[1] The meaning of "when resorting to individual rehabilitation procedures does not conform to the general interests of creditors" under Article 595 subparagraph 6 of the Debtor Rehabilitation and Bankruptcy Act

[2] Requirements to dismiss the debtor's application for commencement of individual rehabilitation procedure on the ground that such application constitutes "when the application is not bona fide" under Article 595 subparagraph 7 of the Debtor Rehabilitation and Bankruptcy Act

[3] The case holding that it is difficult to conclude that Gap's application for commencement of individual rehabilitation procedure is not appropriate for a creditor's general interest, or that the debtor applied for commencement of individual rehabilitation procedure for an unlawful purpose, solely on the ground that the debt incurred in close to the application for commencement of individual rehabilitation procedure is high in total amount of the total amount of the debt, in case where the debt incurred for about one year prior to the application for commencement of individual rehabilitation procedure amounting to approximately 80% of the total amount of the loan amount

[1] Article 595 subparagraph 6 of the Debtor Rehabilitation and Bankruptcy Act / [2] Article 595 subparagraph 7 of the Debtor Rehabilitation and Bankruptcy Act / [3] Article 595 subparagraph 6 and 7 of the Debtor Rehabilitation and Bankruptcy Act

[1] Supreme Court Order 2011Ma976 Decided July 25, 2011 / [2] Supreme Court Order 2011Ma201 Decided June 10, 201 (Gong201Ha, 1389)

The debtor

Busan District Court Order 2012Ra853 dated December 20, 2012

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

The grounds of reappeal are examined.

1. Article 595 subparagraph 6 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “the Act”) provides that “when an application for individual rehabilitation procedures is not in conformity with the general interest of creditors” means that a debtor’s application for commencement of individual rehabilitation procedures is not in accordance with the general interest of all creditors, such as payment period, repayment rate, and securing of performance, as the value of the debt repaid by the individual rehabilitation procedures does not reach the liquidation value of the debtor’s property (see Supreme Court Order 201Ma976, Jul. 25, 201). In order to dismiss the application for commencement of individual rehabilitation procedures on the ground that it constitutes “when the application is not bona fide” under Article 595 subparagraph 7 of the Act (see Supreme Court Order 201Ma976, Jul. 25, 201). The circumstance that the debtor committed procedural errors corresponding to subparagraphs 1 through 5 of the same Article, or that the debtor applied for commencement of individual rehabilitation procedures for unjust purposes, such as solely aiming at the effect following the progress of the individual rehabilitation procedures (see Supreme Court Order 201Ma111, Jun.

According to the reasoning of the order of the court below, the court below acknowledged the fact that an amount equivalent to more than half of the total amount of the debtor's debts out of the total amount of 210,816,481 won out of the total amount of the debtor's debts based on the statement of estimated repayment amount submitted by the debtor was the debt incurred within one year based on the date of application of this case, and determined that the act of filing an application for commencement of individual rehabilitation procedures has not yet passed since the debtor significantly increased his debts, and thus the act of filing an application for commencement of individual rehabilitation procedures constitutes abuse of the individual rehabilitation system, and thus constitutes "when the application is not bona fide

However, according to the records, among the total individual rehabilitation debt amounting to KRW 351,854,785, which is entered in the list of individual rehabilitation creditors submitted by the debtor, the amount of loans newly incurred for one year prior to the date of application of the instant case constitutes approximately 80% as KRW 281,023,527, but the amount of the loans has been used to repay the existing debts, and the remainder has been used to pay the debtor's living expenses and penalty, etc.

Examining these circumstances in light of the aforementioned legal principles, it is difficult to readily conclude that the application for commencement of individual rehabilitation procedures of this case was filed by the obligor solely on the grounds that the amount of debt incurred near the application for commencement of individual rehabilitation procedures of this case exceeds the total amount of debt, thereby making it difficult to readily conclude that the application for commencement of individual rehabilitation procedures of this case was filed for an unreasonable purpose

Nevertheless, solely based on the circumstances indicated in its holding, the lower court determined that the instant application constitutes “when the individual rehabilitation procedure conforms to the general interest of creditors” or “when the application is not bona fide.” In so doing, the lower court erred by misapprehending the legal doctrine on the grounds for dismissing the application for individual rehabilitation procedure commencement as stipulated in subparagraphs 6 and 7 of Article 595 of the Act, which affected the conclusion of the judgment. The grounds for reappeal assigning this error are with merit.

2. However, according to the record, the debtor at the time of the application for commencement of the individual rehabilitation procedure of this case submitted a draft repayment plan with the content that the debtor would repay 31,200,000 won in total by 60 times the monthly average monthly income of 1,050,000 won which is derived from extracurricular lessons as stated in the list of 27,864,294 won as at the time of the application for the commencement of the individual rehabilitation procedure of this case after deducting 5,30,000 won which is equivalent to 95% of the minimum cost of living for the family of 1st,000 won which is published by the Ministry of Health and Welfare. The debtor submitted a draft revision to supplement data on the market price of real estate owned by the debtor. The debtor is also 1,689,070 won which is 0,000 won which is the average monthly income of 1,300,000 won which is 60% of the total amount of living for the family of this case.

In light of these circumstances, the court below shall request a debtor to submit additional data on whether the amount of income and the amount of income are likely to be continuously earned in the future, and shall determine whether the debtor's application in this case constitutes grounds for dismissing the application for commencement of individual rehabilitation procedures provided for in subparagraphs 6 and 7 of Article 595 of the Act, by examining whether the debtor's individual rehabilitation procedures commenced against his husband, the details and amount of living expenses recognized in the procedures therefor, etc.

3. 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 Kim Yong-deok (Presiding Justice)