[1] The meaning of "when an obligor is unable to pay" under Article 116 (1) of the former Bankruptcy Act

[2] Whether the court may dismiss a petition for bankruptcy on the grounds of abuse of bankruptcy proceedings even where the debtor's bankruptcy grounds exist (affirmative)

[1] Article 116 (1) of the former Bankruptcy Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see Article 305 (1) of the current Debtor Rehabilitation and Bankruptcy Act) / [2] Article 116 (1) of the former Debtor Rehabilitation and Bankruptcy Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see Article 305 (1) of the current Debtor Rehabilitation and Bankruptcy Act)

[1] Supreme Court Order 9Ma2084 dated August 16, 1999 (Gong1999Ha, 2156)

[Plaintiff-Appellant] 1 and 30 others (Attorney Lee Yong-hoon et al., Counsel for plaintiff-appellant)

Other Party

Limited Partnership Doctrine Transport

Daejeon High Court Order 2004Ra20 dated December 29, 2004

All reappeals are dismissed.

The grounds of reappeal are examined.

1. Whether it becomes insolvent, which is the cause of bankruptcy;

Article 116(1) of the former Bankruptcy Act (amended by Act on Debtor's Recovery and Bankruptcy, which was enforced April 1, 2006) provides that "if a debtor is unable to pay, the court shall, upon application, declare a bankruptcy by decision." In this context, "if the debtor is unable to pay" means an objective condition in which the debtor is unable to pay his/her debt immediately due to lack of the ability to pay, generally and continuously (see Supreme Court Order 9Ma2084, Aug. 16, 199).

Examining the reasoning of the order of the court below in light of the records, it is justified to maintain the decision of the court of first instance that accepted a petition for bankruptcy against the debtor, based on the reasonable judgment that the debtor is in the insolvency status, comprehensively taking into account the debtor's financial situation, the business situation for the year immediately preceding the bankruptcy, the financial structure, and the scale of assets and debts, etc.

In addition, the record reveals that the first instance court examined the petitioner of this case, who is the representative member of the debtor after the petition for bankruptcy of this case, as the representative director of the debtor, but the examination of the debtor is discretionary in examining the cause of bankruptcy, so even if the court examined the petitioner as the representative of the debtor, the decision of adjudication of bankruptcy cannot be deemed unlawful.

The order of the court below is not erroneous in the misunderstanding of legal principles as to the causes of bankruptcy of limited partnership companies, violation of the rules of evidence, or incomplete hearing as otherwise alleged in the grounds for reappeal. This part of the grounds for reappeal cannot be accepted.

2. Omission of determination as to abuse of rights

Even if there exists a cause for bankruptcy on the debtor, if the bankruptcy petition is deemed to fall under the abuse of bankruptcy procedure, the court may dismiss the petition for bankruptcy.

However, according to the records, there is no reason to view the petitioner's bankruptcy petition of this case as abuse of bankruptcy procedure. Although the court below did not explicitly state the petitioner's claim that the bankruptcy petition of this case constitutes abuse of bankruptcy procedure, it can be known that the court below does not accept the re-appellant's claim. Thus, there is no error of law such as omission of judgment, incomplete hearing, etc. of the court below's decision. The grounds for re-appeal of this part cannot be accepted.

3. Conclusion

Therefore, all reappeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Sung-tae (Presiding Justice)