[1] The purport that Article 240 (2) of the former Company Reorganization Act provides that the reorganization plan shall not affect any extent of liability of the guarantor, etc.

[2] Where the reorganization plan of the reorganization company which is a primary debtor provides for a conversion of investment in lieu of satisfaction of the reorganization claim, the scope of extinction of the guaranteed obligation of the reorganization company guarantor

[1] In order to achieve the purpose of reorganization and reorganization of a company faced with insolvency due to financial difficulties in public interest, the company's reorganization procedure is to create conditions under which the company may continue to enjoy profits from its business by reducing its liabilities or responsibilities that the company bears in order to achieve the purpose of reorganization and reorganization. As such, the company's obligations owed to reorganization creditors by a third party, such as a guarantor, etc. shall be subject to broad changes such as exemption, but it is completely irrelevant to the original purpose of the company reorganization procedure to achieve the company reorganization procedure; however, the mitigation of obligations owed to reorganization creditors by a third party, such as a guarantor, etc., is entirely irrelevant to the original purpose of the company reorganization procedure to achieve the company reorganization procedure; and if the reorganization plan is extinguished or reduced as well as the rights held by a guarantor, etc., in addition to the extinguishment or reduction of the company's rights by the reorganization plan, this would result in forcing the reorganization reorganization and reorganization of the company beyond the extent directly required by the reorganization reorganization of the company, which may result in undermining the company reorganization plan.

[2] Where a reorganization plan of a reorganization company, which is a primary debtor, decides to conduct a conversion of investment in lieu of satisfaction of the reorganization claim, the guaranteed debt of the reorganization company guarantor shall be deemed to have been repaid the amount of debt equivalent to the amount of the reorganization claim, within the limit of the amount of the reorganization claim assessed at the market price of new stocks acquired by the reorganization creditor as of the effective date of

[1] Article 1 of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see Article 1 of the current Debtor Rehabilitation and Bankruptcy Act), Article 240 (2) (see Article 250 (2) of the current Debtor Rehabilitation and Bankruptcy Act) / [2] Article 222 (1) of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see Article 206 (1) of the current Debtor Rehabilitation and Bankruptcy Act), Article 240 (2) (see Article 250 (2) of the current Debtor Rehabilitation and Bankruptcy Act), Articles 428 and 466 of the Civil Act

[1] Supreme Court Decision 2005Da48482 Decided November 10, 2005 (Gong2005Ha, 1967) / [2] Supreme Court Decision 2002Da12703, 12710 Decided January 10, 2003 (Gong2003Sang, 612) Supreme Court Decision 2009Da47739 Decided November 12, 2009 (Gong2009Ha, 2084), Supreme Court Decision 2009Da85830 Decided March 25, 2010 (Gong2010Sang, 801)

Korea Housing Guarantee Co., Ltd. (Law Firm Jeonwon, Attorneys Lee Do-ho et al., Counsel for the plaintiff-appellant)

Korea Land Trust Corporation

New CD-based Industry Co., Ltd. (Bae, Kim & Lee LLC et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2009Na63504 decided March 11, 2010

The appeal is dismissed. The costs of appeal are assessed against the Defendant joining the Defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the grounds of appeal Nos. 1 and 2 of the Kim & Lee LLC and the grounds of appeal No. 1 of the law firm Sejong

A. The existence of guarantee intention is a matter of the parties’ interpretation and fact-finding to be determined by comprehensively considering the motive and background of the parties involved in the transaction, the form and content of the involvement, the purpose of the parties’ transaction, the transaction practices, etc. (see Supreme Court Decisions 98Da39923, Dec. 8, 1998; 2004Da34134, Dec. 21, 2006, etc.).

Meanwhile, in a case where there is a difference between the parties regarding the interpretation of a contract and the interpretation of the parties expressed in the disposition document is at issue, the contents of the text, the motive and background leading up to the agreement, the purpose to be achieved by the agreement, the parties’ genuine intent, etc. shall be comprehensively considered, and it shall be reasonably interpreted in accordance with logical and empirical rules (see, e.g., Supreme Court Decision 94Da16601, Feb.

B. (1) According to the reasoning of the lower judgment and the reasoning of the first instance judgment partially accepted by the lower court, the lower court determined that each of the instant agreements concluded between the Defendant and the Defendant, in light of the following: (a) where the Defendant and the Defendant, as well as the Defendant’s Intervenor, did not perform the liquidation obligation against the Plaintiff, the Defendant would directly pay the Plaintiff the liquidation obligation; (b) as to trust property, only the trustee has exclusive disposal and management rights; and (c) as long as the sales revenue for trust business constitutes trust property, only the Defendant, who is the trustee, has exclusive disposal and management rights for sales revenue; and (b) as long as the sales revenue for trust business constitutes trust property, each of the instant agreements provides that the Defendant shall pay the Plaintiff’s debt to the Defendant with sales revenue, which is the property belonging to the Defendant; (c) in order to obtain the Plaintiff’s housing sales guarantee necessary for the apartment construction project at the request of the Defendant, the trustor, the Defendant, was not bound to conclude each of the instant agreements with the Plaintiff’s liquidation obligation to guarantee the Plaintiff’s repayment obligation within the limit acquired by the management of trust property.

