Plaintiff (Law Firm Chang, Attorneys Park Young-ok et al., Counsel for the plaintiff-appellant)

Defendant (General Law Firm, Attorneys Yoon Young-soo et al., Counsel for the defendant-appellant)

February 5, 2009

Seoul Central District Court Decision 2006Gahap61630 Decided December 28, 2006

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim (including the part extended from the trial) is dismissed.

3. The plaintiff shall pay to the defendant 234,014,842 won and 21,015,896 won from May 12, 2007; 212,98,946 won with 5% per annum from June 12, 2007 to February 19, 2009; and 20% per annum from February 20, 2009 to the day of full payment.

4. The plaintiff shall bear the total costs of litigation and the costs of filing an application for return of provisional payments.

5. Paragraph 3 can be provisionally executed.

1. Purport of claim

The defendant pays to the plaintiff 270,000,000 won and 212,634,846 won per annum from July 28, 2006 to December 28, 2006; 20% per annum from the next day to the day of full payment; 57,365,154 won per annum from the day after the delivery of the application for modification of the purport of this case to the day of full payment; 5% per annum from the day after the delivery of the application for modification of the purport of this case to the day of full payment; and 20% per annum from the next day to the day of full payment (the plaintiff extended its claim in the trial).

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

3. Purport of request for the return of provisional payments;

Paragraph (3) of this Article.

1. Basic facts

(a) Conclusion of a contract for business transfer;

(1) On May 30, 2005, Nonparty 1 Co., Ltd. entered into a business transfer/acquisition agreement (hereinafter “instant business transfer agreement”) between the Defendant and the Defendant, which transfers all business related to the business sector, including all assets (including goodwill) and liabilities, belonging to the E-Bz business among the business sector of Nonparty 1 Co., Ltd., and its main contents are as follows.

1. The term "property" in this contract includes all assets owned or used by, or held for use by, Nonparty 1 in connection with fixed assets, inventory assets, sales bonds, advance payment, deposit, and other business division, which are incidental to the business division of this business even if omitted in the separate sheet (Article 1(2)).

2. The term "debt" in this contract shall include the debt indicated in the balance sheet items related to the transfer business division of May 24, 2005, such as purchase liability, accounts payable, advance payment, unpaid expenses, allowances for severance benefits, etc., but the debt increased due to the cause prior to the date of the transfer of business shall be settled (Article 1(3)).

(3) The base date for the transfer of all assets and liabilities for the business division and the business division shall be the next day of the special general meeting of shareholders related to the transfer of business (Article 2 (1)).

(4) The amount of transfer of net assets obtained by subtracting liabilities from the assets of the business division shall be 2.5 billion won in total (Article 3 (1)).

(5) The proceeds of transfer under Article 3 (2.5 billion won) shall be based on the balance sheet on the business division on May 24, 2005, which is the base date of the actual inspection of the books of understanding prepared in accordance with the corporate accounting standards of the Republic of Korea, and the change in financial situation (including an increase or decrease in assets, such as inventory and sales bonds, and liabilities for purchase, etc.) during the period from the base date of the inspection to the date of business transfer after the base date of the actual inspection shall be presented as basic data, and the Defendant shall confirm the accounting books and transaction documents of the non-party 1 corporation to settle the accounts separately from the transfer proceeds, and the above settlement shall be completed around August 30, 2005 (Article 4(1) and (2

6) The non-party 1 corporation shall ensure that the contract prior to the date of the transfer of business is succeeded to the defendant through the consent of the contracting parties, etc. and other procedures necessary for the succession thereof. The defendant shall be deemed to have taken over the obligations indicated in the items of debt in the balance sheet from the creditor of the non-party 1 corporation (Article 6(1) and (8))

(7) The main contents of the business balance sheet (as of May 24, 2005) shall be as follows:

The credit purchase amount of current assets of 3,283,947,103 won in assets of 3,722,364,303 won in fixed assets of 438,417,200 won in assets of 438,417,200 won in assets of 2,185,034,366 won in assets of 2,953,928,028 won in assets of 67,915,207 won in deposit amount of 4,275,970 won in short-term loans of 643,462,399 won in value-added tax deposit amount of 44,775,970 won in assets of 643,460,000 won in assets of 30,000,0000 won in capital of 768,436,275 won in assets of 468,275 won in earned income of 468,275 won in profits.

(2) In accordance with the instant business transfer agreement, the Defendant succeeded to all physical facilities, including business rights and fixed assets, and human resources including officers and employees, etc. in the business sector from the non-party 1 corporation as they are. The Defendant assumed the liability equivalent to KRW 2,953,928,028, including credit purchase amount of KRW 2,185,03,928,207, which was indicated in the aforementioned balance sheet, and around May 30, 2005, the Defendant publicly announced the matters concerning the instant business transfer agreement through the electronic disclosure system of the Financial Supervisory Service including the acquisition of the liabilities of the non-party 1 corporation in the business sector.

(3) On June 1, 2005 and June 23, 2005, the Defendant paid KRW 1.7 billion out of the transfer proceeds under the instant transfer contract to Nonparty 1 corporation twice.

(4) The Defendant’s provisional shareholders’ meeting related to the instant business transfer agreement was held on July 12, 2005, and around July 13, 2005, Nonparty 1 and the Defendant confirmed the assets and the object of liabilities transferred under the instant business transfer agreement as shown in the list of the transfer of assets in attached Form e-bbbz business assets, and Nonparty 2 did not include the goods purchase claim related to the instant business of Nonparty 1, which was not paid from Nonparty 1 corporation (hereinafter “the instant claim”). In light of the financial situation after the date of actual inspection, taking into account the changes in the financial situation after the date of actual inspection, the amount of the transfer price under the instant business transfer agreement was to be reduced from KRW 2.5 billion to KRW 1.7 billion, and on August 30, 2005, the Defendant corrected the contents of the public announcement on May 30, 2005, including the change in the above transfer price and payment method.

