○○ Stock Company’s Bankruptcy Trustee ○

Defendant 1 Co., Ltd. and 1 (Law Firm Gyeong & Yang, Attorney Kim Yong-sik, Counsel for the defendant-appellant)

November 8, 2007

1. Of the instant lawsuit, the part of the claim for denial of the sales contract as of May 13, 2005 between the Defendants on each of the real estate listed in the separate sheet shall be dismissed.

2. The plaintiff's remaining main claims against the defendants are all dismissed.

3. Defendant 2’s agricultural partnership shall pay to the Plaintiff 4,10,000,000 won with 5% interest per annum from January 14, 2002 to November 8, 2007, and 20% interest per annum from the next day to the day of full payment.

4. As to each real estate listed in the separate sheet:

A. Revocation of a sales contract concluded on May 13, 2005 between Defendant 2 and Defendant 1 Co., Ltd.;

B. Defendant 1 Co., Ltd. shall implement the procedure for registration of cancellation of each transfer of ownership, which was completed on May 13, 2005 by the receipt No. 19604, to Defendant 2’s farming association corporation.

5. The plaintiff's remaining conjunctive claims against the defendant 2 were dismissed.

6. The costs of lawsuit shall be borne by each person;

7. Paragraph 3 can be provisionally executed.

The primary purport of claim: As to each real estate listed in the separate sheet (hereinafter “instant land”), the Plaintiff and Defendant 2’s agricultural partnership denies each sales contract concluded on December 18, 2001 between the sales contract and the Defendants, which was concluded on May 13, 2005, and the Plaintiff. As to the instant land, Defendant 2’s agricultural partnership completed on December 21, 2001 as the receipt No. 34719 of the Daejeon District Court Seosan Branch Office, Defendant 1 followed each transfer of ownership, each transfer of ownership, and each cancellation registration procedure completed on May 13, 2005 as the receipt of No. 19604 on May 13, 2005.

Preliminary Claim: Section 4 of the Disposition and Section 2 of the defendant 2 shall pay to the plaintiff 4,100,000,000 won with 5% interest per annum from December 18, 2001 until the delivery date of a copy of the application for modification of the claim and the cause of the claim of this case, and 20% interest per annum from the next day to the day of full payment.

1. Basic facts

A. Before bankruptcy, ○○○ Co., Ltd. received a successful bid in the real estate auction procedure, and paid the successful bid price on December 2, 199, and received a registration of ownership transfer on the 3th of the same month.

B. On December 18, 2001, ○○ Co., Ltd. sold the instant land to Defendant 2 agricultural partnership for KRW 4.1 billion (hereinafter “the instant land”). As to each land indicated in the attached list 1 through 17, and 19 among them, the Daejeon District Court’s Seosan Branch No. 34719, Dec. 21, 2001; as to each land indicated in the attached list 18, and 20 as to each land indicated in the attached list 18, and 1138, Jan. 14, 202; and each ownership transfer registration (hereinafter “the instant first transfer registration”) was completed.

C. On December 11, 2002, Defendant 2 entered into a contract to establish the right to collateral security with respect to the land of this case with Nonparty 1 Co., Ltd. (hereinafter “instant right to collateral security”) with the maximum debt amount of KRW 8 billion, and with the debtor ○○ Co., Ltd. on the 12th of the same month. On March 5, 2003, Defendant 2 entered into a contract to establish the right to collateral security with Nonparty 2 with each other on the said land at KRW 1.5 billion with the debtor 2, and each other on the same day (after this, Nonparty 1 Co., Ltd. 5, May 23, 2003, and Nonparty 2 transferred each of the above right to collateral security to Nonparty 7, March 26, 2004, respectively).

D. Meanwhile, on November 22, 2004, Nonparty 2, a creditor of ○○ Stock Company, filed an application for adjudication of bankruptcy with ○○ Stock Company, and ○○ Stock Company was declared bankrupt on March 4, 2005, Suwon District Court No. 2004Hahap4 on March 4, 2005. On the same day, the Plaintiff was appointed as a trustee in bankruptcy of ○○ Stock Company.

