MIFFF-Cho Green Growth Investment Association5, a third executive member, the Green Growth Investment Association (Law Firm Yang Hun-Hun, Attorneys Doh-woo et al., Counsel for the defendant-appellant)

Yangyang (Law Firm Won, Attorneys Choi Young-young et al., Counsel for defendant-appellant)

The bankruptcy trustee of Jink K, Inc., the administrator of Jink K, the bankruptcy trustee of Jink K, the bankruptcy trustee of Jink K, the non-party 2 (Law Firm Kinkex, Attorney Kink-kin

November 21, 2014

Seoul Central District Court Decision 2013Gahap3878, 2013Gahap32579 decided November 21, 2013 (Intervention)

1. Of the appeal filed by the Plaintiff (Counterclaim Plaintiff) and the counterclaim filed in the trial, the primary claim is dismissed.

2. The lawsuit on the conjunctive claim shall be dismissed among the counterclaims filed at the trial against the plaintiff (Counterclaims);

3. The costs of the lawsuit after the filing of the lawsuit are assessed against the Plaintiff (Counterclaim Plaintiff).

1. Purport of claim

(a) Main claim;

The Defendant shall pay to the Plaintiff (Counterclaim Plaintiff; hereinafter “Plaintiff”) the amount of KRW 400 million with 5% per annum from December 29, 2012 to the delivery date of a duplicate of the instant complaint, and 20% per annum from the next day to the day of complete payment (the Plaintiff withdrawn the principal suit at the trial).

(b) Intervention by independent parties;

1) The Plaintiff notifies the Defendant, as a general partner of MIFF-Tho Green Growth Investment Association 5, that the transfer contract for the claims entered into on December 25, 2012 was rescinded between Ji K and MIFF-Tho Green Growth Investment Association 5.

2) The defendant shall pay 40 million won to an independent party intervenor (a counterclaim; hereinafter referred to as "participating") and 5% interest per annum from May 1, 2013 to the date of the first instance judgment, and 20% per annum from the next day to the date of full payment.

In addition, the plaintiff and the defendant confirm that on June 18, 2013, the defendant's claim for payment of deposit money of KRW 400 million deposited by the Seoul Southern District Court 2632 was made to the intervenors.

(c) Counterclaim against participation by an independent party;

1) The intervenor around June 18, 2013 confirmed that the defendant's claim for payment of deposit money of KRW 400 million deposited by the Seoul Southern District Court No. 2632 on 2013 was against the plaintiff.

2) Preliminaryly, the Intervenor shall pay to the Plaintiff the amount of KRW 400 million and the amount calculated by the ratio of 5% per annum from December 29, 2012 to the service date of a duplicate of the counterclaim of this case, and 20% per annum from the next day to the day of complete payment (the Plaintiff filed a counterclaim against the intervention at the trial).

2. Purport of appeal

Of the judgment of the first instance, the part against the plaintiff shall be revoked. The defendant shall pay to the plaintiff 40 million won with 5% interest per annum from December 29, 2012 to the service date of a duplicate of the complaint of this case, and 20% interest per annum from the next day to the day of complete payment. The plaintiff's claim against the plaintiff shall be dismissed.

1. Basic facts

(a) The relationship between the parties;

1) MIFAF-Tho Green Growth Investment Association 5 (hereinafter “Chogin”) is a shareholder of Jag K Co., Ltd. (hereinafter “Chog K”) as a small and medium enterprise establishment investment association organized by the Support for Small and Medium Enterprise Establishment Act (hereinafter “Business Start-up Support Act”). The Plaintiff is a member of Chogin’s general partner. According to the Chogin’s bylaws, the executive partner represents the partnership for all acts other than judicial or extrajudicial acts pertaining to the partnership (Article 24).

2) The Defendant (the former trade name is “Acheon,” and the former trade name was transferred from Jin K K to K with the former trade name prior to its change) is a company which acquires part of the business from Jin K with the following.

3) The initial debtor debtor K K’s custodian participated as an independent party, but the rehabilitation procedure was abolished while the instant lawsuit was pending, and the bankruptcy trustee was declared bankrupt on August 4, 2014, and the trustee in bankruptcy took over the same (hereinafter “in cases where it is not necessary to distinguish between the above administrator and the trustee in bankruptcy, it is limited to the “participating”).