(b) Issuance and delivery of promissory notes;

(1) On June 17, 2005, the Plaintiff lent KRW 300 million to Nonparty 3 as security, and received a promissory note with maturity of April 13, 2005, maturity of July 13, 2005, and face value of KRW 500 million (hereinafter “instant promissory note”).

(2) The non-party 2 corporation is a company listed on the KOSDAQ and issued the Promissory Notes in this case without any cause, on the grounds that it is necessary for the share price management and capital increase with respect to the non-party 2 corporation. The Plaintiff failed to pay KRW 300 million loaned to the non-party 3 as above, and thus, requested the non-party 2 corporation to pay the Promissory

(3) The Plaintiff and the non-party 2 corporation agreed to extend the maturity of the Promissory Notes on July 13, 2005, which is the maturity date of the Promissory Notes. The Plaintiff prepared a written confirmation to the effect that “I will confirm that I will cooperate to the maximum extent possible on the basis of the principle of good faith so as not to take over the Promissory Notes by direct financial transaction with the Plaintiff and the non-party 2 corporation, but to receive the Promissory Notes through the personal money relationship with the non-party 3, not by direct transaction with the Plaintiff.”

(c) Conclusion of assignment contracts;

(1) On July 26, 2005, the Plaintiff and Nonparty 2 Co., Ltd. transferred the instant bonds to the Plaintiff, and the Plaintiff agreed to extend the maturity of the Promissory Notes to August 16, 2005.

(2) On July 27, 2005, Nonparty 2 notified Nonparty 1 corporation of the transfer of the instant claim. At the time of notification of the transfer of the instant claim, the amount of the claim against Nonparty 2 corporation was KRW 212,634,846.

(3) On September 2, 2005, the Plaintiff and Nonparty 1 Co., Ltd. confirmed that KRW 212,634,846 of the instant bonds were transferred to the Plaintiff, and the Plaintiff consented thereto. On the same day, the Plaintiff and Nonparty 1 Co., Ltd. sent a debt transfer certificate stating such content to the Defendant and delivered it to the Defendant on the 5th of the same month.

[Ground of recognition] The fact that there is no dispute, Gap's evidence Nos. 1, 2, 5, 10, 12, 22, 23, Eul's evidence Nos. 1 and 9 (including each number), the testimony of non-party 4 and the purport of the whole pleadings

2. Judgment on the plaintiff's assertion

A. The plaintiff's assertion

The instant claim is a commodity price claim supplied by Nonparty 2 Company in connection with the business of Nonparty 1 Company. The Defendant acquired all business related to the business sector of Nonparty 1 Company through the instant transfer contract, and the Plaintiff acquired the instant claim from Nonparty 2 Company. As such, the Defendant, who advertised Nonparty 1 Company’s acquisition of the obligation related to the business sector, is liable to pay to the Plaintiff KRW 270 million, the amount of credit of this case, and delay damages.

B. Determination on the responsibility of a transferee of business

According to the above facts, the claim of this case is a commodity price claim supplied by the non-party 2 to the non-party 1 corporation in relation to the business of the non-party 1 corporation, and at the time the non-party 2 transferred the claim of this case to the plaintiff and notified the non-party 1 corporation of the above transfer, the above claim amount was KRW 212,634,846, and the plaintiff expressed his/her intention to consent to the acquisition of the above amount. The defendant takes over all the business related to the business of the non-party 1 corporation through the transfer contract of this case, and advertised this fact through the electronic publication system of the Financial Supervisory Service. Thus, according to Article 44 of the Commercial Act, the defendant is liable to pay the non-party 2 the claim of this case to the non-party 2.

However, according to Article 44 of the Commercial Act, the debt owed by the non-party 1 corporation as the debtor of the claim of this case and the debt owed by the defendant to the non-party 2 corporation under the same economic purpose is extinguished due to repayment, etc. of one debt. The defendant's debt is a separate debt which differs from the debt of the non-party 1 corporation and legally causes, and it cannot be viewed that it is dependent upon the non-party 1 corporation's debt in its nature. Thus, it cannot be concluded that the transfer of the claim of this case against the non-party 1 corporation is naturally accompanied by the defendant's debt (see Supreme Court Decision 2005Da6579, Jan. 18, 2008). The base date of the transfer of the asset and the debt between the non-party 1 corporation and the defendant is the non-party 2 corporation on July 12, 2005 and the non-party 4 corporation on the transfer of the claim of this case to the plaintiff under the above Article 205 of the Commercial Act.

3. Conclusion

If so, the plaintiff's claim of this case is dismissed due to the lack of reason, and the judgment of the court of first instance is unfair with different conclusions, so the judgment of the court of first instance is revoked, and all of the plaintiff's claim including the extended claim in the

Meanwhile, according to the judgment of the court of first instance on May 11, 2007, the defendant paid to the plaintiff KRW 21,015,896 on May 11, 2007, and KRW 212,98,946 on June 11, 2007, and the provisional execution declaration of the court of first instance was revoked at the court of first instance and became null and void due to this judgment. As such, the plaintiff is obligated to pay the defendant the amount of KRW 234,014,842, and KRW 21,015,896 among them, from May 12, 2007, from June 12, 2007 to June 12, 2007, as it is deemed reasonable to dispute over the existence and scope of the obligation to return provisional payment from the date following the judgment of the court of first instance to the date of second instance on February 19, 209.

Judges Choi Jae-sik (Presiding Judge)