement may request the trustee to dispose of golf course facilities essential for golf course business at any time if the claims are not fully repaid. Therefore, in order to implement the instant rehabilitation plan based on the premise of golf course business, it is essential to obtain consent from the National Agricultural Cooperative, etc. to withhold rights under the trust agreement. To this end, it is unreasonable to determine the condition of repayment for the relevant rehabilitation claims, such as agricultural cooperatives, etc. as the content of the instant rehabilitation plan.

In addition, all members’ membership security deposit return claims, general commercial transaction claims, and loans are categorized as rehabilitation claims under Article 217(1)3 of the Debtor Rehabilitation Act in principle. However, given the characteristics of the obligor’s business purpose at golf course, the rehabilitation claims of the members, who are membership security deposit return claims, account for at least 60% of the total amount of obligations, whereas general commercial transaction claims are merely about 1.5%, and general commercial transaction claims are about 0.4% of the total amount of obligations. Furthermore, among new shares allocated in lieu of repayment in accordance with the rehabilitation plan, an ordinary share out of the new shares allocated in lieu of repayment in accordance with the rehabilitation plan is not a free retirement, but a preferential right to repayment that is allocated only to the members by conversion of the membership security deposit refund claims into equity, and thus, the number of members would be entitled to receive additional cash repayment through the repayment of shares or enjoy the benefit of the obligor’s shareholder. Considering this point, it cannot be deemed that the difference between the membership security deposit return claims

Considering the aforementioned circumstances and various circumstances revealed in the records, there are reasonable grounds to differentiate between the rehabilitation claims of Nonghyup, etc., the first beneficiary of the security trust agreement, the rehabilitation claims of members, the general commercial transaction creditors, and the rehabilitation claims of loan creditors. Furthermore, the degree of such differential is beyond reasonable scope and it is difficult to deem that the degree of such differential violates the principle of equality against the concept of fairness and fairness. The Re-Appellant’s assertion on this part is without merit.

5. As to the assertion that the principle of guaranteeing liquidation value is violated among the fifth grounds for reappeal

Liquidation value means the amount of disposal assumed at the time of separate disposal of individual assets constituting the relevant company where the relevant company is dissolved or extinguished through a bankruptcy liquidation (see Supreme Court Order 2002Da121, Dec. 10, 2004; Supreme Court Order 2004Da31, Nov. 14, 2005). In order to authorize a rehabilitation plan, the so-called principle of guaranteeing liquidation value (Article 243(1)4 of the Debtor Rehabilitation Act) that the method of repayment under the rehabilitation plan must be more favorable than the repayment to each creditor when the debtor’s business is liquidated (see Supreme Court Order 2002Ma1306, Feb. 21, 2014). This is to be determined by all data submitted by the time the appellate trial is determined (see Supreme Court Order 2013Ma1306, Feb. 21, 2014).

In light of the above legal principles and records, the judgment below maintained the first instance court decision which approved the rehabilitation plan of this case on the premise that the rehabilitation plan of this case satisfies the principle of guaranteeing liquidation value, did not err by misapprehending the legal principles as to the principle of guaranteeing liquidation value, as otherwise alleged in

6. As to the ground of reappeal Nos. 6 and 7

A. In order for the court to authorize a rehabilitation plan, the implementation of the rehabilitation plan ought to be possible pursuant to the latter part of Article 243(1)2 of the Debtor Rehabilitation Act. The term “performance possibility” in this context refers to the possibility that the debtor is able to fully implement the repayment plan for the obligation stipulated in the rehabilitation plan and not re-enter into the rehabilitation procedure.

Article 243(1)6 of the Debtor Rehabilitation Act provides, “The matters requiring the permission, authorization, license or other disposition of an administrative agency under the rehabilitation plan shall not vary from the opinion of the administrative agency provided for in Article 226(2) in an important point of view,” as the requirements for authorization of the rehabilitation plan. This is the requirement for authorization of the rehabilitation plan, since the possibility of implementation of the rehabilitation plan may arise if the rehabilitation plan is based on the premise of the permission, etc. of the administrative agency.

Meanwhile, Article 226(2) of the Debtor Rehabilitation Act provides, “The court shall hear the opinion of the relevant administrative agency regarding the rehabilitation proposal that prescribes the matters requiring the permission, authorization, license and other disposition of the administrative agency.” In a case where the court omits any opinion submission prescribed in Article 226(2) of the Debtor Rehabilitation Act, it does not satisfy the requirement that “the rehabilitation procedure conforms to the provisions of the Act” under Article 243(1)1 of the Debtor Rehabilitation Act among the requirements for authorization of the rehabilitation plan, and it does not constitute a lack of the requirement under Article 243(1)6 of the Debtor Rehabilitation Act relating to the feasibility of the implementation of the rehabilitation plan (see Supreme Court Order 2014Ma1427, May 25, 2016).

B. According to the reasoning of the lower judgment and the record, the following facts and circumstances are revealed.

(1) The instant rehabilitation plan includes matters necessary for the debtor’s rehabilitation, including taking administrative procedures for converting the debtor’s custodian into the “public golf course” after authorization of the rehabilitation plan. The debtor was unable to obtain approval for the change of the business plan regarding the “public golf course” from the Governor of Chungcheongbuk-do by the time of the lower judgment.