B. Conclusion of the instant sales contract

1) On October 2012, J. C. K. transferred to the Defendant all the business of selling and distributing red ginseng products with the exception of the J. K., among the business of J. K. K.

2) On October 30, 2012, J. K resolved on the agenda for the transfer of business at the general meeting of shareholders. Pursuant to Article 374-2 of the Commercial Act, C.C., the shareholder, exercised the appraisal right on the redemption convertible shares held on November 9, 2012 (hereinafter “instant shares”), against the transfer of business.

3) As a result, Samho and Jin K entered into a share sales contract (hereinafter “instant share sales contract”) with the following content.

Article 2 (Purchase Price of Stocks and Purchase Price of Stocks included in the main sentence: 1 million won per share purchase price: 2,400,000 won per share purchase price: Article 3 (Transfer of Claim in lieu of Payment of 400,000,000 won out of the purchase price) (1) shall deposit KRW 2,00,000,000 among the total purchase price of shares to Byung (Chin; hereinafter the same shall apply)’s bank account designated by Byung (Chin; hereinafter the same shall apply) by December 27, 2012. (2) At the same time as this agreement was entered into with the board of directors on the share purchase price, and at the same time as this agreement was entered into, and the agreement was entered into with Byung on the purchase price of each of the above total purchase price, and the agreement was entered into with Byung, stating that the agreement was not effective in lieu of payment of the remaining 400,000,000 won per share of the above total purchase price.

C. Conclusion of the instant assignment contract, keeping of stock certificates, etc.

1) Under the instant share purchase agreement, Jin K transferred K’s claim amounting to KRW 400 million (hereinafter “instant claim”) among the transfer payment claims against the Defendant pursuant to the instant share purchase agreement (hereinafter “instant claim”), and on December 27, 2012, notified the Defendant of the transfer of claim by content-certified mail. The Defendant received the instant notice on December 28, 2012.

2) Samhoin acquired stock certificates regarding the instant stocks pursuant to Article 22 of the Support for Establishment of Small and Medium Enterprises Act and Article 29(2) of the Regulations of the Association, and thereafter trust them to the Industrial Bank of Korea, which is a trust company. Samhoin did not take measures concerning the delivery of the instant stocks until it receives the Intervenor’s notice of cancellation after concluding the instant stock sales contract.

D. Rehabilitation and bankruptcy procedures and cancellation of the share sales contract of this case

1) On January 4, 2013, Jin K filed an application for commencing rehabilitation procedures on January 4, 2013, and rehabilitation procedures began on February 4, 2013; Nonparty 1, one of the joint representative directors of Jin K, was appointed as a custodian; and on July 16, 2013, the rehabilitation plan was approved.

2) On March 20, 2013, the custodian applied to the Seoul Central District Court for the permission of cancellation of the instant share sales contract, and obtained the permission on March 21, 2013. On March 25, 2013, the custodian sent the notice of cancellation of the contract on March 25, 2013. The custodian received the notice of cancellation of the said contract on March 26, 2013.

3) On May 30, 2014, the custodian submitted a written opinion on the discontinuation of rehabilitation procedures on the grounds that there is no possibility of implementation of the rehabilitation plan. On July 17, 2014, the said court rendered a decision to discontinue rehabilitation procedures.

4) On August 4, 2014, the said court rendered ex officio a bankruptcy judgment against Jye K pursuant to Articles 6(1), 305, and 306 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”), and appointed Nonparty 2 as the trustee in bankruptcy.

E. Defendant’s deposit for repayment

On the other hand, on June 18, 2013, the Defendant deposited the deposited amount of KRW 400 million (hereinafter “instant deposit”) with the Seoul Southern District Court Decision 2632, 2013, where the true creditor of the instant claim is K K or the Plaintiff is unknown.

