Whether an act of a debtor’s gratuitous transfer of his/her own property to a third party for the purpose of evading compulsory execution constitutes a fraudulent act in relation to other bankruptcy creditors (affirmative), and in cases where a third party collects his/her claim by transfer and pays the money to the debtor, whether the amount equivalent to the money should be deducted within the scope of restitution or return of the value (negative)

The debtor's act of transferring his/her own property to a third party only in fact with the intention of evading compulsory execution becomes a fraudulent act in relation to other bankruptcy creditors, and even if the third party collects the debt and provides the debtor with the money, the amount equivalent to the amount shall not be deducted within the scope of restitution or return of value.

Article 391 subparag. 1 of the Debtor Rehabilitation and Bankruptcy Act

The plaintiff in bankruptcy by the non-party 2, who is the taking over of the lawsuit by the non-party 1

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

Seoul High Court Decision 2009Na13042 decided December 16, 2011

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

The grounds of appeal are examined.

The debtor's act of transferring his/her own property to a third party only in fact with the intention of evading compulsory execution becomes a fraudulent act in relation to other bankruptcy creditors, and even if the third party collects the debt and provides the debtor with the money, the amount equivalent to the amount shall not be deducted within the scope of restitution or return of value.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the record, the lower court, based on its reasoning, is acceptable to have accepted the Plaintiff’s claim on the ground that Nonparty 2’s transfer of the claim of this case, which is almost the exclusive active property for the purpose of avoiding compulsory execution from creditors, to the Defendant without any claim or debt relationship, constitutes an act detrimental to bankruptcy creditors. In so doing, it did not err by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules, by exceeding the bounds of the principle of free evaluation of evidence, or by misapprehending

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 Poe-young (Presiding Justice)