E. On May 13, 2005, Defendant 2 sold the instant land to Defendant 1 Co., Ltd. (hereinafter “instant second sale”). On May 13, 2005, Daejeon District Court issued each ownership transfer registration (hereinafter “second transfer registration”) under the receipt of No. 19604 on May 13, 2005, pursuant to the Daejeon District Court Seosan Branch Office No. 19604.

F. The non-party 5 corporation transferred the instant right to collateral security from the non-party 1 corporation filed an application for voluntary auction on the instant land with the Daejeon District Court Branch, and received a decision to commence auction as of August 24, 2005 by the above court around 2005ta8380, and the said auction is currently in progress.

【Ground of recognition】 The fact that there is no dispute, entry of Gap 1 through 3, 6, and 8 (including each number), and the purport before oral argument

2. Judgment on the main claim

A. The parties' assertion

(1) The plaintiff's assertion

Defendant 2: (a) purchased the instant land from ○○ Co., Ltd. for the first sale and completed the first transfer registration, but did not pay the purchase price at all; (b) sold the said land to Defendant 1 Co., Ltd. for the second sale; and (c) was declared bankrupt after the first transfer registration; (b) each of the above sales was known by ○○ Co., Ltd. to prejudice bankruptcy creditors; and (c) as it is subject to avoidance under Article 64 Subparag. 1 of the former Bankruptcy Act, the Plaintiff, a trustee in bankruptcy of ○○ Co., Ltd., denies each of the above sales contracts, and sought the cancellation of each of the above transfer registration against the Defendants.

(2) The defendants' assertion

Defendant 2’s purchase of this case’s land from ○○ Co., Ltd. is a ○○ Co., Ltd.’s purchase of the instant land from ○○ Co., Ltd. on or before December 18, 2001, ○○ Co., Ltd., which was declared bankrupt on March 4, 2005. At that time, ○○ Co., Ltd. did not undergo special management difficulties, and at the time, Defendant 2 could not have anticipated that ○ Co., Ltd. will become bankrupt at the time of the said purchase. Therefore, the instant sales contract between ○ Co., Ltd. and Defendant 2 Co., Ltd. based on the instant first sales contract between ○ Co., Ltd. and Defendant 1 Co., Ltd. and the instant second sales contract between Defendant 2 Co., Ltd. and Defendant 1 Co., Ltd., which was concluded after

B. Determination on the claim for denial of the second sales contract of this case

(1) The Plaintiff asserted that Defendant 2’s selling of the pertinent land to Defendant 1 Co., Ltd. by the second sale of the instant land to Defendant 1 is also a fraudulent act detrimental to ○○ Stock Company’s bankruptcy creditors, and sought a declaration of denial of the said contract.

(2) However, Article 64 subparagraph 1 of the former Bankruptcy Act subject to the right to set aside is only a legal act between the bankrupt and the beneficiary, and a legal act between the beneficiary and the subsequent purchaser cannot be subject to the said right to set aside. Therefore, the part on the claim for set aside against the second sales contract of this case among the lawsuit of this case is unlawful.

C. Determination as to the claim for denial of the First Sales Contract of this case and the claim for cancellation of each registration of the First and Second Transfer Registration of this case

(1) Requirements for exercising the avoidance power

"Act of the bankrupt, which is an act subject to avoidance as stipulated in Article 64 subparagraph 1 of the former Bankruptcy Act, knowing that the bankrupt would prejudice the bankruptcy creditor" not only the so-called fraudulent act which absolutely reduces the general property of the bankrupt who is a joint security of all creditors, but also the so-called biased act which affects the bankrupt's property relationship with a specific creditor, such as repayment or provision of security to a specific creditor, which is favorable to a specific bankruptcy creditor and is contrary to the fairness with other bankruptcy creditors, but also it is necessary to know that the bankrupt will harm the bankruptcy creditor as a subjective requirement in order to be recognized as the above intentional person."

(2) Facts of recognition

The following facts may be recognized as either of the parties to a dispute, or as a whole by considering the overall purport of the arguments in the facts and the statements in Gap 1, 4, 5, and 8 (including each number):

(A) Defendant 2’s agricultural partnership was established on December 17, 2001, and purchased the instant land from ○○ Co., Ltd. on the 18th of the same month following the following day. Defendant 2 was declared bankrupt on March 4, 2005 when Defendant 2 was not paid the purchase price of the said land at full by Defendant 2’s agricultural partnership. Defendant 2 sold the said land to Defendant 1 Co., Ltd. on May 13, 2005, which was the day immediately preceding May 13, 2005. Nonparty 9 filed a lawsuit against Defendant 2, etc. seeking the cancellation of the registration of transfer registration of Article 1 of the instant land on November 25, 2003 at the Seosan District Court 2003Ga1228, and Defendant 2 sold the said land to Defendant 1 Co., Ltd. during the said lawsuit.