(2) In light of the above legal principles and records, the above determination by the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to the existence of a surety intent, interpretation of a disposition document, etc. as otherwise alleged in the grounds of appeal, or inconsistent reasoning.

2. As to ground of appeal No. 2 by Law Firm Sejong

A. The company reorganization procedure is to create conditions under which a company may continuously enjoy profits from its business in a state where the company's liabilities or responsibilities are low to be borne by the company in order to achieve the purpose of proposing reorganization and re-resolution of the company faced with insolvency due to financial deficiencies in the needs of public interest. As such, the company's obligations to the reorganization creditors are subject to extensive changes such as exemption from liability, and it is nothing more than the original purpose of the company reorganization procedure to achieve the company reorganization procedure. However, to reduce obligations to the reorganization creditors such as the guarantor, etc., it is nothing more than the original purpose of the company reorganization plan to achieve the company reorganization procedure, and if the rights of the reorganization creditors such as the guarantor, etc. are extinguished or reduced as well as the rights of the company against the guarantor, etc. are equally extinguished or reduced by the reorganization plan, this would result in hindering the reorganization of the company beyond the direct necessary scope of reorganization and re-determination of the company, and it is also also not affected by Article 201 (20) of the former Company Reorganization Act (amended by Act No. 202848, Mar. 31, 200028).

B. According to the reasoning of the first instance judgment cited by the lower court, the lower court determined that the burden of loss incurred pursuant to the reorganization plan is more impartial and reasonable, and that the above provision should be applied only to the reorganization plan approved for the first time after the commencement of the reorganization procedure, and that the above provision should be applied not only to the guarantor who guaranteed the company's obligation before the commencement of the reorganization procedure, but also to the guarantor who guaranteed the reorganization obligation of the reorganization company after the commencement of the reorganization procedure.

In light of the above legal principles, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as argued in the Grounds for Appeal.

3. As to ground of appeal No. 3 by Law Firm Sejong

In a case where the reorganization plan of the reorganization company, which is a principal debtor, decides to conduct a conversion of investment in lieu of satisfaction of the reorganization claim, the surety obligation of the reorganization company shall be deemed to have been repaid the amount of debt equivalent to the appraised amount of the reorganization claim, within the limit of the amount of the reorganization claim to be paid in lieu of repayment through the conversion of investment after evaluating the market price of the new shares acquired by the reorganization creditor as of the date of entry into force of the issuance of new shares through the conversion of investment (see Supreme Court Decisions 2002Da12703, Jan. 10, 2003; 2009Da47739, Nov. 12, 2009).

According to the reasoning of the judgment below and the reasoning of the judgment of the court of first instance as partially admitted by the court below, the court below acknowledged the fact that the plaintiff paid 10,211,926,289 won out of the reorganization claim amount of 20,464,312,446 won in cash from the defendant joining the defendant pursuant to the plan to revise the reorganization plan, and that the defendant paid 10,252,386,157 won in lieu of the repayment of reorganization obligation in lieu of 3,242 shares in lieu of the payment of new shares in lieu of the payment of 3,242 shares in lieu of the payment of the liquidation obligation. The court below held that the defendant is liable to pay 7,249,314,940 won after deducting the amount already repaid from the amount of each reserved bond guaranteed by the agreement of this case, and that the defendant is liable to pay 10,252,386,157 won in lieu of payment of the liquidation claim amount of 10,3940,209

In light of the above legal principles and records, even if the defendant's defendant's payment of cash in accordance with the plan to revise the reorganization plan is considered, as long as 10,219,96,157 won (10,252,386,157 won - 32,420,000 won) out of the reorganization claim amount that the plaintiff would substitute for payment through debt-equity swap in relation to the defendant, the plaintiff has the right to receive payment from the defendant as the reserve amount guaranteed by the defendant within the scope of the above reorganization claim amount. Thus, the above judgment of the court below is just and acceptable, and there is no error of omission of judgment on the part of the defendant's payment in cash, and no error of incomplete deliberation, etc., as alleged in the grounds for appeal, such as omission of judgment on the portion of

4. Conclusion

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

Justices Park Il-young (Presiding Justice)