In a case where a debtor enters only the original claim in the list of creditors of the application for immunity and does not separately state the incidental claim, whether the incidental claim constitutes a non-exempt claim not entered in the list of creditors in bad faith (negative)

In light of the contents and purport of Articles 8, 558(1) and (2), 562(1) main text, and 566 subparag. 7 of the Debtor Rehabilitation and Bankruptcy Act, when a debtor submits the original content of a bankruptcy creditor and a bankruptcy claim to the list of creditors in the application filed for immunity, the creditor is guaranteed the opportunity to participate in the procedure for immunity. Thus, even if the debtor does not separately state the original claim and the interest, etc., the incidental claim does not constitute non-exempt claims that the debtor has failed to enter in the list of creditors in bad faith.

Articles 8, 558(1) and (2), 562(1), and 566 subparag. 7 of the Debtor Rehabilitation and Bankruptcy Act

Supreme Court Decision 2010Da49083 Decided October 14, 2010 (Gong2010Ha, 2094)

Plaintiff

Defendant (Attorney Kim Jong-chul, Counsel for the defendant-appellant)

Incheon District Court Decision 2015Na11311 Decided November 5, 2015

The judgment below is reversed, and the case is remanded to the Incheon District Court.

The grounds of appeal are examined.

1. According to the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”), a debtor, upon whom bankruptcy and immunity is granted, is exempted from all liabilities to any bankruptcy creditor except dividends pursuant to the bankruptcy procedures, and thus, a bankruptcy claim not entered in the list of creditors in the application filed for immunity also becomes eligible for immunity. However, in cases where a debtor is aware of the existence of a claim before immunity is granted and fails to enter such claim in the list of creditors, the debtor is not exempted from liability for the bankruptcy claim, but even in such cases, if the creditor becomes aware of the existence of a bankruptcy (Article 566 subparagraph 7 of the Debtor Rehabilitation Act). The purport of the aforementioned provision is as follows: (a) if a creditor is not entered in the list of creditors, the creditor would be deprived of the opportunity to raise an objection, etc. to the application for immunity within the scope of immunity procedures, and accordingly, the creditor would be exempt from the liability to pay obligations in principle without any objective verification of the grounds for refusing to grant immunity as prescribed in Article 564 of the Debtor Rehabilitation Act; and (b) thus, a creditor is not entitled to participate in the aforementioned procedure (see Supreme Court Decision 20014.

Meanwhile, where any person who files an application for immunity is declared bankrupt, when the court has decided to examine the debtor on the fixed date, it shall publicly announce such decision and serve it on the bankruptcy creditors, etc. known to the court as bankruptcy creditors who are entitled to the effect of immunity. In addition, even in cases where the examination date for the debtor is not set, the court shall make a decision to set the period for raising an objection and serve on the creditor entitled to the effect of immunity. Any bankruptcy creditor may file an objection with the court regarding the application for immunity within 30 days from the examination date or within the period for raising an objection set by the court (Articles 558(1) and (2), 562(1) main text and

In light of the aforementioned contents and purport of the Debtor Rehabilitation Act, if an obligor submits to the list of creditors requesting immunity the original contents of the bankruptcy claim and the bankruptcy claim, the obligee is guaranteed the opportunity to participate in the immunity procedure. Therefore, even if the obligor did not record only the original claim and make a separate statement on the creditor list, the incidental claim does not constitute non-exempt claim that is not recorded in the creditor list in bad faith by the obligor.

2. The lower court acknowledged the following facts based on the reasoning of the first instance judgment or evidence.

① On July 13, 2006, the Defendant leased 6 million won to the Plaintiff at an annual interest rate of 24% per annum and due date of repayment until December 13, 2006, and was assigned the Plaintiff’s claim to return the lease deposit amount of KRW 14,352,00 for the instant real estate owned by the Plaintiff against the Korea National Housing Corporation for the purpose of collateral.

② Although the maturity period for the above loan was due, the Plaintiff did not repay the principal and interest of the loan and the lease period for the instant real estate expires, the Defendant filed a lawsuit to deliver the instant real estate to the Korea National Housing Corporation ( Incheon District Court 2009Da37809) with the purport of cancelling the lease contract by subrogation of the Korea National Housing Corporation in order to recover the principal and interest of the loan.

