(영문) 서울행정법원 2021.3.18. 선고 2020구합64668 판결

1) The Plaintiff was an unlisted corporation established for the purpose of engaging in manufacturing and selling telecommunications equipment, etc., resulting in financial distress due to loss of overseas works, decline in the sales unit price of telecommunications equipment, increase in import unit price, failure to recover sales claims, etc., the Plaintiff filed an application for commencing rehabilitation procedures with the Seoul Rehabilitation Court (2017 Meeting*****) on March 13, 2017.

2) On November 24, 2017, the Seoul Rehabilitation Court issued the rehabilitation plan approval order for the Plaintiff, and thereafter, the Plaintiff divided part of the business division according to the approved rehabilitation plan (hereinafter “instant rehabilitation plan”) and established the ○○○○○ Co., Ltd. on December 20, 2017.

3) On January 15, 2018, the Plaintiff, separate from the said newly incorporated company, left a company with a surviving division, continued the rehabilitation procedure and received a decision to discontinue the rehabilitation procedure.

(b) Conversion into equity and stock transfer without compensation;

1) The main contents of the instant rehabilitation plan are as follows ("debtor company" refers to the Plaintiff).

New shares following a conversion into ○-Issuance of new shares following a conversion of investment - Issuance of new shares for rehabilitation claims (lease bonds, commercial transaction bonds, indemnity claims, and claims of a specially related person): The effective date of the issuance of shares for conversion into equity under Section 4 of Chapter X of the instant rehabilitation plan (the effective date of capital reduction due to stock retirement under Section 3 of Chapter X of the instant rehabilitation plan (the following business day from the date following the approval date of the instant rehabilitation plan): The reduction of capital through stock retirement - the method of stock retirement - the method of stock retirement - the method of stock retirement - the total common shares for all issued shares due to existing shareholders' old shares and investment after conversion into equity after conversion into equity of some of the claims of rehabilitation security rights and rehabilitation claims are finalized; and the effect of capital reduction following stock retirement - the date of issuance of shares for conversion into equity under Section 4 of Chapter X of the instant rehabilitation plan (the first day of the following month of the month to which the date on which the debtor's repayment liability becomes effective due to the date on which the debtor's repayment liability is duly established).

○ The alteration of rights and method of repayment of rehabilitation claims (commercial claims) - The amount of 98.7084% of the principal and interest accrued prior to commencement shall be paid in cash and 1.2916% of the amount of cash payments shall be paid in full on the date of repayment - The amount of cash payments shall be paid in lieu of the repayment of the relevant rehabilitation claim on the effective date of issuance of new shares by the debtor company pursuant to Section 4 of Chapter X of the instant rehabilitation plan, and interest

2) 이 사건 회생계획에 따라 원고에게 재화나 용역을 공급하였던 주식회사 ●●●● 등 10개 업체의 원고에 대한 상거래채권 등 36억 1,700만 원이 회생채권으로 분류되어 그 중 4,500만 원은 현금으로 지급되었고, 나머지 35억 7,200만 원(= 36억 1,700만 원 - 4,500만 원, 이하 '이 사건 채권'이라 한다)은 원고의 보통주식으로 출자전환된 후 무상소각되었다.

3) According to the instant rehabilitation plan, the effective date of issuance of new shares following a debt-equity swap of the instant claim is “ November 25, 2017,” and the effective date of capital reduction following a stock retirement becomes “ November 26, 2017.”

1) The Plaintiff’s creditors, recorded in the Plaintiff’s debt-to-equity swap, deducted the amount of value-added tax of KRW 273 billion from among the instant claims converted into equity swap to each head of the competent tax office as bad debt tax amount, and filed a final tax return on the amount of value-added tax for the second period of February 2017. Each of the competent tax offices notified the Defendant of the data on bad debt

2) On March 4, 2019, the Defendant increased the amount of bad debt tax deducted by the above creditors from the Plaintiff’s input tax amount, and notified the Plaintiff of KRW 273,761,170 for the second term of 2017 (hereinafter “instant disposition”).

(d) Procedures of the previous trial; and

On May 10, 2019, the Plaintiff filed an objection with the director of the Seoul Regional Tax Office against the instant disposition, but was dismissed on July 4, 2019. On October 1, 2019, the Plaintiff filed an appeal with the Tax Tribunal, but was again dismissed on February 24, 2020.

[Reasons for Recognition] A without dispute, Gap evidence Nos. 1 through 5 (including the number with each number), Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In accordance with the instant rehabilitation plan, payment in kind was made through the issuance of new shares through debt-equity swap for the instant claims. In other words, the instant claims were all extinguished upon the creditors’ acquisition of shares equivalent to the book value of the instant claims in lieu of payment in full. Accordingly, the instant claims do not constitute “a claim confirmed as impossible to be recovered by the decision of authorization for the rehabilitation plan or the court’s decision on immunity.” Moreover, the instant rehabilitation plan does not constitute “the de facto exemption of obligations” merely because the instant rehabilitation plan plans are scheduled to be retired without compensation after the debt-equity swap, and in such a case, there is concern that a certain creditor would be a problem of equity among creditors if allowing a specific creditor to deduct bad debt tax. In short, it is contrary to the legislative intent of the Debtor Rehabilitation and Bankruptcy Act to promote efficient rehabilitation of the debtor. Ultimately, a bad debt tax deduction for the instant claims is not allowed, and thus, the amount of input tax deduction for the Plaintiff in December 2, 2017 against the said disposition should be revoked by violating the relevant Acts and subordinate statutes, such as the Value-Added Tax Act, and the Debtor Rehabilitation Act.