(B) At the time of the bankruptcy of ○○ Stock Company, Nonparty 10, the representative director at the time of the incorporation of Defendant 2, was the representative director at the time of Nonparty 1’s establishment, and thereafter Nonparty 11, the father of Nonparty 10, was appointed as the representative director of Defendant 2 on March 22, 2005. The above Nonparty 11 was also appointed as the representative director at the time of incorporation of Defendant 1 Stock Company.

(C) The ○○ Co., Ltd. is Nonparty 8, the actual owner of the ○○ Co., Ltd...., from around 1999, purchased convertible bonds issued by ○○ Co., Ltd. from around 199 to KRW 8, and thereafter, the ○ Co., Ltd., purchased convertible bonds through capital increase with capital increase after investing them in an affiliate through capital increase with capital increase. The ○ Co., Ltd., in the process of using the purchased convertible bonds to be distributed to ○ Co., Ltd. for private purposes (the ○ Co., Ltd. is subject to criminal punishment), and the ○ Co.,

(D) From approximately 140 billion won in 2000 to approximately 28.7 billion won in 2001, approximately 23.7 billion in 2002, about 2002, and about 40 billion in 2003. The liabilities have been reduced to approximately KRW 1,42.9 billion in 50 billion in 46.4 billion in 41.1 billion in 2000, but the capital of ○○ Company continued to increase the amount of approximately 201.2 billion in 2000 to approximately 2.9 billion in 2000 in 200, approximately 21.7 billion in 2002, approximately 22.8 billion in 2003, approximately 201.3 billion in net income in 2018, and about 201.4 billion in 2008.

(3) Determination

This paper examines whether ○○ Stock Company entered into a sales contract of this case with Defendant 2’s agricultural partnership while knowing that it would prejudice bankruptcy creditors.

According to the above facts, at the time of the above sales contract, the ○○ Stock Company was estimated to reduce its capital, and it is confirmed that the financial status of the ○○ Stock Company has deteriorated due to the utilization of the company’s funds by Nonparty 8, but this alone is insufficient to recognize that the management status of the ○○ Stock Company has deteriorated to the extent that the bankruptcy or bankruptcy would have been anticipated at the time of the above sales contract. In addition, considering that the bankruptcy petition for the ○○ Stock Company was filed after three years after the above sales contract, the above facts alone are insufficient to deem that the ○ Stock Company was subject to future bankruptcy at the time of the above sales contract and that in this case, it was insufficient to deem that the ○

Therefore, the plaintiff's claim for this part is without merit.

3. Determination on the conjunctive claim

A. Determination on the cause of the claim

(1) The instant land was sold to Defendant 2 to Defendant 2 for KRW 4.1 billion. Defendant 2’s agricultural partnership sold the said land, which is the only property, to Defendant 1 corporation, under the circumstance that ○○ Stock Company was liable for the payment of the purchase-price at all, not paying the said purchase-price. There is no dispute between the parties that the said land was sold to Defendant 1.

(2) Therefore, barring any special circumstances, Defendant 2 is obligated to pay to the Plaintiff the amount of KRW 4.1 billion and the obligation to pay the purchase price of KRW 4.1 billion to the Plaintiff from January 14, 2002, when the first transfer registration of this case was completed, to November 5, 2007, the Plaintiff’s application for purport of claim and change of cause of claim, which was served on the Defendants, 5% per annum under the Civil Act and 20% per annum under the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings from the next day to the day of full payment (the Plaintiff claimed interest after December 18, 201, which is the date of the first sale contract of this case, but the Plaintiff’s obligation to pay interest after December 18, 201, the obligation to pay the Plaintiff’s above transfer registration and the obligation to pay the purchase price of Defendant 2 to the Plaintiff does not arise. Thus, Defendant 2 and Defendant 2 were not obligated to cancel the registration of the transfer registration of this case.

