[1] The purport of Article 221 (4) of the former Company Reorganization Act

[2] The meaning of "fair and equitable reorganization plan" under Article 233 (1) of the former Company Reorganization Act, and whether the reorganization plan exemptings the reorganization claim and the right to indemnity of insolvent management shareholders is against substantial equality (negative)

[3] Whether Article 221 (4) and Article 229 of the former Company Reorganization Act are unconstitutional (negative)

[1] Article 221 (4) of the former Company Reorganization Act (amended by Act No. 6085 of Dec. 31, 1999) / [2] Articles 228 (1), 229, and 233 (1) of the former Company Reorganization Act (amended by Act No. 6085 of Dec. 31, 199) / [3] Articles 221 (4) and 229 of the former Company Reorganization Act (amended by Act No. 6085 of Dec. 31, 199)

[2] [3] Supreme Court Order 9Da66 dated November 24, 1999 (Gong2000Sang, 134) / [2] Supreme Court Order 88Ma266 dated July 25, 1989 (Gong1997Sang, 285) Supreme Court Order 98Da11 dated August 28, 1998 (Gong198Ha, 2493)

1. A person who is a foundation for the maintenance of the World Air Transport Society (Law Firm Kim Shin-Bd, Attorneys Kim Jin-jin et al., Counsel for the defendant-appellant)

A reorganization company Korea Tyton Industry Ltd.

Seoul High Court Order 200Ra73 dated October 29, 2001

The special appeal is dismissed.

1. On the first ground for a special appeal

An investigating member appointed by the reorganization court pursuant to Article 40 of the former Company Reorganization Act (amended by Act No. 6085 of Dec. 31, 1999; hereinafter the same) is obligated to investigate whether a cause for commencement of reorganization proceedings occurred due to an act of a director or a person corresponding thereto, or a manager, or the scope of a shareholder having a special relationship, who has exercised significant influence over the above act of a director, etc., and a person who has a special relationship with him/her, barring special circumstances, such as the report on investigation prepared by an investigating member on the criteria for determination of free retirement of stocks as stated in an investigation report pursuant to Article 2(c) of the former Guidelines for Handling Cases of Company Reorganization (amended by Act No. 731 of Jul. 9, 199).

In the same purport, the fact-finding and decision of the court below that deemed a special appellant as a shareholder of poor management under Article 221 (4) of the former Company Reorganization Act is justifiable on the basis of the investigation report by the investigating committee that judged that the special appellant, the controlling shareholder of the instant reorganization company, frequently replaced the management of the reorganization company, thereby achieving consistency in the management and management of the reorganization company, and that the director of the reorganization company has an excessive financial support to the related company under the Uniform Group, and increased the burden of financial expenses by dependent on new investment funds, and that the above act has caused the commencement of reorganization proceedings, and that the special appellant was a shareholder of poor management under Article 21 (4) of the former Company Reorganization Act, and there is no error in the misapprehension of the legal principle of probative value as to the investigation report by the investigating committee, as

2. On the second ground of appeal

The purpose of Article 221 (4) of the former Company Reorganization Act is to reduce capital by means of retiring not less than 2/3 of stocks owned so as to deprive the directors, etc. of the reorganization company who have caused the commencement of the company from a significant liability, and to promote the acquisition of a third party to the company in excess of liabilities, with pride, only for the poor management shareholders who have exercised considerable influence over the directors, etc. of the reorganization company who have caused the commencement of the company, in a punitive sense.

In the same purport, the judgment of the court below that held that the special appellant is deemed to be a non-performing shareholder under Article 221 (4) of the former Company Reorganization Act and that the decision of the court of reorganization that approved the reorganization plan that stipulates the condition that 100% of its stocks shall be retired without compensation is justifiable, is just, and there is no error of law by misapprehending the legal principles as to the requirements for free retirement of the shareholders of the non-performing management under Article 221 (4) of the former Company Reorganization Act, as alleged by the special appellant.

