In cases where the holder of the right to separate settlement exercises the right to separate settlement without resorting to bankruptcy procedures, whether the report and investigation procedures prescribed by the Bankruptcy Act should be followed (negative)

A person who has any lien, pledge, mortgage, or right to lease on a deposit basis, which exists on the property that belongs to the bankrupt estate, shall naturally have the right to separation on the property that is the subject matter thereof, and the right to separation may be exercised without resorting to bankruptcy procedures. Article 201(2) of the Bankruptcy Act provides for cases where the holder of the right to separate settlement is unable to receive the full amount of claims by the exercise of the right to separation, and files a report on claims to be distributed to bankruptcy creditors. As such, the right to separate settlement is not necessarily entitled to exercise

Articles 84, 86, 201(2), and 234 of the Bankruptcy Act

[Plaintiff-Appellant] Lisung Franchi Co., Ltd. Hawon

Korea Guarantee Insurance Corporation

Busan High Court Decision 95Na12491 delivered on March 29, 1996

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

A person who has any right of retention, pledge, mortgage, or right of lease on a property that belongs to the bankrupt estate shall naturally have the right of separation on such property, and the right of separation may be exercised without resorting to bankruptcy procedures (Articles 84 and 86 of the Bankruptcy Act). Article 201(2) of the Bankruptcy Act provides for cases where the holder of the right of separation is unable to receive the full amount of claims through the exercise of the right of separation, and files a report on claims to participate in bankruptcy procedures and receive the dividends as bankruptcy creditors. Thus, the right of separation, such as bankruptcy claims, shall also be confirmed through the procedures of report, inspection, and the right of separation shall be exercised without resorting to the management, realization, and distribution of the bankruptcy estate.

Therefore, it is legitimate that the Defendant received the principal and interest by exercising the right of pledge on the claim for time deposit in this case, which the Defendant had the right of pledge, as the exercise of the right of separation. Even if the Defendant, at the time of reporting the claim, reported as the claim that cannot be repaid by the exercise of the right of separation, the amount obtained by deducting only the principal and interest from his own claim, is excluded from the distribution unless it is clearly explained that the claim cannot be repaid again by the disposition of the right of separation in the distribution stage (Article 234 of the Bankruptcy Act). Therefore, it cannot be deemed that any damage to the bankrupt estate was caused by the above report, and there is no error

Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Jong-soo (Presiding Justice)