Where a creditor, such as wages, retirement allowances, etc., of a debtor who is a stock company, satisfies the requirements prescribed in Article 34(2)1(a) of the Debtor Rehabilitation and Bankruptcy Act, whether a creditor may file an application for commencement of rehabilitation procedures (affirmative)

Article 34(2)1(a) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Act”) provides that “A creditor who holds a claim equivalent to at least 1/10 of the capital against a debtor who is a stock company may file an application for commencement of rehabilitation procedures,” and does not have any other restrictions. Meanwhile, in a case where there is a concern that any creditor, such as wage, retirement allowance, etc. may cause bankruptcy to a debtor, there is a benefit in promoting efficient rehabilitation of the debtor or business through the rehabilitation procedures, and using the rehabilitation procedures instead of individual compulsory execution procedures in terms of cost and time. Therefore, as long as the creditors, such as wage, retirement allowance, etc., against the debtor who is a stock company, meet the requirements under Article 34(2)1(a) of the Act, such creditors may file an application for commencement of rehabilitation procedures insofar as they meet the requirements under Article 34(2)1(a) of the Act, and this cannot be deemed any different from the fact that wage

Articles 34(2)1(a) and 179(1)10 of the Debtor Rehabilitation and Bankruptcy Act

Appellant 1 and 2 others (Law Firm LLC et al., Counsel for the plaintiff-appellant)

Korea Daily Co., Ltd.

The Nonparty, who was the administrator of Korea Successor Corporation

Seoul High Court Order 2013Ra1595 dated January 24, 2014

All reappeals are dismissed.

The grounds of reappeal are examined.

1. As to the first and second grounds for reappeal

Article 34(2)1(a) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Act”) provides that “A creditor who holds a claim amounting to at least 1/10 of the capital against a debtor who is a stock company may file an application for commencement of rehabilitation procedures,” and does not have any other restrictions. Meanwhile, in cases where there is a concern that any creditor, such as wages and retirement allowances, may cause bankruptcy to a debtor, there is a benefit in promoting efficient rehabilitation of the debtor or his/her business through the rehabilitation procedures, and using the rehabilitation procedures instead of individual compulsory execution procedures in terms of cost and time. Accordingly, a creditor, such as wages and retirement allowances, etc. against a debtor who is a stock company, may file an application for commencement of rehabilitation procedures insofar as he/she satisfies the requirements prescribed in Article 34(2)1(a) of the Act, and this cannot be deemed as a priority claim that ought to be repaid from time to time without resorting to the rehabilitation procedures.

In citing the reasoning of the first instance judgment, the lower court acknowledged the following facts: (a) the number of shares issued by the obligor is 2,000,916 common shares (10,000 won per share); (b) paid-in capital is 20,009,160,000; and (c) the applicants were creditors who did not receive wages, allowances, retirement allowances, etc. from the obligor, and the amount of such claims is more than 1/10 (2,00,916,000 won) of the obligor’s capital; and (d) determined that the application for rehabilitation was lawful.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error of law by misapprehending the legal principles as to the interest in the application or the right of commencement of rehabilitation procedures.

2. As to the third ground for reappeal

In light of the records, the court below's rejection of the re-appellant's assertion that the applicant's application for commencing the rehabilitation procedure of this case constitutes "unfaithful case" is just and there is no error of law by misunderstanding the legal principles as to the ground for rejection of the application for commencing the rehabilitation procedure of Article 42 subparagraph 2 of the Act, as otherwise alleged

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 Min Il-young (Presiding Justice)