[1] Meaning of “Bilateral contract” under Article 103(1) of the former Company Reorganization Act, and purport of Article 208 subparag. 7 of the former Company Reorganization Act, where an administrator performs his/her obligations pursuant to Article 103(1) of the same Act, the other party’s right to claim as a priority claim

[2] Whether the nature of reorganization claims changes into a public-interest claim solely on the ground that a custodian treats reorganization claims as a public-interest claim (negative)

[3] Whether the company is exempted from liability on the ground that the receiver did not report the right acknowledged under the provision of the reorganization program, in case where the receiver had a provision that remains effective in the reorganization program and the court approved the reorganization program and confirmed the approval decision as it is (negative in principle)

[4] Where the purport of entry in the reorganization plan is not clear, the method of interpretation of the reorganization plan

[1] In the case of bilateral contract not performed by both parties, the term "a bilateral contract" under Article 103 (1) of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act (Act No. 7428 of March 31, 2005) that grants an option to perform or cancel the contract to the administrator is a contract under which both parties are liable for an equal contractual obligation. The term "a bilateral contract" under Article 103 (1) of the former Company Reorganization Act (amended by the Addenda to the Debtor Rehabilitation and Bankruptcy Act (amended by Act No. 7428 of March 31, 2005) refers to a contract under which both parties are liable for an equal contractual obligation. The original purpose of the above provision is to ensure that the whole or part of the contractual obligation under one another's equal contractual relationship is not performed in order to ensure the equity between the parties by allowing the custodian to perform the obligation under a contract where the custodian intends to claim the other party's performance.

[2] Public-interest claims are claims falling under Article 208 of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005, hereinafter “former Company Reorganization Act”), or claims recognized by individual provisions of the former Company Reorganization Act, and thus, the nature of reorganization claims does not change into public-interest claims on the ground that the administrator treated reorganization claims as public-interest claims without accurately and accurately making legal decisions on the legal nature of claims.

[3] The reorganization plan is effective for and against the company, all reorganization creditors, security holders, and stockholders [Article 240 of the former Company Reorganization Act (repealed by Act No. 7428 of Mar. 31, 2005, Article 2 of the Addenda to the Debtor Reorganization and Bankruptcy Act, Article 7428 of the former Company Reorganization Act, hereinafter the "former Company Reorganization Act}. The company is exempted from liability for all reorganization claims and securities except for the rights recognized under the provisions of the plan or the former Company Reorganization Act, and all security rights in the company's property are extinguished (Article 241 of the former Company Reorganization Act). In light of the contents of the above provision and the purpose of the former Company Reorganization Act to coordinate the interests of creditors, stockholders, and other interested persons with economic value, and to arrange and reconstruct the business, the company cannot be exempt from liability for the report of the reorganization plan, unless special circumstances exist, by establishing the fair and appropriate reorganization plan under which the receiver did not have the right to report the reorganization plan.

[4] If the purport of entry in the reorganization program is not clear, the purport thereof must be clarified by means of interpretation of legal act. Interpretation of legal act is clearly confirming the objective meaning given by the parties to the act of expression. In a case where objective meaning is not clearly expressed by the party’s language and text, it shall be reasonably interpreted in accordance with logical and empirical rules, social common sense, and trade norms so that it conforms to the ideology of social justice and equity, by comprehensively taking into account the following factors: (a) the form and content of text; (b) the motive and background behind the juristic act; (c) the purpose and genuine intent of the parties

[1] Article 103(1) 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) (see current Article 119(1)), Article 208 subparag. 7 (see current Article 179 subparag. 7 of the Debtor Rehabilitation and Bankruptcy Act) / [2] Article 208 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 1 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) (see current Article 119(1) of the Debtor Rehabilitation and Bankruptcy Act), Article 208 subparag. 7 of the Debtor Rehabilitation and Bankruptcy Act (see current Article 201 of the Debtor Rehabilitation and Bankruptcy Act), Article 2130 of the Debtor Rehabilitation and Bankruptcy Act (see current Article 2130 of the Debtor Reorganization Act)

[1] Supreme Court Decision 2013Da16305 Decided September 26, 2013 / [4] Supreme Court Decision 2006Da77197 Decided June 26, 2008 (Gong2008Ha, 1052)

Seoul High Court Decision 2001Na14888 delivered on August 2, 201

T&C Co., Ltd. (Law Firm LLC et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2012Na60123, 60130 decided March 28, 2013

The judgment below is reversed and the case is remanded to Seoul High Court.

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

1. Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On September 10, 1998, the company reorganization procedure was commenced as Seoul District Court 98No485 on September 10, 1998, as a company that operates a sub-defendant, which consists of golf courses, containers, hotels, skiing grounds, etc. (hereinafter “non-resident”).