[Ground of recognition] Facts without dispute, Gap's entries in Gap's 1 through 5, 7, 8, 10, 11, 19, 20, 21 evidence, Byung's 1 through 4, 6, 7 and the purport of the whole pleadings

2. Scope of the judgment of this court;

In the first instance court, the Plaintiff filed a lawsuit against the Defendant seeking payment of KRW 400 million of the instant claim under the instant claim assignment contract, and the Intervenor sought notification of cancellation of the instant claim assignment contract against the Plaintiff on the ground that the instant claim transfer contract was cancelled, and sought confirmation that the Plaintiff and the Defendant sought reimbursement of KRW 400 million of the instant claim and delayed damages, or sought selective reimbursement against the Plaintiff and the Defendant.

The first instance court accepted a claim against the plaintiff for notification of the assignment of claims and for confirmation of the claim for the payment of the deposit of this case against the defendant, and dismissed the lawsuit against the plaintiff for confirmation of the claim for payment of the deposit of this case, and dismissed the plaintiff's principal claim against the defendant and the plaintiff's claim for damages for delay against the defendant (the intervenor's claim for the principal amount of KRW 400 million against the defendant was not determined separately because it is inconsistent with the claim for confirmation of the payment of deposit of this case).

In response, only the Plaintiff filed an appeal. At the trial court, the Plaintiff withdrawn the principal claim against the Defendant at the trial court, and sought confirmation of the right to claim the payment of the deposit of this case around the counterclaim against the participation, and added the claim seeking the payment of the said KRW 400 million in preliminary.

Therefore, the scope of the court's adjudication is limited to the part of the counterclaim claim against the plaintiff, the plaintiff's claim seeking notification of the assignment of claims against the plaintiff, and the claim seeking confirmation of the claim for payment of the deposit of this case.

3. Judgment on the intervenor's claim against the plaintiff and the plaintiff's main claim against the intervenor

A. Summary of the parties' assertion

1) An intervenor

In the meantime, the instant share sales contract is an executory bilateral contract, and thus, the contract was rescinded due to the Intervenor’s exercise of the Intervenor’s right to rescission under Article 119(1) of the Debtor Rehabilitation Act. Therefore, the instant claim transferred in lieu of a partial payment of the purchase price of the instant shares return to Jin K, a transferor of the instant claim. As such, the instant claim for payment of the deposit money belongs to the intervenor, who is the trustee in bankruptcy of Jin K, and the Plaintiff, a managing member of Kink, is obligated to notify

Preliminaryly, if the rescission of the instant share sales contract is unlawful, the intervenor denies the instant transfer contract in accordance with Article 100(1)3 of the Debtor Rehabilitation Act. Therefore, the Plaintiff is obligated to notify the original state that the instant transfer contract was rescinded.

2) Plaintiff

For the following reasons, the share sales contract of this case still remains valid. Accordingly, the Plaintiff is a legitimate creditor of the right to claim the return of the instant deposit money.

① The instant share sales contract was concluded pursuant to Article 374-2 of the Commercial Act, which recognized the appraisal right of the shareholders opposing a transfer of business, and it is unreasonable to view that the said Commercial Act recognizes the appraisal right as above, or that the custodian of Jin K violated the said Commercial Act and the instant share sales contract as it did not pay the price stipulated under the instant share sales contract, may rescind the instant share sales contract, notwithstanding Article 119(1) of the Debtor Rehabilitation Act.

② As stated in Article 374-2(2) of the Commercial Act, the period of “two months from the date of claim for purchase” is the due date for the payment of the purchase price of the instant shares; the purport of Article 11 of the Stock Sales Contract of the instant case, which guarantees that, under the provisions of the Act on the Establishment of Small and Medium Enterprises, Chin has fulfilled all necessary procedures for the instant stock sales contract, not violating the statutes or the articles of incorporation; and the fact that, Chin’s preservation of the instant shares into the Industrial Bank of Korea under the provisions of the Act on the Establishment of Small and Medium Enterprises, there is any legal limitation that, only when Chin paid the purchase price, it shall be deemed that the obligation to deliver the instant shares to Chin’s Jk’s Ch

③ Even if it is not so, the share purchase price of KRW 400 million in the share purchase contract of this case has already been executed as a result of the conclusion of the share transfer contract of this case and the notification of its transfer, as stipulated in the latter part of Article 137 of the Civil Act, and Samhoin and Ji K had the intention to conclude a sales contract equivalent to KRW 400 million even if the sales contract of this case loses its validity other than the above KRW 400 million, as stated in the latter part of Article 137 of the Civil Act, since the share purchase price payment portion of the above KRW 400 million has already

