Effect of compulsory execution based on composition claim during a composition procedure (=Invalidation)

Article 42 of the Composition Act provides that "any claim on the property against a debtor arising from a cause before the commencement of composition shall be made a composition claim," and Article 40 (1) of the same Act provides that "any compulsory execution, provisional seizure or provisional disposition on the debtor's property shall not be made with respect to composition credits during the composition procedure," so compulsory execution on the basis of composition credits during the composition procedure shall be null and void.

Articles 40(1) and 42 of the Composition Act

Sacephene Co., Ltd.

Defendant (Attorney Seo Jae-sik et al., Counsel for the defendant-appellant)

Suwon District Court Decision 2003Na2854 delivered on August 19, 2004

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

1. According to the reasoning of the judgment below, the court below acknowledged the facts based on the evidence adopted by the bankrupt, and rejected the plaintiff's claim for the cancellation of the composition procedure against the non-party corporation (hereinafter referred to as "non-party corporation") under Article 6 (1) of the Bankruptcy Act, and Article 6 (2) of the same Act provides that "any claim that the bankrupt shall exercise in the future for reasons arising before the bankruptcy is declared shall belong to the bankrupt estate," and Article 14 of the same Act provides that "any claim on the property arising before the bankruptcy is declared against the bankrupt shall constitute a bankruptcy claim" and Article 61 (1) of the same Act provides that "the compulsory execution, provisional seizure or provisional disposition against the property belonging to the bankrupt estate shall lose its effect against the bankrupt estate estate: Provided, That the bankruptcy trustee's claim for the cancellation of the composition procedure against the non-party corporation or the non-party corporation (hereinafter referred to as "non-party corporation") is not in dispute between the parties, and thus, the non-party corporation's claim for the cancellation of the composition procedure or the bankruptcy claim against the bankruptcy estate estate foundation.

2. Article 42 of the Composition Act provides that "The debtor shall have a claim on the property arising from a cause before the commencement of composition shall be made a composition claim." Article 40 (1) of the same Act provides that "No compulsory execution, provisional seizure or provisional disposition against the debtor's property shall be made with respect to composition credits during composition procedures." Thus, compulsory execution based on composition credits shall be null and void during composition procedures.

According to the records, on October 14, 1997, the Daejeon District Court rendered a decision of commencement of composition to the non-party company on the non-party company on the 15th of the same month by the same court on June 8, 1998. The plaintiff applied for a payment order with respect to composition claims against the non-party company on June 30, 200, and the plaintiff applied for a payment order with respect to composition claims against the non-party company on June 30, 200, "the non-party company shall pay to the plaintiff 15,374,798 won and the amount at the rate of 25 percent per annum from the day following the delivery of the payment order to the full payment procedure until the day after the completion of the above payment order, and the payment order was served after the above payment order became final and conclusive, and the non-party company shall receive the above payment order with respect to the non-party company's KRW 213,435,200,1478,209.

According to the above legal principles, the seizure and collection order of this case were based on composition claims during the composition procedure. Thus, it is inappropriate for the court below to conclude that the seizure and collection order of this case is null and void pursuant to Article 61 (1) of the Bankruptcy Act. However, the court below's conclusion that the seizure and collection order of this case is null and void pursuant to Article 61 (1) of the Bankruptcy Act is just, and it is not erroneous in the misapprehension of legal principles as to the composition law and the Bankruptcy Act, incomplete hearing, or inconsistent reasoning as alleged in the ground of appeal. (The plaintiff's claim against the non-party company is a composition claim as seen earlier, and it cannot be accepted the argument of the ground of appeal that this is the claim or the expense of composition procedure for composition as provided in Article 10 (1) of the Composition Act. Meanwhile, Supreme Court Decision 96Da13781 delivered on September 24, 196 is related to the effect of the seizure and collection order before the commencement of reorganization proceedings of the company, and it is not appropriate to this case.

3. 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 Lee Hong-hoon (Presiding Justice)