[1] Whether an act of transferring a company's claim to a specific secured party after an application for suspension of payment, bankruptcy, commencement of composition proceedings, or commencement of reorganization proceedings is subject to avoidance under Article 78 (1) 2 of the former Company Reorganization Act (affirmative)

[2] In a case where a reorganization security holder who received a dividend by participating in a distribution procedure suspended by the decision of the commencement of a company reorganization procedure excludes the amount of a claim equivalent to the dividend from the report of the reorganization security, and the corresponding reorganization company's debt is exempted from liability, the case holding that even if the above dividend is invalidated by the decision of the approval of the reorganization program, the reorganization company cannot be deemed to have obtained a benefit equivalent to

[3] The time when the other party's claim is restored by the exercise of the avoidance power under the former Company Reorganization Act, and the legality of offset against the other party's claim before the repayment of the performance value based on the exercise of the avoidance power (Additional law)

[1] The "act detrimental to reorganization creditors, etc." under Article 78 (1) 2 of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) includes not only a fraudulent act absolutely reduced the company's general property, which is a joint security of all creditors, but also a biased act detrimental to equity among creditors of the company. In the company reorganization procedure, a secured party cannot exercise a security right individually, but also can exercise a security right within the reorganization procedure as a security holder and can not extinguish the company's claim outside the reorganization procedure. In light of the fact that the company's transfer of the company's claim to a specific secured party for the repayment of the debt after an application for suspension of payment or bankruptcy, commencement of composition procedure, or commencement of reorganization procedure is an act detrimental to equity with other creditors, and thus, it is subject to avoidance under Article 78 (1) 2 of the former Company Reorganization Act.

[2] In a case where a reorganization security holder who received a dividend by participating in a distribution procedure suspended by the decision of the commencement of a company reorganization procedure excludes the amount of a claim equivalent to the dividend from the report of the reorganization security and the corresponding reorganization company's debt is exempted from liability, the case holding that even if the above dividend is invalidated by the decision of the approval of the reorganization program, the reorganization company cannot be deemed to have obtained profits equivalent to the above exemption

[3] According to Article 89 of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005), where the right to set aside is exercised, the other party's claim shall be restored only when the other party returns the performance that was received by the act subject to set aside to its original state or he redeems the value thereof. In a case where the other party contests the existence of the other party's claim for repayment of the performance value based on the exercise of the right to set aside and fails to perform it, the other party's claim has not yet been restored. Thus, set-off against the other party's automatic claim that has not been reinstated is unlawful due to the lack of set-off.

[1] Articles 67 (1) 2, 78 (1) 2 (see current Article 100 (1) 2 of the Debtor Rehabilitation and Bankruptcy Act), 112 (see current Article 131 of the Debtor Rehabilitation and Bankruptcy Act), and 124 (see current Article 141 of the Debtor Rehabilitation and Bankruptcy Act) of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005), Article 67 (1) of the former Company Reorganization Act (see current Article 58 (1) of the Debtor Rehabilitation and Bankruptcy Act), Article 126 (1) 2 of the Debtor Rehabilitation and Bankruptcy Act (see current Article 100 (1) 2 of the Debtor Rehabilitation and Bankruptcy Act), Article 112 of the Debtor Rehabilitation and Bankruptcy Act (see current Article 131 of the Debtor Rehabilitation and Bankruptcy Act), Article 29 (1) of the Debtor Rehabilitation and Bankruptcy Act (see current Article 29 (1) of the Debtor Rehabilitation and Bankruptcy Act), Article 29 of the current Act

The administrator of the SubdivisionS Co., Ltd. (Law Firm Chungcheong, Attorneys Park Yong-ok et al., Counsel for the plaintiff-appellant)

Korean Bank (Law Firm Geosung, Attorneys Hy-won et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2004Na84865 delivered on October 19, 2005

The part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the Seoul High Court. The Defendant’s appeal is dismissed. The costs of appeal are assessed against the

1. The defendant's grounds of appeal are examined.

A. As to the claim for the money due to the exercise of the avoidance power

The "act detrimental to reorganization creditors, etc." under Article 78 (1) 2 of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005, hereinafter the "Company Reorganization Act") includes not only absolute reduction of the general property of the company which is a joint security of the total creditors, but also a biased act detrimental to equity among the creditors of the company. In light of the fact that in the company reorganization procedure, a secured party cannot individually exercise a security right and exercise a right within the reorganization procedure as a security holder, but also cannot extinguish his claim outside the reorganization procedure, the company's transfer of the company's claim to a specific secured party for the repayment of the debt after an application for suspension of payment, bankruptcy, commencement of composition, or commencement of reorganization proceedings is a biased act detrimental to equity with other creditors, and thus becomes subject to avoidance under Article 78 (1) 2 of the Company Reorganization Act.