B. Determination

1) Relevant legal principles

The main text of Article 45(1) of the former Value-Added Tax Act (amended by Act No. 16845, Dec. 31, 2019; hereinafter the same) provides that "Where an entrepreneur supplies goods or services subject to value-added tax, and all or part of credit sales or other sales claims (including value-added tax) due to bankruptcy or compulsory execution of a person who receives the supply, or due to other causes prescribed by Presidential Decree, it may not be recovered, 10/10 (hereinafter referred to as "large-liability tax amount") of the amount recoverable as bad debt and irrecoverable as bad debt can be subtracted from the output tax amount in the taxable period whereto belongs the date when the bad debt becomes final and conclusive." In applying the main text of Article 45(1) and (2) of the former Value-Added Tax Act, where an entrepreneur who receives goods or services has been deducted from the input tax amount under Article 38 of the Enforcement Decree of the Corporate Tax Act as one of the bad debt taxes, Article 15(2) of the former Enforcement Decree of the Corporate Tax Act provides that the entrepreneur shall be exempt from the bad debt tax amount determined by Presidential Decree No.

Meanwhile, when it is decided to grant authorization for the rehabilitation plan, the rights of rehabilitation creditors, rehabilitation secured creditors, shareholders, and equity right holders are altered according to the rehabilitation plan (Article 252(1) of the Debtor Rehabilitation Act); and the court may determine matters, such as the amount of liabilities that are to be reduced by issuing new shares, in the rehabilitation plan and require the debtor who is a stock company to issue new shares without having rehabilitation creditors, rehabilitation secured creditors, or shareholders make new payments or make investments in kind (Article 206(1) of the Debtor Rehabilitation Act). When the rehabilitation plan prescribes the amount of capital and methods of reducing capital to be reduced, the court may reduce the debtor's capital pursuant to the rehabilitation plan. In such cases, the provisions of Articles 343(2), 439(2) and (3), 440, 441, 445 and 446 of the Commercial Act shall not apply (Article 205(1) and (2)6(1) of the Debtor Rehabilitation Act).

Ultimately, if the rehabilitation plan does not require separate payment, etc., but it is decided to substitute the existing rehabilitation claim, etc. for repayment through a conversion of shares into equity through a conversion of shares, but the shares issued through a conversion of shares are decided to be retired without compensation, the shares newly issued pursuant to the validity of the authorized rehabilitation plan do not have the right as a shareholder, and it is clear that they will be retired without any other consideration. Thus, it is reasonable to view that the rehabilitation claim, etc., which is the premise of the said conversion of shares as above, has become impossible to recover according to the decision to authorize the rehabilitation plan (see, e.g., Supreme Court Decision 2017Du68295, Jun.

2) Whether the bad debt tax amount of the instant claim is deducted

A) The following facts are acknowledged in full view of the evidence mentioned above and the purport of the entire pleadings.

① On March 13, 2017, the Plaintiff filed an application for commencing rehabilitation procedures as Seoul Rehabilitation Court 2017 Gohap***.

② On November 24, 2017, the above court decided to grant authorization for the rehabilitation plan to convert the instant bonds into registered ordinary stocks, which are 1.2916% of the portion of the rehabilitation claim against the Plaintiff of 10 companies to pay in cash on the date of repayment, and excluding this, the remainder 98.7084% of the instant bonds, which are 10 companies. (3) Specifically, the rehabilitation plan of this case contains the following contents: (i) in lieu of the repayment of the relevant rehabilitation claim on the date when the stocks newly issued by the company take effect; (ii) the stocks issued by the conversion into equity and the shares owned by the existing shareholders are retired free of charge; and (iii) the reduction of capital due to reduction of capital takes effect on the following business day from the date when the issuance of new stocks takes effect; and (iii) the Plaintiff is exempted from the total amount of interest thereafter.

B) Examining the following circumstances in light of the legal principles seen earlier, the instant claim converted into equity pursuant to the rehabilitation plan approval plan of this case constitutes “a claim confirmed as impossible to be recovered according to the decision to authorize the rehabilitation plan of this case” under Article 19-2(1)5 of the Enforcement Decree of the Corporate Tax Act, and thus, the deduction of bad debt tax amount is justifiable. Therefore, the Defendant’s disposition that deducted the amount equivalent to the deduction of bad debt tax amount from the input tax amount of value added tax for the second year of 2017 from the Plaintiff’s input tax amount for the second year of 2017 is lawful. The Plaintiff

(1) The nature of de facto exemption from liability

(A) Unlike ordinary debt-equity swap, the rehabilitation plan of this case plans to retire shares issued through a debt-equity swap without compensation, and free retirement after a debt-equity swap is merely an act of implementation in accordance with the rehabilitation plan. In addition, the plaintiff, a debtor, has no economic effect similar to debt-equity swap in that there is no outflow of funds for debt-equity swap. The creditors of this case merely have the appearance of debt-equity swap without any actual satisfaction on their own claims, and thus there is no difference between debt-equity swap and the actual purpose of debt-equity swap.