(2) However, after the authorization of the instant rehabilitation plan, 5 billion won was established through the issuance of new shares to a third party after the authorization of the instant rehabilitation plan, and 5 billion won was implemented as key matters for the implementation of the instant rehabilitation plan.

(3) The rehabilitation plan of this case provides that the rights of members shall be extinguished after cash repayment and repayment priority issuance are completed, and there is no violation of the contents of the protection of members under the Installation and Utilization of Sports Facilities Act. For this reason, the Do Governor seems to have no reason to specifically deny the transition of a golf course to a debtor’s general system.

(4) The Do Governor seems to have known that the instant rehabilitation plan was based on the premise of the transition to the general system, and did not indicate any particular opinion by the time of the original judgment.

C. Examining these facts and circumstances in light of the legal principles as seen earlier, it cannot be deemed that there was no possibility of implementing the instant rehabilitation plan to the extent that it would be difficult for the debtor to realize the debtor’s rehabilitation due to the fact that the order of the lower court did not take any administrative disposition regarding “the conversion of a public golf course”

Meanwhile, according to the records, the first instance court’s failure to present opinions to the Do governor, who is the competent administrative agency, on the matters requiring a disposition related to the “the conversion of a public golf course.” However, considering all the aforementioned circumstances, the omission of opinion by the first instance court may not affect the content of the instant rehabilitation plan concerning the feasibility of implementation, and thus, it is not possible to authorize the rehabilitation plan on such grounds. In addition, even if the first instance court’s violation of the provisions of the Act on Rehabilitation, it can be deemed that it constitutes a case where it is deemed inappropriate to authorize the rehabilitation plan to be in violation of the provisions of the rehabilitation procedure under Article 243(2) of the Debtor Rehabilitation Act.

Therefore, the judgment of the court below to the same purport does not violate the Constitution, Acts, orders or rules that affected the judgment.

7. As to the ground of re-appeal Nos. 4 and 5 on the protection of rights

A. Where a court decides to grant authorization pursuant to Article 244(1) of the Debtor Rehabilitation Act, it shall set a clause on the protection of rights against all entitled persons of the same group who do not consent in a way that protects their rights by granting the substantive value of the right to minimize damage, not infringing upon the essence of the right, in a fair and equitable manner, by means of any of the methods falling under any of the subparagraphs of the above clause or by any other similar method. However, the court does not necessarily necessarily amend the rehabilitation plan in order to determine the protection clause. If the rehabilitation plan that was rejected is determined to have distributed the liquidation value to the rights-holder of the non- consented group, and it is deemed that the requirements under each subparagraph of Article 244(1) of the Debtor Rehabilitation Act are satisfied, the court is also allowed to set the provisions on the rehabilitation plan as it is for the rights-holder of the non- consented group (see Supreme Court Order 2007Ma919, Oct. 11, 2007).

B. According to the record, the instant rehabilitation plan was prepared with the content of complying with the principle of guaranteeing liquidation value for all creditors, and the first instance court added the provision that grants the right of preferential use of golf courses for membership holders among the right holders of rehabilitation creditors who did not consent to the first instance court, thereby authorizing the instant rehabilitation plan.

C. We examine these factual relations in light of the legal principles as seen earlier. The first instance court added the protection clause that grants a right to use a golf course to the original rehabilitation plan for a membership holder among rehabilitation creditors, and appears to have decided to grant authorization pursuant to Article 244(1) of the Debtor Rehabilitation Act by setting the content of the original rehabilitation plan as it is for the remaining rehabilitation creditors. Such determination does not seem to be erroneous in the method or content of setting the protection clause of rights.

Furthermore, if the defect in the rehabilitation plan is solely related to the interests of the right holder who belongs to a specific section and the defect is a nature that can be cured by the approval of such person, only the interested party who is at a disadvantage or the right holder belonging to a specific section may assert the defect as an illegal cause for the decision of approval of the rehabilitation plan. The re-appellant's argument disputing that only the member is entitled to a benefit through the protection clause of the right holder's right that grants the right of preference to the use of the golf course as a member is not acceptable.

Therefore, the lower court did not err by misapprehending the legal doctrine on the protection clause of rights, contrary to what is alleged in the grounds of reappeal, thereby adversely affecting the judgment.

8. As to the assertion that the resolution of the rehabilitation plan was made in an unsound and unfair manner

The Re-Appellant asserts that there was deception for membership holders at the time of the resolution of the rehabilitation plan of this case. However, according to the records, at an assembly for resolution of the rehabilitation plan of this case, it is recognized that shareholders and rehabilitation creditors attend the assembly for resolution of the rehabilitation plan of this case and exercise their voting rights in good faith

9. As to the grounds for reappeal

The re-appellant's other grounds of re-appeal are merely criticisming the order of the court below from its independent view, and cannot be accepted.

10. Conclusion

Therefore, all reappeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-hyung (Presiding Justice)