(a) the significance and criteria for determining the “accomforcing net” under Article 38 subparag. 5 of the Company Reorganization Act;

(b) The case reversing the original decision that the company whose business and production activities are suspended due to excessive debts has no evidence to prove that it had the revenue source necessary for the reorganization of the company;

A. In Article 38 subparagraph 5 of the Company Reorganization Act, the term "the provisional liquidation network" means the possibility of continuously earning profits from the management of the company in accordance with the reorganization plan and thereby, it refers to the possibility of independent company beyond the financial failure due to repayment of debts, and of conducting industrial activities. The most important factor in determining whether or not such reorganization has been net is the corporate profit-making power, and its profit-making power is determined based on whether the operating fund is secured, whether the production and supply ability and demand is secured, and whether the rational management and management system is established.

(b) The case reversing the order of the court below that the company whose business and production activities are suspended due to excessive debts has no evidence to deem that it had earnings necessary for the rehabilitation of the company;

Article 38 subparagraph 5 of the Company Reorganization Act

Korea Exchange Bank, Inc.

Meteorological Electronic Corporation

Daegu High Court Order 92Ra8 dated April 30, 1992

The order of the court below is reversed and the case is remanded to the Daegu High Court.

The grounds of reappeal are examined.

1. The purpose of corporate reorganization is to reorganize the business of a company which faces distress due to financial difficulties, but which is likely to make a rehabilitation, that is, the restructuring network is essential for the commencement of reorganization proceedings. As such, Article 38 subparagraph 5 of the Company Reorganization Act provides that the time when the reorganization is not possible is the cause for dismissing an application for commencement of reorganization proceedings.

The possibility of reorganization above refers to the possibility that a company may engage in an industrial activity as an independent company beyond the financial distress situation by continuously obtaining profits from its management according to the reorganization program, thereby paying its debts, and the most important factor in determining whether or not such reorganization is a profit-making power is determined by the acquisition of operating funds, whether or not the production and supply ability and demand are secured, and whether or not the reasonable management and management system is established.

2. According to the records, the applicant company is established on Apr. 22, 1981 and has major industrial contents to manufacture and sell electronic sound equipment. (1) The applicant company actually holds all stocks (161.50 million won in capital scale) and is in the status of suspension of profit and production activities due to complex action of various factors, such as poor business management and failure of management policy, profit and loss of business management policy, deterioration of labor-management regulations, vulnerability in financial structure, etc. (2) The applicant company's operating profit and loss should be 2.5 billion won in total amount of assets as of Nov. 30, 191 and 168.5 billion won in total, and liabilities should be 2.6 billion won in total, and its operating profit and loss should be 5 billion won in total, and its operating profit and loss should be 2.5 billion won in total, more than 3 billion won in total, and its operating profit and loss should be 500 million won in total, more than 2.5 billion won in total amount of assets.

3. However, according to the reasoning of the order of the court below, the court below held that (A) all employees of the applicant company agree to refrain from all collective actions that obstruct management normalization in the future, at least two years in the future, to equal pay; (d) give up all allowances other than basic pay and consent to the postponement of payment until the management of the applicant company is normal track; and (B) the applicant company's financial structure is stable, as the repayment of principal and interest is temporarily suspended and it is no longer necessary to borrow malicious short-term funds when the company reorganization procedure is commenced in the future, and (c) if normal operation is conducted in the future, it seems possible to open the domestic market of the applicant company with the main audio company's order increase, and (d) if the applicant company seeks management rationalization at the same time by selling part of its facilities invested in the applicant company's capital, it is likely to improve the management structure; and (e) if the applicant company takes more than that of the applicant company's bad debt as a whole, it is more likely for the majority of the creditors to take account of the claim amount.

4. However, among the various requirements required for the realization of profits and losses prescribed in the cost and revenue estimates presented by the applicant company, the partial sale of an existing Seongdong Factory cannot be found in the records unless there is any data to acknowledge the possibility of sale or financing of operating funds, and there is no other data to verify the possibility of sale or sale. Moreover, since the Japanese Weather and Electronic Co., Ltd., which actually holds the entire shares of the applicant company, is in progress due to bankruptcy, the operation financing capacity of the applicant company is operated, and the re-appellant, who is the main bank, does not consent to the commencement of reorganization proceedings. Second, according to the above investigation report on health as to whether there is about 40 current production employees with production technology ability, it is hard to find that there is no reasonable and efficient order-based and efficient domestic market-based conversion management system, such as the time of the original decision, and there is no sufficient data to recognize that there is no new domestic market-based conversion management system with respect to the main domestic market-based conversion business demand.

In addition, the reason that the court below's entry into the liquidation procedures cited by the reason that most of the claims need to be treated as bad debt or have a significant impact on the local economy is the reason that the reorganization decision is not directly related to the company's profit.

In addition, there is no evidence that the applicant company, whose business and production activities are suspended due to excessive debts, has the revenue ability necessary for the rehabilitation of the company, so it shall be deemed that there is no possibility of liquidation in such a situation.

Ultimately, the order of the court below that judged otherwise as the possibility of reorganization is erroneous in violation of Article 38 subparagraph 5 of the Company Reorganization Act, which affected the conclusion of the judgment, and the grounds for appeal assigning this error are with merit.

5. Accordingly, the order of the court below is reversed and remanded. It is so decided as per Disposition by the assent of all participating Justices.