[1] In a case where a collection deferment provision is provided in the rehabilitation plan for a tax claim, whether an increased amount may be imposed on the deferred delinquent amount, etc. (negative)

[2] Where deferment of collection is determined in the rehabilitation plan after the deadline for payment of delinquent amount expired, whether the decision to authorize such rehabilitation plan is null and void in violation of the former National Tax Collection Act (negative)

[1] Claims, such as taxes, under Article 140(2) and (3) of the Debtor Rehabilitation and Bankruptcy Act belong to rehabilitation claims subject to the change of rights under Article 251 of the same Act. As such, the scope of obligations that a debtor is obliged to pay with respect to such claims, such as taxes, after authorization is granted for the rehabilitation plan, shall be determined according to the contents of the approved rehabilitation plan, as in the same way as other general rehabilitation claims are concerned. Therefore, insofar as a collection deferment is stipulated in the rehabilitation plan regarding claims such as taxes, the increased amount of taxes may not be imposed as prescribed in the rehabilitation plan, and separate provisions of the former National Tax Collection Act concerning the deferment of collection (amended by Act No. 8832 of Dec. 31, 2007) or the head of a tax office, etc. do not take effect upon the deferment of collection

[2] Even if Article 19(4) of the former National Tax Collection Act (amended by Act No. 8832 of Dec. 31, 2007) provides only the effect of deferment of collection when the collection is deferred under the provisions of Article 140 of the Debtor Rehabilitation and Bankruptcy Act after a taxpayer received a notice or demand for the payment of tax, the validity of deferment of collection under the provisions of Article 140 of the former National Tax Collection Act (amended by Act No. 8832 of Dec. 31, 2007), it does not take effect as the result of deferment of collection under the above provisions. Thus, the rehabilitation plan can determine the deferment of collection even if the time limit for the payment of delinquent amount is over, and the amount and time limit for the claims such as taxes to be borne by the debtor according to the authorization of the rehabilitation plan is determined. Therefore, the decision of deferment of collection is not illegal

[1] Articles 140(2) and (3), and 251 of the Debtor Rehabilitation and Bankruptcy Act; Article 19(4) of the former National Tax Collection Act (amended by Act No. 8832 of Dec. 31, 2007) / [2] Articles 140(2) and (3), and 251 of the Debtor Rehabilitation and Bankruptcy Act; Article 19(4) of the former National Tax Collection Act (amended by Act No. 8832 of Dec. 31, 2007)

Republic of Korea (Attorney Kim Yong-sik, Counsel for defendant-appellant)

Non-party Administrator of Debtor Mobilization Development Corporation

Seoul High Court Order 2007Ra1221 dated November 16, 2007

The reappeal is dismissed.

The grounds of reappeal are examined.

Article 140(2) and (3) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”) provides that when the collection of taxes, etc. is deferred for a period of not more than three years or the realization of property under a disposition on default is deferred with respect to a claim for tax, etc., the rehabilitation plan shall hear the opinion of the person who is authorized to collect taxes, and the head of a tax office shall determine the deferment of the collection of taxes or realization of property under a disposition on default for a period exceeding three years, or shall obtain the consent of the person who is authorized to collect taxes, if he/she determines the succession of debts, tax reduction or exemption, or other matters affecting other rights. On the other hand, the former National Tax Collection Act (amended by Act No. 8832, Dec. 31, 2007; hereinafter “former National Tax Collection Act”) and the former Enforcement Decree of the National Tax Collection Act (amended by Presidential Decree No. 20623, Feb. 22, 2008; hereinafter “former Enforcement Decree”) provides that a taxpayer may again notify or pay national taxes in installments within 13 months.

As above, the Debtor Rehabilitation Act does not require the requirements or procedures stipulated in the former National Tax Collection Act, etc. when prescribing in the rehabilitation plan concerning the deferment of collection, etc. of claims for taxes, etc.; the period of deferment of collection, etc. may also be determined after hearing the opinions of the persons with authority to collect taxes for not more than three years. In the event of deferment of collection, the scope of deferment of collection of claims for taxes, etc. is extended rather than the provisions of the former National Tax Collection Act and the Enforcement Decree of the same Act, such as where the debtor applies for commencement of rehabilitation procedures, such as not asking whether the period for the payment of the principal tax and additional dues has expired. In addition, when the debtor applies for the commencement of rehabilitation procedures, there are many cases where the period for the repayment of claims for taxes, etc. already exceeds the period for the collection of the principal tax and additional dues, and it is difficult to obtain authorization of the rehabilitation plan prior to the expiration of the period for the collection of the amount in arrears, and if it is impossible to determine in the rehabilitation plan after the period for the collection of the amount in arrears, the debtor’s right to collect taxes.

In addition, Article 251 of the Debtor Rehabilitation Act provides that a debtor shall be exempted from liability for all rehabilitation claims and rehabilitation security rights except for the rights recognized under the provisions of the rehabilitation plan or the provisions of the above Act when the approval of the rehabilitation plan is decided. Since claims, such as taxes, etc. provided for in Article 140(2) and (3) of the above Act belong to rehabilitation claims subject to the change of rights provided for in Article 251 of the above Act, the scope of the debtor's obligation to pay for such claims, such as taxes, etc. after the authorization of the rehabilitation plan is granted shall be determined according to the contents of the approved rehabilitation plan, as in other general rehabilitation claims. Therefore, as long as the rehabilitation plan provides for the deferment of collection of claims, additional dues may not be imposed on the deferred amount of delinquent taxes, etc. as prescribed in the rehabilitation plan, and it does not take effect separately according to the provisions of the former National Tax Collection Act or the deferment of collection such as the head of a tax office, etc. The current National Tax Collection Act (amended by Act No. 9265, Dec. 26, 2008) provides for the grace period after the amendment.

In light of the above legal principles, even if the validity of deferment of collection at the time of deferment of collection under the provisions of Article 140 of the Debtor Rehabilitation Act exists after the taxpayer received notification or demand of tax payment, the validity of deferment of collection under the provisions of Article 19(4) of the former National Tax Collection Act (amended by Act No. 140), it does not take effect in the rehabilitation plan, which is approved only under the above provisions. Thus, even if the time limit for the payment of delinquent amount is over, the rehabilitation plan can determine deferment of collection, and the amount and time limit for the claims, such as taxes to be borne by the debtor according to the authorization of the rehabilitation plan is determined. Accordingly, it is not deemed unlawful or invalid on the ground that the deferment of collection was determined after the time limit for payment of delinquent

Therefore, if the rehabilitation plan, the collection deferment of which was determined by the court below, was authorized after the payment deadline for the delinquent amount, the re-appellant cannot collect increased tax based on Article 19(2) of the former National Tax Collection Act during the period of deferment of collection.

Therefore, the reappeal's reappeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Ji-hyung (Presiding Justice)