B. In the company reorganization procedure against the Plaintiff, the Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) reported the Plaintiff’s total amount of KRW 120,601,065,414 as reorganization claim on October 23, 1998, and the interest amount of KRW 15,227,230,578 as reorganization claim, but did not report the Plaintiff’s non-state membership right.

C. In reorganization programs (hereinafter “first reorganization programs”) submitted by the Plaintiff’s administrator to the reorganization court, Article 3 Section 6 of the “Rights of Claim, etc., which are not reported, shall not be disadvantaged even if they were not reported as reorganization claims, and if an object is clarified upon the expiration of the lease contract period, the deposit shall be repaid, and the method of repayment shall be determined after consultation with the lessee in question.” The first reorganization program was approved upon resolution at the meeting of interested persons for the resolution of reorganization programs on August 12, 1999, and the above approval decision was finalized as it is.

D. The manager of the Plaintiff, in consultation with the reorganization court, promoted the sale to a third party (M&A) to the Plaintiff. On November 15, 2001, the Plaintiff entered into an underwriting contract with the M&A consortium on November 15, 2001. On January 14, 2002, the Plaintiff submitted a modified reorganization plan (hereinafter “amended reorganization plan”) to the reorganization court by reflecting the contents of the above underwriting contract.

E. On February 19, 2002, the reorganization court rendered that the number of creditors of the "other member groups of reorganization creditors", who are non-member groups, shall be at least 10,000 persons and shall not obtain consent of those who have voting rights exceeding the statutory amount. The reorganization court decided on February 19, 200, pursuant to Article 234(2) and (1) of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428, Mar. 31, 2005; hereinafter the "Company Reorganization Act"), the administrator shall determine the protection provisions for the "other member groups of reorganization creditors" and shall prepare the revised reorganization plan. The revised reorganization plan was resolved at the meeting of interested persons on March 13, 202, and thereafter the reorganization court approved the amendment of the reorganization plan by prescribing the protection provisions for the "other member groups" on May 31, 2002, which became final and conclusive.

F. According to the revised reorganization plan, the contents of the reorganization claim concerning the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right to the right of the right to the right to the right are reduced

G. Each member deposit of the instant 101 to 212 is KRW 3,200,000 to KRW 125,000,000,000, and the Defendant paid KRW 1,000,000,000 prior to the commencement of the Plaintiff’s corporate reorganization proceedings. The Defendant paid KRW 1,000 to the Plaintiff each of the unpaid member deposits and paid acquisition tax, etc. necessary for acquiring membership rights on September 2002, which was after the Plaintiff’s corporate reorganization proceedings were commenced. The Plaintiff’s custodian determined that the unpaid member deposit of KRW 1,00 constitutes a public-interest claim, and classified the said member membership rights into a modified reorganization plan or various instructions, etc.

H. On October 15, 2002, the reorganization court decided to close the company reorganization procedure for the Plaintiff, and thereafter, the Korea Electric Cable Co., Ltd. exercised the right to manage the Plaintiff, and on April 20, 201, the father-young Housing Co., Ltd. acquired the Plaintiff. The Defendant claimed the return of the membership deposit from April 27, 201 to August 12, 201, but the Plaintiff rejected the return on the ground that the membership deposit was not reported in the company reorganization procedure.

2. As to the assertion of misapprehension of legal principles as to executory bilateral contract under Article 103(1) of the Company Reorganization Act, and priority claim under Article 208 subparag. 7 or 5 of the Company Reorganization Act

A. In the case of bilateral contracts not performed by both parties, the term “a bilateral contract” under Article 103(1) of the Company Reorganization Act, which grants an option to perform or cancel the contract to a custodian, refers to the contract under which both parties bear an equal contractual obligation, and originally, to function as a security in legal and economic relation between both parties’ obligations, and thus, to ensure the application of the aforementioned provisions, all or part of the contractual obligations under an equal contractual relationship should not be performed. Article 208 subparag. 7 of the Company Reorganization Act provides for the other party’s right to claim as a priority claim where the custodian intends to claim the performance of the other party’s obligation pursuant to Article 103(1) of the Company Reorganization Act (see, e.g., Supreme Court Decision 201Da16305, Sept. 26, 2013).

Examining the above facts in light of the legal principles as seen earlier, each of the member deposits with unpaid KRW 1,00 is extremely part of KRW 3,200,000 through KRW 125,00,000 of each of the above member deposits. It cannot be deemed that the Plaintiff’s obligation to pay KRW 1,000 and the obligation to enjoy as a member to enjoy as a member is in a quid pro quo relationship. Thus, it is difficult to view each of the above member’s membership agreements as an executory contract under Article 103(1) of the Company Reorganization Act.