3. On the third ground for special appeal

Article 233 (1) of the former Company Reorganization Act provides that the conditions of a plan shall be fairly and fairly differentiated between the right holders of different types, taking into account the order of rights provided for in Article 228 (1) of the same Act, and Article 229 of the same Act provides that the conditions of a plan shall be equal as between the right holders of the same kind, as prescribed by Article 229 of the same Act. The equality under Article 229 of the same Act refers not to formal equality, but to substantive equality that does not go against the concept of fairness and fairness (see Supreme Court Order 9Do66, Nov. 24, 199). Thus, in substantial cases where a financial company is responsible for the management of the reorganization company, it shall bear damages to the reorganization company, and it shall not be deemed that such financial company is exempt from the right to indemnity against the reorganization company, and the exercise of reorganization claim against the company under Article 229 (2) of the former Company Reorganization Act or the exercise of rights by subrogation against the company under Article 29 (3) of the former Company Reorganization Act.

In the same purport, the decision of the court below that held that the decision of the reorganization court that approved the reorganization plan under the condition that the special appellant who is a stockholder of insolvent management under Article 221 (4) of the former Company Reorganization Act will be exempted from the total amount of the claim for indemnity acquired or to be acquired after an application for commencement of reorganization claims and reorganization proceedings is justifiable is just, and there is no error of law by misapprehending the legal principles as to the fair and equitable discrimination under Article 228 (1) of the former Company Reorganization Act and the equality principle under Article 229 of the same Act, or by failing to exhaust all necessary deliberations,

4. On the fourth ground for special appeal

As long as the reorganization plan under the conditions stipulated in Article 221(4) of the former Company Reorganization Act to exempt the whole amount of claims acquired or to be acquired by stockholders after an application for the commencement of reorganization claims and reorganization proceedings, it cannot be deemed that the resolution was not made in good faith and fair manner solely on the ground that the reorganization court did not submit the reorganization plan under the above different contents submitted by stockholders, or did not separate the principal creditors and secured creditors into a separate group, or did not grant voting rights to the reorganization claims by stockholders whose creditors and secured creditors were denied.

In the same purport, the decision of the court below that the reorganization court did not submit a different reorganization program submitted by the special appellant to the meeting of interested persons for the examination or resolution, or did not separate the main creditor and the secured creditor into a separate group, or did not grant voting rights to the reorganization claim denied by the special appellant, is justifiable in holding that the resolution of the reorganization plan in this case does not meet the requirements for authorization under Article 233 of the former Company Reorganization Act, because the resolution of the reorganization plan in this case was not made in good faith and fair manner, and it is not erroneous in the misapprehension of legal principles as to the requirements for authorization of reorganization under Article 233 of the former Company Reorganization Act, or in failing

5. Ground of appeal No. 5

Although the concept of equality under Article 229 of the former Company Reorganization Act is a "case where a cause for the commencement of reorganization proceedings has occurred due to an act bearing a heavy responsibility under Article 221 (4) of the former Company Reorganization Act", or all concepts of equality under Article 229 of the same Act are indefinite concepts, it is inevitable in the legislative technology, but it can be reasonably determined whether it is an act bearing a significant responsibility even through the sound common sense of the social average person, or a reorganization plan against equality. Accordingly, it does not seem that the requirements have been interpreted abstract and ambiguously, or that it does not seem to be unconstitutional due to infringement of property rights beyond the limit of delegated legislation (see Supreme Court Order 9Do66, supra).

In addition, even if the reorganization court exercises considerable influence on the management of the reorganization company pursuant to the above provision, and ultimately, can approve the reorganization plan under the conditions that make it possible to retire all stocks of the insolvent management shareholder, or to exempt the entire amount of the claim for indemnity acquired or to be acquired after the application for commencement of reorganization claims and reorganization proceedings, such provisions do not seem to be unconstitutional, contrary to the principle of proportionality, by imposing excessive sanctions not proportional to the degree of illegality of the shareholders of the insolvent management.

Meanwhile, Article 221(4) of the former Company Reorganization Act grants the right to gratuitously retire stocks owned by shareholders of insolvent management within the scope of not less than 2/3 of the total number of stocks owned by such shareholders to reorganization courts. Thus, it cannot be said that the above provision deprives the court's discretion, thereby undermining the right to a legitimate judgment of special appellant

6. Therefore, the special appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices.

Justices Byun Jae-chul (Presiding Justice)