(B) In addition, the proviso of Article 72 (2) 4-2 of the Enforcement Decree of the Corporate Tax Act, which provides that the acquisition value of shares acquired through a debt-to-equity swap shall be included in the calculation of earnings by including the reduced amount of liabilities (including the reduced amount exceeding the market price where stocks are issued through a debt-to-equity swap pursuant to the proviso of Article 17 (1) 1 of the Corporate Tax Act) arising from the exemption or termination of the debt, as a provision to solve the taxation problem arising from the debt-to-equity swap, or in the case of this case where a debt-to-equity swap or gratuitous retirement is planned, it is reasonable to view that it does not apply to the determination of whether it constitutes the grounds for a debt-to-equity swap. Furthermore, Article 11 (6) of the Enforcement Decree of the Corporate Tax Act provides that "the reduced amount of liabilities (including the reduced amount exceeding the market price where stocks are issued through a debt-to-equity swap) arising from the debt-to-equity swap shall be included in the calculation of earnings."

(ii)the occurrence of the cause for the bad debt tax deduction;

(A) It is reasonable to understand the issuance of new shares and the gratuitous retirement of shares through a debt-equity swap as an indivisible procedure in the rehabilitation procedure for the single purpose of the debt exemption. On the contrary, the Plaintiff’s assertion that the issuance of new shares through a debt-equity swap constitutes payment in kind is difficult to accept, on the premise that the above acts included in the rehabilitation plan of this case are separated and identified separately, and on the premise that the issuance of new shares through a debt-equity swap constitutes payment in kind, the effect of the extinguishment of the entire value of the stock on the account book is difficult to accept. In addition, in the case where the “reparability of collection” is determined by the authorization decision for the rehabilitation plan of this case, the concept “reparability of collection” should be determined by considering the economic substance aspect. As long as there was a decision to authorize the rehabilitation plan of this case for the gratuitous retirement of shares after a debt-equity swap, the interested parties shall comply with the rehabilitation plan, and it can be deemed that the act of free retirement of shares is merely an act of implementation according to the above decision, and

(B) Ultimately, the obligees of this case did not receive an opportunity to exercise shareholders' rights after conversion into equity, and since the claim of this case was extinguished due to debt exemption and a cause of bad debt arises, it is reasonable to evaluate the claim of this case as falling under "a claim confirmed to be impossible to recover according to a decision to authorize the rehabilitation plan" under Article 19-2 (1) 5 of the Enforcement Decree of the Corporate Tax

(3)the intent of the bad debt tax deduction system and consideration of tax equity;

(A) As long as the value-added tax was supplied for consideration under the Value-Added Tax Act, whether it was actually paid or not does not affect the establishment of the liability for the payment of value-added tax. In other words, value-added tax is a bad debt tax deduction system to eliminate unreasonable outcomes. In other words, a taxpayer is a tax collected through a prior-stage tax credit system, which is a taxpayer of goods or services, and the supplier who was supplied with the goods or services but was inevitably paid the value-added tax at his/her own expense even if the goods or services were supplied, and thus, the taxpayer would inevitably pay the value-added tax

(B) However, as alleged by the Plaintiff, if the creditors of this case were to be deemed to have acquired new shares through debt-equity swap through payment in substitutes and thus it is impossible to deduct bad debt tax amount, the creditors are also liable for the amount of value-added tax not collected from the Plaintiff by adding up the losses incurred by the said creditors by the free retirement of shares without any consideration. On the other hand, the Plaintiff is entitled to deduct the profits from debt-free retirement through debt-equity swap or capital reduction, and furthermore, the Plaintiff also deducts the input tax amount equivalent to the value-added tax amount that has no possibility of actual collection. This constitutes an exception to the principle of taxation of value-added tax, which accords with the intent of the bad debt tax deduction system that grants the benefits of tax reduction as an exception to the principle of taxation of value-added tax, and it is sufficiently recognized as necessary to interpret it in line with the tax equity. In particular, as long as the entire stocks and the existing shareholders’ shares are retired without compensation and the rehabilitation creditors are entitled to the deduction of bad debt tax amount for each claim

3. Conclusion

If so, the plaintiff's claim is without merit, and it is dismissed. It is so decided as per Disposition.

Note tin

1) The Plaintiff refers to the legal principles of Supreme Court Decision 2008Da18376 Decided July 24, 2008, Supreme Court Decision 2010Du17564 Decided November 22, 2012, Supreme Court Decision 2019Du31853 Decided May 10, 2019, etc. However, the deliberation of the instant case is difficult to vary.

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