B. Determination of the defendants' assertion

(1) Determination as to the allegation of offset

(A) The Defendants asserted that, upon Defendant 2’s request, Defendant 2 established the instant right to collateral security against Nonparty 1 Co., Ltd. in order to guarantee and secure the payment obligation of KRW 6.12 million against Nonparty 1 Co., Ltd., the amount of KRW 6.120 million. However, Defendant 2’s right to collateral security against ○○ Co., Ltd. and the instant right to collateral security against ○○ Co., Ltd. were not repaid to Nonparty 1 Co., Ltd., and Nonparty 5 Co., Ltd., who received the said right to collateral security from Nonparty 1 Co., Ltd., filed an application for voluntary auction against ○ Co., Ltd., and decided to commence the auction. Defendant 2 acquired the right to prior right to collateral security against ○○ Co., Ltd., and the said right to collateral security was entirely extinguished by offsetting the payment obligation with automatic bond against ○○ Co., Ltd., and thus, Defendant 2’s claim for the instant right to collateral security against Defendant 1 Co., Ltd. is without merit.

(B) On December 12, 2002, Defendant 2: (a) created the instant right to collateral security with respect to the instant land to Nonparty 1 Co., Ltd.; and (b) Nonparty 5 Co., Ltd., which transferred the said right to collateral security from Nonparty 1 Co., Ltd., requested a voluntary auction on the said land; and (b) currently conducting auction on the said land; and (c) according to the evidence evidence No. 8, Defendant 2 Co., Ltd. sent to the Plaintiff a certificate of content that Defendant 2 would offset the Plaintiff’s claim for the purchase price against the Plaintiff’s equal amount with the Plaintiff’s right to collateral security on April 26, 2006, and then deliver it to the Plaintiff at that time.

However, each of the above facts and evidence Nos. 1 through 7 (including each number) alone purchased shares of ○○ Co., Ltd. from Nonparty 1 Co., Ltd. in the amount of KRW 6.12,100,000,000, and bears the payment obligation. It is insufficient to recognize that Defendant 2 Co., Ltd. jointly and severally guaranteed the above obligation to Nonparty 1 Co., Ltd. in order to secure the above obligation, and there is no other evidence to acknowledge it. Rather, according to the evidence No. 1 of No. 7-1, Nonparty 1 Co., Ltd., on August 12, 2002, sold shares of Nonparty 4 Co., Ltd. (ordinary shares 2,316,270, registered priority shares 80,220,000) to Nonparty 3 Co., Ltd. in the amount of KRW 12,367,385,100,000, Defendant 2 bears the above portion of the purchase price to Nonparty 1 Co.

(2) Determination as to the assertion of denial of fraudulent act by the instant collateral security

(A) Next, the Defendants asserted that, at the time of the second sales contract, the said sales contract does not constitute a fraudulent act in relation to the Plaintiff, since the instant land was established as a collateral of the maximum debt amount exceeding the value of the instant land.

(B) If a security right has been established on the object transferred by the debtor, among the subject matter, the property which is attributable to the common creditors' joint collateral is limited to the remaining part after deducting the secured claim amount. If the secured claim amount exceeds the price of the subject matter, the transfer of the subject matter cannot be deemed a fraudulent act.

As to the instant case, the price of the sale of the instant land by ○○ Co., Ltd. to Defendant 2 to the Defendant 2 farming association corporation is KRW 4.1 billion. At the time of the second sale of the instant land, the said land was established with the maximum debt amount of KRW 8 billion exceeding the said sale price. However, unless there is no assertion or proof as to the market price of the instant land and the amount of the claim secured by the said mortgage at the time of the second sale, the said recognition alone is insufficient to recognize that the amount of the claim secured by the said right exceeds the value of the said land. The Defendants’ assertion on this part is without merit, as there is no other evidence to acknowledge otherwise.

4. Conclusion

Therefore, the part of the claim for denial of the second sale contract of this case among the lawsuit of this case is unlawful and dismissed. The plaintiff's remaining main claim is dismissed as it is without merit. The plaintiff's conjunctive claim is accepted within the scope of the above recognition, and the remainder of the conjunctive claim is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment List omitted]

Judges Kim Jae-ho (Presiding Judge)