In a case where a declaration of bankruptcy is rendered without cancellation of the decision of composition after the determination of composition has become final and conclusive under the Composition Act before the execution is completed, whether a composition creditor's previous claim is restored (affirmative)

If a debtor is declared bankrupt without a cancellation of the composition decision in the composition procedure, the necessity of restoring the former credit of composition creditor is different from the case where a bankruptcy declaration is made ex officio for other reasons as stipulated in Article 9 of the Composition Act in the composition procedure, and there is no reason to distinguish from the case where a new bankruptcy declaration is made without cancellation of compulsory composition during the bankruptcy procedure. Therefore, even in the case where a new bankruptcy declaration is made after the composition becomes final and conclusive under the Composition Act and before the execution is completed, it is reasonable to deem that the former credit of composition creditor is restored by analogy of Article 71 of the Composition Act and Articles 316 and 310 of the Bankruptcy Act.

Articles 310, 316, 9, and 71 of the Bankruptcy Act;

Korea Asset Management Corporation (Law Firm Dudi, Attorneys Kim Jung-chul et al., Counsel for the plaintiff-appellant)

Bankruptcy Trustee, Defendant 1 and one other, who are the bankrupt

Daegu High Court Decision 2001Na8821 delivered on June 14, 2002

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

Article 310 of the Bankruptcy Act provides that in cases where the bankruptcy proceedings continue due to the revocation of compulsory composition under the Bankruptcy Act, the amount of bankruptcy claims shall be calculated by deducting the amount received under the conditions as prescribed by the compulsory composition from the amount of the previous bankruptcy claim with respect to the creditor who has the effect of compulsory composition. Article 316 of the same Act provides that Article 310 of the same Act shall apply mutatis mutandis in cases where a new bankruptcy is declared after compulsory composition becomes final and conclusive and before the completion of the performance. Thus, Article 316(a) of the same Act provides that Article 310 of the same Act shall apply mutatis mutandis in cases where a new bankruptcy is declared against a composition debtor, if the composition debtor becomes declared bankrupt, his/her property is incorporated into the bankruptcy estate and it is naturally impossible to perform the subsequent compulsory composition. Thus, as in such cases, the purpose of the above provision is to deem the concession under the compulsory composition to be revoked, and to reinstate the right

However, according to Articles 71 and 9 of the Composition Act, in cases where the court declares bankruptcy ex officio on the grounds of revocation of composition, etc., Article 310 of the Composition Act applies mutatis mutandis, and Article 310 of the Composition Act applies mutatis mutandis to cases where a new bankruptcy declaration is made without cancellation of composition, and Article 316 of the Composition Act does not apply mutatis mutandis to cases where a new bankruptcy declaration is made without cancellation of composition, and Article 316 of the Composition Act is omitted in cases where a new bankruptcy declaration is made on the debtor without cancellation of composition. However, in composition procedures, where a new bankruptcy declaration is made on the debtor without cancellation of composition decision, the necessity to reinstate the previous creditor's previous claim does not differ from cases where a new bankruptcy declaration is made on other grounds provided for in Article 9 of the Composition Act, and there is no reason to distinguish it from cases where a new bankruptcy declaration is made without revocation of compulsory composition during bankruptcy procedures. Thus, it is reasonable to deem that the previous creditor's previous claim should be reinstated by analogy application of Articles 71, 316 and Composition Act.

The court below found that Bosung Co., Ltd. (hereinafter referred to as " Bosung") filed an application for composition with the Daegu District Court and confirmed the decision upon approval of composition; thereafter, the above composition was not explicitly cancelled when it was declared bankrupt by the above court pursuant to Article 23 (2) of the Company Reorganization Act after the dismissal decision was filed with the Daegu District Court; on the other hand, the plaintiff had a joint and several surety claim amounting to KRW 9,634,692,561 in total, such as the principal and interest of loans, etc. transferred from Taedong Bank as of the day before the above bankruptcy was declared; on the date of its report, the defendants filed a bankruptcy claim within the reporting period, but on the ground that there was insufficient evidence to prove that the above bankruptcy claim was not subject to the restriction of bankruptcy claim exemption of the previous bankruptcy claim, and thus, it rejected the defendants' assertion that the above bankruptcy claim was excluded from the bankruptcy claim exemption of the previous bankruptcy claim.

Upon examining the records on the premise of the above legal principles, the above judgment of the court below is just, and there is no error of law by misunderstanding the legal principles on composition under the Composition Act and compulsory composition under the Bankruptcy Act, which misleads the scope of bankruptcy claims.

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

Justices Kim Ji-dam (Presiding Justice)