Whether an individual rehabilitation creditor may file a lawsuit seeking revocation after a decision to commence an individual rehabilitation procedure is rendered (negative)

According to Articles 584, 347(1) and 406 of the Debtor Rehabilitation and Bankruptcy Act, after a decision to commence an individual rehabilitation procedure has been rendered, the debtor shall exercise the right to set aside, and the court may order the debtor to exercise the right to set aside, at the request of the creditor or rehabilitation commissioner or ex officio. When a lawsuit for revocation filed by the individual rehabilitation creditor is pending at the time the decision to commence the individual rehabilitation procedure is rendered, the lawsuit procedures shall be interrupted until the takeover of the individual rehabilitation procedure or the termination of the individual rehabilitation procedure. In light of the purport of such provisions and the character of the individual rehabilitation procedure, the purpose of the right to set aside, etc., after the decision to commence the individual rehabilitation procedure has been issued, the debtor shall exercise the right to set aside for the equal repayment to all creditors, and the individual rehabilitation creditor who is unable to receive or request repayment of the individual rehabilitation claim recorded in the list of individual rehabilitation creditors, may not file a lawsuit for revocation of the creditor, the purpose of

Article 406 of the Civil Act, Articles 347(1), 406, and 584 of the Debtor Rehabilitation and Bankruptcy Act

Young Life Insurance Co., Ltd. (Law Firm New Daegu, Attorneys Lee Jong-young et al., Counsel for the defendant-appellant)

Defendant 1 and one other

Daegu District Court Decision 2009Na17422 Decided April 20, 2010

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

We examine the grounds of appeal.

1. According to Articles 584, 347(1) and 406 of the Debtor Rehabilitation and Bankruptcy Act, after a decision to commence an individual rehabilitation procedure is rendered, the right to set aside shall be exercised by the debtor, and the court may order the debtor to exercise the right to set aside upon the application of the creditor or rehabilitation commissioner or ex officio. When a lawsuit filed by the individual rehabilitation creditor is pending at the time when the decision to commence the individual rehabilitation procedure is made, the lawsuit shall be interrupted until the takeover of the right or the termination of the individual rehabilitation procedure

In light of the purport of these regulations and the nature of individual rehabilitation procedures, which are collective debt disposal procedures, and the purpose of avoidance power, after a decision to commence individual rehabilitation procedures has been rendered, the debtor shall exercise the avoidance power aiming at equal repayment to all creditors, and the individual rehabilitation creditors who are unable to receive repayment or require repayment of individual rehabilitation claims stated in the list of individual rehabilitation creditors cannot file a lawsuit seeking revocation of creditors with the aim of preserving the liability assets for individual claims on the premise of individual compulsory execution.

2. According to the reasoning of the judgment below, the court below acknowledged the following facts based on the relevant employment evidence: (i) the Nonparty was decided to commence individual rehabilitation procedures on February 19, 2008 by Daegu District Court 2007 Daegu District Court 2007da45991, (ii) the Plaintiff’s claims are also recorded in the list of individual rehabilitation creditors; (iii) the Nonparty was decided to authorize the repayment plan by the above court on June 4, 2008; and (iv) the lawsuit seeking revocation of the instant fraudulent act was filed on January 5, 2009; and (iii) determined that the instant lawsuit filed by the Plaintiff, which is an individual rehabilitation creditor, was unlawful after the decision to commence individual rehabilitation procedures against the Nonparty was rendered.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to individual rehabilitation procedures and fraudulent act revocation litigation as otherwise alleged in the ground of appeal.

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

Justices Lee Hong-hoon (Presiding Justice)