[1] Method of protesting against a decision of appellate court on approval or disapproval of composition (=re-appeal)

[2] The purport and meaning of the principle of equality of composition conditions

[3] Whether the resolution of the creditors meeting against the principle of equality of composition becomes a ground for non-authorization of composition (affirmative with qualification)

[4] The case holding that the condition of composition is contrary to the principle of equality of composition condition, in case where the construction mutual aid association has determined the condition of composition considerably favorable in terms of the time of repayment and interest rate compared to the composition claims of other financial institutions without security rights, even though it clearly stated that the right of pledge against the composition applicant's investment certificate which was established as a security for the composition applicant's claim against the composition applicant was reserved, on the premise that the above association waives the right of separation

[1] Article 7 (1) of the Composition Act provides that an immediate appeal may be filed only in cases where there are special provisions in this Act as to the judgment on composition procedures in order to ensure the prompt progress of composition procedures, and Article 11 (2) of the same Act provides that the Civil Procedure Act shall apply mutatis mutandis to composition procedures. Article 57 (1) of the same Act provides that an immediate appeal shall be filed against a decision on approval of composition, but there is no provision as to the methods of objection against the decision on approval of composition. In full view of these relevant provisions, the decision on approval of composition pursuant to Article 412 of the Civil Procedure Act as applied mutatis mutandis pursuant to Article 11 (1) of the same Act may be re-appeal, and there is no possibility that a special appeal under Article 420 of the same Act as applied mutatis mutandis to the decision on approval of composition may be filed, and there

[2] Article 276 of the Bankruptcy Act, which applies mutatis mutandis under Article 53 (2) of the Composition Act, provides that "the conditions of compulsory composition shall be equal among bankruptcy creditors." This is a provision to prevent infringement by majority of the interests of minority opposing creditors who have consented to composition. The conditions of composition referred to in this context refer not to treating all composition creditors equally in the form of payment rate, time of repayment, establishment of security and provision of interest, but to treating them equally in the form of fair and equitable manner so that it does not go against the concept of fairness and fairness. Therefore, it is allowed to give differentials within a reasonable scope according to the characteristics of composition claims, such as preferential treatment of small claims, but discrimination against the idea of fairness such as the rate of repayment or timing of repayment without reasonable grounds is not allowed.

[3] The resolution of the creditors meeting against the principle of equality of composition is a reason for non-authorization of Article 55 subparagraph 1 of the Composition Act only when the deficiency can not be corrected.

[4] The case holding that the condition of composition is contrary to the principle of equality of composition condition, in a case where the construction mutual aid association, even though it clearly stated that the right of pledge was reserved against the composition applicant's investment certificate which was established as a collateral for the composition applicant's credit, and the above association, on the premise that the right of separation was waived, determines the time of repayment and interest rate considerably favorable compared to the claims of other financial institutions without a security interest, in excess of the value of the security

[1] Articles 7(1), 11(1) and (2), and 57(1) of the Composition Act; Articles 412 and 420 of the Civil Procedure Act / [2] Article 53(2) of the Composition Act; Article 276 of the Bankruptcy Act / [3] Articles 53(2) and 55 subparag. 1 of the Composition Act; Article 276 of the Bankruptcy Act / [4] Articles 44 and 53(2) of the Composition Act; Article 276 of the Composition Act

[1] Supreme Court Order 98Da71 dated December 23, 1998 / [2/4] Supreme Court Decision 88Da22671 Decided October 27, 1989 (Gong1989, 1775)

Korea Guarantee Insurance Co., Ltd. (Law Firm Jung-il General Law Office, Attorneys Lee Jong-soo et al., Counsel for defendant-appellant)

Yongma Co., Ltd.

Seoul High Court Order 98Ra123 dated August 24, 1998

The order of the court below is reversed and the decision to authorize composition of this case is revoked.