④ On the other hand, the current rehabilitation procedure for Jin K was abolished. The right to rescind a bilateral contract, which is performed by both the administrator under Article 119 of the Debtor Rehabilitation Act, can only be exercised on the premise of the progress of rehabilitation procedures for a special limited-liability system that is recognized for the maintenance and rehabilitation of the debtor. In the event rehabilitation procedures are completed after the right to rescission was exercised and the subsequent rehabilitation procedures are completed before the property is recovered, it shall not be deemed as the effect of exercising the right to rescission against the other party. Therefore, an intervenor cannot claim against the Plaintiff the effect of rescission of the sales contract of this case under the condition that Jink K was

B. Determination

1) Whether the instant share sales contract constitutes subject to rescission under Article 119(1) of the Debtor Rehabilitation Act

In light of the purport of Article 374-2(1) through (4) of the Commercial Act that regulates the appraisal right of the shareholders opposing a transfer of business, the appraisal right of the opposing shareholders is so-called formation right, regardless of whether they have consented to the exercise of such right (see Supreme Court Decision 2010Da94953, Apr. 28, 201). The reason why the Commercial Act grants appraisal right to the opposing shareholders is that where significant changes are made by the majority shareholders such as transfer of business, etc., the reason why the Commercial Act grants appraisal right to the opposing shareholders is that the minority shareholders are given an opportunity to receive fair consideration and withdraw from the company by claiming the purchase of shares against the company.

Meanwhile, according to Article 119(1) of the Debtor Rehabilitation Act, when both the debtor and the other party have not yet completed the performance of a bilateral contract at the time rehabilitation procedures commence, the custodian may rescind or terminate the bilateral contract, perform the debtor's obligation, and claim the other party's performance. "Bilateral contract" means a contract under which both parties are liable for an equal contractual obligation, and "when both parties have not completed the performance" includes the failure to perform part of the obligation, and the reasons for the failure to complete the performance are not asked (see, e.g., Supreme Court Decision 2000Da54659, May 16, 2003). In cases where rehabilitation procedures commence with respect to a bilateral contract between both parties to which the debtor and the other party have commenced, it is intended to facilitate rehabilitation procedures and ensure that the custodian can perform the other party's obligation when the custodian selects the other party's performance, thereby maintaining equity between the parties (see, e.g., Supreme Court Decision 9Da54659, Apr. 16, 2005).

In light of the legislative intent of both systems and the purport of the Debtor Rehabilitation Act, unlike the exercise of the right to purchase shares by the opposing shareholders under the Commercial Act, there is no provision that limits the custodian’s right to cancel; rehabilitation procedures have the organizational legal effect. Therefore, in the event rehabilitation procedures commence, the above provision of the Debtor Rehabilitation Act shall take precedence over the above provision of the Commercial Act in order to guarantee the property rights of individual minority shareholders; in the event the other party suffers losses due to such rescission under Article 121(1) of the Debtor Rehabilitation Act, Article 121(1) of the same Act provides that the other party may exercise his/her right as a rehabilitation creditor to compensate for such losses; and thus, in the event rehabilitation procedures commence for either party, the custodian may exercise his/her right to cancel under Article 119(1) of the Debtor Rehabilitation Act even if a contract is concluded by exercising the right

2) Whether the instant sales contract was not fulfilled by both parties

Article 374-2 (2) of the Commercial Act provides that "two months from the date when a company has received a request for purchase of shares" shall be construed as setting the due date for the payment of the purchase price of shares (see Supreme Court Decision 2010Da94953, supra) and Article 22 of the Support for Small and Medium Enterprise Establishment Act imposes on the general partner the obligation to manage the property of a small and medium enterprise establishment investment association by entrusting a trust company with the management of the property of a small and medium enterprise establishment investment association. In addition, the fact that a contract for purchase of shares of this case has implemented all the procedures, such as internal authority procedures, etc. necessary for the purchase price of shares, and guarantees that the contract for purchase of shares does not contravene the Acts and subordinate statutes or the articles of incorporation, etc., and that it does not go against administrative dispositions or instructions such as the court's decision, decision, or approval or permission of the administrative agency, etc. In the case of a bilateral contract, the extent of the provision to which one party should provide should be determined reasonably by the parties, depending on the time and specific circumstances (see, etc.