③ On October 12, 2009, the court of the lawsuit in the instant case confirmed that the Plaintiff had a debt of KRW 6 million against the Defendant on July 13, 2006. The Plaintiff was at least the Defendant on July 2, 2006, and until November 10, 2009, the Plaintiff paid interest of KRW 2.6 million in interest on the above loan from November 11, 2009 to the interest of the above loan (not later than the 10th of the following month).

④ After the decision to recommend reconciliation in this case became final and conclusive, the Plaintiff paid a total of KRW 5.8 million from November 20, 2009 to April 22, 2013, which is the date of application for bankruptcy and immunity.

⑤ Accordingly, the interest rate of KRW 2.6 million already occurred at the time of the decision to recommend reconciliation was not observed, and most of the interest rate of KRW 100,000 that was paid after the date did not comply with each month.

④ On April 22, 2013, the Plaintiff filed a bankruptcy and application for immunity with the Incheon District Court, and was declared bankrupt on June 11, 2013 (In Incheon District Court Decision 2013Hadan2329), and was granted immunity on March 26, 2014 (In Incheon District Court Decision 2013No. 2326), and the decision became final and conclusive around that time.

7) In the list of creditors submitted at the time of bankruptcy and application for immunity, the Plaintiff entered only the principal amount of KRW 6 million as to the Defendant’s obligations pursuant to the decision of recommending reconciliation of this case.

3. Based on the aforementioned factual basis, the lower court determined that the Plaintiff still bears interest liability on the ground that the Plaintiff’s obligation to deliver the instant real estate under Article 566 subparag. 7 of the Debtor Rehabilitation Act was a non-exempt claim under Article 566 subparag. 7 of the Debtor Rehabilitation Act, even though the Plaintiff, a debtor, was aware of the existence of the interest obligation, and did not state the interest obligation, as a matter of course, in the obligee’s list, when making bankruptcy and application for immunity. Furthermore, even if the Plaintiff’s obligation to deliver the instant real estate under paragraph (3) of the decision on recommending the settlement of this case was not exempted, the Plaintiff was obligated to deliver the instant real estate to the Korea National Housing Corporation as a result of the nonperformance, and thus, dismissed the Plaintiff’s claim for compulsory execution based on the original copy of the decision on recommending the settlement of this case.

4. However, we cannot accept the above judgment of the court below as it is.

Examining the facts acknowledged by the court below in light of the legal principles as seen earlier, insofar as the Plaintiff entered the Defendant as a bankruptcy creditor in the list of creditors submitted by the Plaintiff at the time of bankruptcy and application for immunity and entered the original copy of the above 6 million won loan claims (hereinafter “instant loan claims”) which are bankruptcy claims against the Plaintiff, there is sufficient room to deem that the Defendant was able to participate in the procedures for exemption

Nevertheless, without examining at all whether the Defendant was able to participate in the discharge procedure, the lower court determined that the Plaintiff’s interest obligation against the Defendant constitutes non-exempt claims and the obligation to surrender the instant real estate to the Korea National Housing Corporation is still valid due to the effect of nonperformance of the obligation. In so determining, the lower court erred by misapprehending the legal doctrine as to non-exempt claims under Article 566 subparag. 7 of the Debtor Rehabilitation Act, and affected the conclusion of the judgment.

However, according to the above facts acknowledged by the court below, since the defendant received the claim for the refund of the lease deposit against the real estate in this case as security of the loan claim in this case, it can be said that the above lease deposit claim was established as security, and the obligation to deliver the real estate in paragraph (3) is likely to have been established before the plaintiff's bankruptcy and application for immunity since the failure to perform the obligation to transfer the real estate in paragraph (2) of the decision of recommending reconciliation in this case satisfies the requirements for occurrence, and the obligation to transfer the real estate in paragraph (3) is likely to have been established before the plaintiff's bankruptcy and application for immunity. In such case, execution for the compulsory performance of the obligation to transfer the real estate in paragraph (3) of the decision of recommending reconciliation in this case should be permitted in accordance with the exercise of the right by

5. The lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition.

Justices Kim Shin (Presiding Justice)