1. Nature of the appeal of this case

In order to promote the rapid progress of composition procedures, Article 7(1) of the Composition Act provides that only an immediate appeal may be filed in cases where there are special provisions in this Act by means of objection to the decision on composition procedures. Article 11(2) of the Composition Act provides that the Civil Procedure Act shall apply mutatis mutandis to composition procedures. Article 57(1) of the Composition Act permits an immediate appeal against the decision on approval of composition, but does not provide for the methods of objection to the decision on approval of composition. In full view of these relevant provisions, the decision on approval of composition can be re-appeal pursuant to Article 412 of the Civil Procedure Act applied mutatis mutandis pursuant to Article 11(1) of the Composition Act, and there is no room for a special appeal pursuant to Article 420 of the Composition Act that is permitted only in cases where an appeal against the decision on approval of composition is not filed (see, e.g., Supreme Court Order 97Da1871, Dec. 23, 1998).

2. The grounds for reappeal are examined.

Article 276 of the Composition Act, which applies mutatis mutandis under Article 53 (2) of the Composition Act, provides that "the conditions of compulsory composition shall be equal among bankruptcy creditors." This is a provision to prevent infringement by majority of the interests of minority opposing creditors who have consented to composition. The equality of the conditions of composition referred to in this context means that all composition creditors are treated equally in the form of payment rate, time of repayment, establishment of security and provision of interest, etc., not treating all composition creditors equally in the form of formal calculation, but treating them equally so that it does not go against the concept of fairness and fairness (see Supreme Court Decision 88Da22671, Oct. 27, 1989). Thus, it is allowed to set a reasonable discrimination within the scope of reasonable scope according to the characteristics of composition claims, but discrimination against the idea of fairness, such as the rate of repayment or time of repayment without reasonable grounds, cannot be permitted, and a resolution contrary to such principle of equality cannot be made only when the meeting of creditors fails to meet the requirement of equality.

(3) According to the reasoning of the order of the court below, the court below determined that the 2-year interest rate of 1,272,019,936 won on the 2-year interest rate of 9% on the 2-year interest rate of 9% on the 2-year interest rate of 9% on the 3-year interest rate of 2-year interest rate of 1,272,000,000 interest on the 2-year interest rate of 9% interest on the 2-year interest rate of the 2-year interest rate of the 2-year interest rate of the 3-year interest rate of the 5-year interest rate on the 2-year interest rate of the 3-year interest rate of the 5-year interest rate on the 2-year interest rate of the 3-year interest rate of the 5-year interest rate on the 3-year interest rate of the 5-year interest rate on the 2-year interest rate of the 2-year interest rate of the 9-year interest rate of the 20-year interest rate.

However, according to the records, when a construction mutual aid association presents its opinion on the terms and conditions of composition revised on December 23, 1997, it is merely a 11,272,019,936 won of the above determined amount of claims as a composition bond and thus the voting rights are granted, it is explicitly stated that the construction mutual aid association asserts separate voting rights on the amount of future claims and did not waive the right to separation of 500 shares. Nevertheless, the composition court considers the total amount of claims of the construction mutual aid association as included in composition bonds and reported the total amount of such claims to the creditors meeting as stated in the report amount (69,51,481,166 won). However, the construction mutual aid association still fails to obtain a confirmation on the status of collateral that it has a pledge on the above 500 share of the fixed amount of claims under the Act on the Settlement of Securities and Exchange without the resolution of the creditors meeting. If the construction mutual aid association does not have any specific condition of a pledge on the above construction mutual aid association, it can still be viewed that it did not have any other condition of a pledge on the construction bond.

Nevertheless, the court below held that the payment time and interest rate for the portion exceeding the value of the above investment certificate, which is the collateral, under the premise that the construction mutual aid association waived the above right to separation, is not contrary to the principle of equality of composition condition. Therefore, there is an error of law of misunderstanding of facts against the rules of evidence or a law scenario as to the principle of equality of composition condition due to the violation of the rules of evidence, and there is a reason to point out this point.

Therefore, without further proceeding to decide on the remaining grounds of re-appeal, the order of the court below is reversed, but the revocation of the decision to authorize composition of this case is sufficient for a party member to directly decide. Therefore, it is so decided as per Disposition by the assent of

Justices Lee Jae-soo (Presiding Justice)