In calculating the value of securities in the company reorganization procedure, if the purpose of the security interest is unlisted stocks, if the assessment is conducted by applying the method of appraisal based on the net asset value of the value and the method of appraisal based on the value of the unlisted stocks, whether a guaranteed debt with little possibility of actual loss should also be considered as a

In calculating the value of securities under the company reorganization procedure, if the purpose of the security right is unlisted stocks, the value should be based on the market price at the time of the commencement of the reorganization procedure. Accordingly, if there is a normal example of transaction that properly reflects the objective exchange value, the value of the stocks should be assessed on the basis of the market price. However, if there is no such case of transaction, it is reasonable to conclude that any one of the methods of evaluation should be applied at all times in consideration of the application of different standards according to the purpose of each legislation. Furthermore, in applying the method of appraisal based on the net asset value among various methods of assessment, if there is a guaranteed liability owed by the relevant unlisted company, it is reasonable to evaluate the value of the stocks, which is the collateral, based on the net asset value calculated without regard to the debt if there is no possibility that it will lead to the result of actual damage, in light of the content of the principal obligation, the financial resources of the principal obligor, and all other circumstances.

Articles 124(2) (see current Article 141(4)), 177 (see current Article 90 of the Debtor Rehabilitation and Bankruptcy Act), 60 of the Inheritance Tax and Gift Tax Act, Article 54 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act

Korea Exchange Bank (Law Firm Spah, Attorneys Yu-hee et al., Counsel for the defendant-appellant)

Defendant (Law Firm Pacific, Attorneys Kim Man-man et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2004Na10536 delivered on March 2, 2005

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

The grounds of appeal are examined.

In calculating the value of securities under the company reorganization procedure, if the purpose of the security right is unlisted stocks, the value should be based on the market price at the time of the commencement of the reorganization procedure. Accordingly, if there is a normal example of transaction that properly reflects the objective exchange value, the value of the stocks should be assessed on the basis of the market price. However, if there is no such case of transaction, the relevant laws and regulations governing the evaluation method should be considered generally accepted various evaluation methods, but it cannot be concluded that any one evaluation method should be applied at all times in light of the application of different standards according to the purpose of each enactment. Furthermore, in applying the evaluation method based on the net asset value among various evaluation methods, if there is a guaranteed obligation owed by the relevant unlisted company, it is reasonable to assess the value of the stocks, which are the collateral, based on the net asset value calculated without regard to the debt if there is no possibility that it will lead to the result of actual damage, in light of the contents of the principal obligation, the financial resources of the principal obligor, and other circumstances.

Examining the reasoning of the judgment below in light of the above legal principles and the records, it is just for the court below to assess the value of the stocks based on the net asset value calculated without regarding the amount of payment guarantee as the number of unlisted stocks, which is the collateral, in calculating the net asset value per stock of unlisted companies as stated in the judgment of the court below, such as Dong Tourism Development Co., Ltd., which agreed to bear such a guarantee liability, in calculating the net asset value per share of unlisted companies as stated in the judgment of the court below, on November 24, 2000, under the premise of the non-performance of the obligation to repair the large number of Libybybyi or related defects, when based on the commencement date of company reorganization procedure for the Korea-Japan Korea-Japan corporation as of November 24, 200.

In addition, there is a fact that the court below stated the circumstances that occurred within a considerable period after the date of the decision on commencement of the above company reorganization procedure in detail on the grounds of the decision, but in light of the fact that the court below judged as of the date of the above decision on commencement and listed such circumstances, it is merely a show of opinion in order to verify the legitimacy of the decision as at the time of the decision on commencement of the company reorganization procedure, and it cannot be said that the court below erred in its decision on transfer to another time.

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.

Justices Park Jae-sik (Presiding Justice)