However, even if there are the above facts or statutes, it cannot be deemed that the obligation to pay the purchase price of the shares to J K was fulfilled upon the lapse of the above two-month period or with the consent of the above contract clause, or that there was the same legal effect as the delivery of the shares to K K, or that there was the same legal effect as the delivery of the shares to Kccck. Furthermore, in case where the shares are issued under Article 336(1) of the Commercial Act, the issuance of share certificates is necessary for the transfer of shares. Even if the establishment support law imposes the obligation to manage the assets entrusted to the trust company, it cannot be deemed that the withdrawal from the trust company for the implementation of the sales contract to the other party or the provision of performance is prohibited, and if it is difficult to actually withdraw the share certificates, it cannot be deemed that the Plaintiff’s obligation to provide the shares can not be asserted as being fulfilled within the reasonable scope. Accordingly, the Plaintiff’s obligation to provide the shares can not be viewed as being fulfilled.

3) Whether the part concerning the sales contract of the instant case, which was KRW 400 million, cannot be rescinded as a result of performance

The following circumstances revealed by the above facts: (a) the instant share sales contract is a contract which provides for the sale and purchase of the entire share of KRW 2,400,000 per share by calculating the total purchase price of KRW 2,400,000 per share; (b) although the instant share sales contract was concluded instead of paying KRW 2,400,000,000 per share price, the instant share transfer contract was divided into KRW 2,400,000,000 per share price; (c) it did not provide for any provision regarding this in the instant share sales contract; and (d) Choho and Jin did not appear to exclude the instant share sales contract from the subject of cancellation if the cause of termination occurs when only part of the instant share sales contract was performed; and (e) it does not appear that the Plaintiff’s claim that Article 119(1) of the Debtor Rehabilitation Act Article 137 of the Civil Act applies to the entire share sales contract, not to the Plaintiff’s claim for cancellation of the entire share sales contract.

4) Whether it is no longer possible to claim the effect of exercising the right of rescission upon completion of the rehabilitation procedure

Article 335(1) of the Debtor Rehabilitation and Bankruptcy Act provides that, as in the rehabilitation procedure, the bankruptcy trustee may either cancel a contract or perform the other party’s obligation at his/her option in the event of a bilateral contract not performed by both parties, and claim for the other party’s performance. This is, in principle, a legal and economic relationship with each other in the bilateral contract. In light of the above, where one of the parties to the bilateral contract becomes bankrupt, recognition of the right to cancel the contract or to claim the other party’s performance of the other party’s obligation is made with the intent to protect the interests of the bankruptcy estate and at the same time protect the other party who responded to the option made by the bankruptcy trustee (see, e.g., Supreme Court Decision 2001Da24174, Oct. 9, 201). Therefore, the Plaintiff’s assertion that the custodian’s right to cancel under Article 119(1) of the Debtor Rehabilitation and Bankruptcy Act is a special system for rehabilitation procedures for which the rehabilitation of the debtor

Furthermore, even if the custodian’s right to rescind is exercised during the rehabilitation procedure, as alleged by the Plaintiff, even if the rehabilitation procedure is terminated before the property is reinstated, Article 6 of the Debtor Rehabilitation Act provides that, as the effect of exercising the right to rescind, the return of the property cannot be claimed against the other party. However, Article 6 of the Debtor Rehabilitation Act provides that the litigation procedures performed by the custodian due to a declaration of bankruptcy under Articles 119(1) and 6(7) of the Debtor Rehabilitation Act shall be suspended, but the bankruptcy trustee may take over the property. When the bankruptcy is declared pursuant to paragraph (1) of the same Article, any act performed by the custodian under the rehabilitation procedure shall be

However, on August 4, 2014, immediately after the decision to discontinue rehabilitation procedures was rendered on July 17, 2014, the court rendered a bankruptcy ruling against J K pursuant to Article 6(1) of the Debtor Rehabilitation Act, etc. In the instant lawsuit, the fact that the trustee in bankruptcy of Jin K took over the administrator of Jin K in the instant lawsuit is as seen earlier. As such, the trustee in bankruptcy of Jin K still may seek against the Plaintiff the return of property upon the rescission of the instant contract for purchase and sale of shares or the implementation of procedures incidental thereto. The Plaintiff’s assertion on this part is without merit.

