[1] Requirements for a rehabilitation claim under Article 118 subparagraph 1 of the Debtor Rehabilitation and Bankruptcy Act

[2] The case affirming the judgment below holding that Eul company's indemnity claim constitutes public-interest claim under Article 179 (1) 5 of the Debtor Rehabilitation and Bankruptcy Act, in case where Gap company's administrator decided to implement a guarantee execution entrustment contract, and entered into a secondary guarantee insurance contract with Eul company based on the first guarantee insurance contract which was entered into before the commencement of rehabilitation procedures with Eul company upon permission from the rehabilitation court, and the second guarantee insurance contract with Eul company was modified, such as insurance amount, insurance amount, insurance premium, etc.; since the occurrence of the first guarantee insurance accident occurred after the insurance period stipulated in the first guarantee insurance contract, Eul company paid insurance money stipulated in the second guarantee insurance contract to the construction insurance association and sought reimbursement against Eul company

[1] Article 118 subparagraph 1 of the Debtor Rehabilitation and Bankruptcy Act / [2] Article 118 subparagraph 1 of the Debtor Rehabilitation and Bankruptcy Act and Article 179 (1) subparagraph 5 of the Debtor Rehabilitation and Bankruptcy Act

[1] Supreme Court Decision 2011Da84335 Decided November 29, 2012 (Gong2013Sang, 21) Supreme Court Decision 2012Da114851 Decided May 16, 2014 (Gong2014Sang, 1193)

Seoul Guarantee Insurance Co., Ltd. (Law Firm Barun, Attorneys Park Gam-type et al., Counsel for the defendant-appellant)

Pung Forest Industry Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Cho Il-young et al., Counsel for the plaintiff-appellant)

Seoul Central District Court Decision 2015Na4183 decided December 8, 2016

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

The grounds of appeal are examined.

1. Rehabilitation claims under Article 118 subparag. 1 of the Debtor Rehabilitation and Bankruptcy Act refer to any property claim arising from the cause prior to the commencement of rehabilitation procedures, such as expression of intent. If the cause of the occurrence of claims is based on the cause prior to the commencement of rehabilitation procedures, the content of the claim is not specifically determined or even if the period of repayment arrives after the commencement of rehabilitation procedures (see Supreme Court Decision 2012Da114851, May 16, 2014). Moreover, it is sufficient that the major cause of the claim has occurred prior to the commencement of rehabilitation procedures (see Supreme Court Decision 2011Da84335, Nov. 29, 2012). Meanwhile, Article 179(1)5 of the Debtor Rehabilitation Act provides for “a claim arising from borrowing funds that a custodian with respect to the debtor’s business and property after the commencement of rehabilitation procedures and other acts” as one of public-interest claims.

2. A. After finding the facts as stated in its reasoning, the lower court determined that, based on the factual basis, the Plaintiff’s indemnity claim is difficult to be deemed to have been established prior to the commencement of rehabilitation procedures, and that, upon considering the fact that, upon the commencement of rehabilitation procedures against the Defendant under the condition that the implementation of each of the instant guarantee construction consignment contracts was not completed, the Defendant’s administrator concluded the secondary guarantee insurance contract with the permission of the rehabilitation court to issue a new contract guarantee agreement; ② although the secondary guarantee insurance contract was concluded based on the primary guarantee insurance contract that was concluded before the commencement of rehabilitation procedures against the Defendant, the main contents of the insurance contract, such as the insurance period, the amount of the insurance, the insurance premium, and the insurance premium, were modified; ③ the insurance accident occurred after the initial period of the first guarantee insurance contract; ③ the amount of the insurance accident occurred after the insurance period; and the Plaintiff paid the insurance money stipulated in the second guarantee insurance contract, it constitutes a public-interest claim under Article 179(1)5 of the Debtor Rehabilitation Act with respect to the Defendant’s business and property.

Accordingly, the court below rejected the defendant's defense that the plaintiff's claim for reimbursement is a rehabilitation claim, and maintained the first instance court that accepted the plaintiff's claim for reimbursement as the plaintiff's primary claim for reimbursement.

B. Examining the relevant legal principles and records, the lower court did not err in its judgment by misapprehending the legal doctrine under Article 126(1) and (3) of the Debtor Rehabilitation Act, as otherwise alleged in the grounds of appeal, such as the relationship between the first and the second guarantee insurance contract, and the legal doctrine on the confirmation of rehabilitation claims.

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 on the bench.

Justices Lee Ki-taik (Presiding Justice)