In the same purport, the court below is just in holding that, after the suspension of payment by an Lao Corporation Co., Ltd., Ltd., the liquidation company's transfer of sales claims to the defendant for the repayment of its obligation to the defendant who is the secured party, as stated in its reasoning, the act of transferring the sales claims to the defendant is subject to avoidance pursuant to Article 78 (1) 2 of the Company Reorganization Act, and the defendant has the obligation to repay the amount repaid to the plaintiff during that period from the debtor of the sales claims so transferred (hereinafter "debt to repay the sales claims"), and there is no error in the misapprehension of legal principles as to the avoidance power of the company reorganization procedure,

B. As to the claim for the amount based on invalidity of a dividend

The court below held, as stated in its reasoning, that the defendant's seizure and collection order and the distribution procedure based on such order were naturally suspended pursuant to Article 67 (1) of the Company Reorganization Act due to the order to commence a corporate reorganization procedure for the liquidation company for the liquidation company, which was then invalidated pursuant to Article 246 (1) of the Company Reorganization Act due to the decision to approve the reorganization plan for the reorganization company, and thus, the defendant has an obligation to return the dividend amount received from the above distribution procedure after the decision to commence a corporate reorganization procedure (hereinafter "debt repayment obligation") to the plaintiff as unjust enrichment. In light of related provisions and records, the judgment of the court below is just, and there is no error of law such as misunderstanding of legal principles as to unjust enrichment, as otherwise alleged

C. As to the defense of offsetting

The court below rejected the defendant's defense of set-off against an automatic claim for return of unjust enrichment on the ground that, as a result of the defendant's receipt of dividends by participating in the above distribution procedure that was suspended by the decision of the commencement of company reorganization procedure and the result of excluding the amount of claims equivalent to the amount of dividends that the defendant received by him from the above declaration was exempted by Article 241 of the Company Reorganization Act, since it was based on the defendant's liability, even if the above dividends were null and void by the decision of the reorganization plan, it cannot be said that the reorganization company obtained profits equivalent to the amount of the above exempted amount of debts without any legal cause, and thus the defendant cannot be deemed to have acquired the above amount of claims for return of unjust enrichment. In light of the relevant provisions and records, the court below's measures are just, and there is no error of law such as misunderstanding legal principles

2. The plaintiff's grounds of appeal are examined.

The court below held that since the right to set aside against the transfer of the above sales claim between the reorganization company and the defendant after the meeting of interested parties for the examination of the reorganization plan was completed, as a result of the exercise of avoidance power against the transfer of the above sales claim between the reorganization company and the defendant, the defendant cannot report and exercise the claim pursuant to Article 89 of the Company Reorganization Act, the reorganization company obtains unjust profits from the defendant's loss, which is the other party. Thus, the plaintiff, the administrator of the reorganization company, has the obligation to return the claim to the defendant with public-interest claim under Article 208 subparagraph 6 of the Company Reorganization Act, which is unjust profits accrued after the commencement of the reorganization procedure, and the amount of unjust profits to be returned in such case, if the restored claim was reported as a security in the reorganization procedure, the amount of the claim that was due by the date of closing of argument in the court below pursuant to the reorganization plan among the defendant's claim for return of unjust profits, the court below rejected part of the defendant's claim for set-off and dismissed the plaintiff's claim.

However, according to the provisions of Article 89 of the Company Reorganization Act, in a case where the avoidance power is exercised, the other party’s claim shall be restored only when the other party returns the performance received by the act subject to the avoidance to its original condition or only when the other party redeems its value after repaying the other party’s claim. As long as it is evident in the record that the Defendant asserted the existence of the obligation and fails to perform the claim for repayment based on the exercise of the avoidance power of this case, notwithstanding the exercise of the above avoidance power, the other party’s claim has not yet been restored to its original claim. Thus, the offset against the other party’s automatic claim that has not been

Therefore, as seen earlier, the lower court, which rejected the Plaintiff’s claim on the part of the Defendant’s counterclaim by partially citing the Defendant’s counterclaim, erred by misapprehending the legal doctrine on the restoration of the other party’s claim and an offset against the claim for restoration of the other party’s claim, thereby adversely affecting the conclusion of the judgment.

3. Therefore, the part of the judgment below against the plaintiff is reversed, and that part of the case is remanded to the court below for a new trial and determination, and the defendant's appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Nung-hwan (Presiding Justice)