B. Meanwhile, since a public-interest claim is a claim falling under Article 208 of the Company Reorganization Act, or a claim recognized by an individual provision of the Company Reorganization Act, the nature of reorganization claim cannot be deemed to be changed into a public-interest claim on the ground that the administrator treated the reorganization claim as a public-interest claim without accurately determining the legal nature of the claim, and it is difficult to deem that there was an agreement between the administrator and the defendant to return the total amount of the membership deposit under the above membership deposit to the same extent as the public-interest claim, on the ground that the Plaintiff’s administrator classified the membership right as a changed reorganization plan or various notice, etc.

C. Although there are some inappropriate parts at the time of the reasoning of the lower judgment, the lower court was justifiable to have determined that the right to claim the return of membership deposits based on the membership rights under Articles 101 through 212 of the Company Reorganization Act was based on the grounds before the commencement of reorganization proceedings against the Plaintiff, and does not constitute a priority claim under Article 208 subparag. 7 of the Company Reorganization Act or Article 208 subparag. 5 of the same Act. Therefore, contrary to what is alleged in the grounds of appeal, the lower court did not err in its judgment by misapprehending the legal doctrine on executory contract under Article 103(1) of the Company Reorganization Act, non-performance bilateral contract under Article 103 subparag. 5 and 7 of the Company Reorganization

3. As to the assertion of misapprehension of legal principles as to the exemption from reorganization claims and the interpretation of reorganization plan under Article 241 of the Company Reorganization Act

A. The reorganization plan is effective for and against the company, all reorganization creditors, security holders, and stockholders (Article 240 of the Company Reorganization Act), and the company is exempted from liability for all reorganization claims and securities except for the rights recognized under the provisions of the plan or the provisions of the Company Reorganization Act, and all security rights in the company’s property are extinguished (Article 241 of the Company Reorganization Act). In light of the contents of such provisions and the purpose of the Company Reorganization Act to coordinate the interests of creditors, stockholders, and other interested persons, and to promote the reorganization and reorganization of the company’s business with economic value, the company is not exempt from liability even if the company is approved under the provisions of the reorganization plan, unless there are special circumstances such as the provision of the plan and the concept of fairness and fairness.

In addition, if the purport of entry in the reorganization program is not clear, the purport thereof shall be clarified by means of interpretation of the legal act. Interpretation of a legal act is clearly confirming the objective meaning which the parties gave to the act of representation. If the objective meaning is not clearly expressed by the language and text expressed by the parties, it shall be reasonably interpreted in accordance with logical and empirical rules, and the common sense of society and the common sense of transaction, by comprehensively taking into account the following factors: (a) the form and content of the text; (b) the motive and background leading up to the juristic act; (c) the purpose and genuine intent to be achieved by the juristic act by the parties; and (d) the transaction practices (see Supreme Court Decision 2006Da7197, Jun. 26, 2008).

B. However, the following circumstances revealed by the reasoning of the judgment below and the records, namely, ① Section 6 of Chapter 3 of the first reorganization plan provides that “right to a non-reported claim” shall not be disadvantaged even if a reorganization claim is not reported,” and the Plaintiff’s administrator may have explained that other reorganization claims than lease deposit are protected; ② the Plaintiff’s administrator appears to have explained to members that it does not change rights even if a claim is not reported, ③ the obligation to return the non-reported membership deposit is continuously reflected in the Plaintiff’s obligation, and the Plaintiff’s administrator did not dispute the existence and scope of non-registered membership right including the instant membership right; ④ The Plaintiff’s administrator and transferee of the first reorganization plan pursuant to the premise that the Plaintiff’s claim was not reported for the purpose of protecting the rights of the Plaintiff’s first reorganization plan and other non-reported reorganization creditors’ claim under the premise that the Plaintiff’s claim to return the non-reported membership deposit was not reported for the purpose of protecting rights under the premise that the latter’s first reorganization plan was not approved.”

Therefore, in light of the above legal principles, so long as the reorganization court approves the first reorganization plan and its approval decision becomes final and conclusive, the membership of this case shall be deemed not to have been exempted as a right recognized by the provisions of the first reorganization plan, but only some of the contents of the right are changed by the revised reorganization plan approved thereafter.

C. Nevertheless, on the grounds indicated in its reasoning, the lower court determined that the instant membership was forfeited by failure to report or acquired after transfer of forfeited rights, and thus, the Defendant cannot seek the return of the membership deposit to the Plaintiff. In so determining, the lower court erred by misapprehending the legal doctrine on exemption from reorganization claims and interpretation of the reorganization plan under Article 241 of the Company Reorganization Act, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit.

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Min Il-young (Presiding Justice)