5) The rescission of the instant sales contract and the duty to restore such termination

A) As seen earlier, although it appears that the instant share sales contract was more likely to be fulfilled, the Intervenor could rescind the instant share sales contract that constitutes a bilateral contract for both parties’ non-performance pursuant to Article 119(1) of the Debtor Rehabilitation Act. Therefore, the instant share sales contract was lawfully rescinded upon the Intervenor’s notice of termination of contract on March 25, 2013.

B) In a case where a former creditor entrusted the collection of a claim or any other exercise by delegation, but the delegation becomes null and void due to the termination, etc. of the assignment, the claim shall return to the transferor. Furthermore, the transferee bears the obligation to notify the obligor of the obligation to restore the obligation to the transferor upon the termination of the transfer obligation contract (see Supreme Court Decision 2010Da100711, Mar. 24, 201).

As seen earlier, since the share sales contract of this case, which was the cause of the transfer of the claim of this case, was lawfully cancelled, the claim of this case was returned to Jk K again. Therefore, the Plaintiff, who is the general partner of Samhohoin, is obligated to notify the Defendant, who is the debtor, of the fact that the transfer of claim of this case was cancelled.

C) In the case of a repayment deposit on the grounds of a creditor’s relative uncertainty, a person seeking to claim a payment of deposit shall attach a document attesting that the person is the person to whom the deposit was made, to the document proving that the person to whom the deposit was made is the person to whom the deposit was made. In a case where there is a dispute over the reversion of rights between the persons to whom the deposit was made, a part of the persons to whom the deposit was made may claim a payment of deposit upon obtaining a judgment, etc. confirming that there was a claim for payment of deposit against another person to whom the deposit was made. As long as the Plaintiff is disputing that the claim of this case belongs to the third party of the claim of this case, the intervenor shall have

D) Ultimately, the Intervenor’s claim against the Plaintiff is well-grounded, and the Plaintiff’s primary claim against the Intervenor is without merit.

4. Whether the lawsuit by the plaintiff against the intervenor in the conjunctive claim is legitimate

A. The plaintiff's assertion

The damage amounting to KRW 400 million, which is the claim amount of this case, due to the cancellation of the stock transfer contract of this case. Since such damage claim is a public-interest claim arising after the commencement of rehabilitation procedures, the plaintiff may claim it without resorting to rehabilitation procedures. Therefore, the intervenor is obliged to pay the above KRW 400 million and the damages for delay to the plaintiff.

B. Determination

In light of the provisions, etc. of Articles 121(1) and 337 of the Debtor Rehabilitation Act, when the rehabilitation plan is approved and the rehabilitation procedure is abolished pursuant to Article 6(1) of the Debtor Rehabilitation Act and the bankruptcy is declared, such rehabilitation claim can only be treated as a bankruptcy claim.

However, Article 424 of the Debtor Rehabilitation Act provides that a bankruptcy claim cannot be exercised without resorting to bankruptcy procedures. Thus, the lawsuit on the conjunctive claim seeking payment of the said claim against the intervenor is unlawful without need to further examine.

5. Conclusion

Therefore, the intervenor's claim against the plaintiff is accepted on the ground of its reason, and the part of the conjunctive claim is dismissed on the part of the counterclaim against the plaintiff's participation, and the main claim is dismissed on the ground that it is unlawful. The judgment of the court of first instance as to the plaintiff's claim against the plaintiff is justifiable on the ground of its conclusion. As such, the judgment of the court of first instance as to the plaintiff's claim against the plaintiff is justifiable on the ground of its conclusion, each of the plaintiff's appeal and the counterclaim against the participation raised at the court of first instance,

[Attachment]

Judges Noh Tae-il (Presiding Judge) Constitution