[1] The method to determine whether an individual debtor in excess of his/her liability is in insolvent as the cause of bankruptcy

[2] In a case where Gap filed a petition for bankruptcy, the case holding that the court below erred in the misapprehension of legal principles as to the cause of bankruptcy as stipulated in Article 305 (1) of the Debtor Rehabilitation and Bankruptcy Act in the judgment below where Gap's petition for bankruptcy was concluded to be lacking explanation of the cause of bankruptcy without going through specific and objective evaluation of Gap's future income, living cost, and scale of household income

[3] Meaning of Article 309(1)5 of the Debtor Rehabilitation and Bankruptcy Act as the ground for dismissing a petition for bankruptcy, and whether it is permissible to immediately dismiss the petition for bankruptcy on the ground of nonperformance of the order of correction on the matters not required by the above Acts and subordinate statutes, or on the ground of insufficient correction without giving additional correction opportunity (negative)

[4] The case reversing the order of the court below on the ground that, in case where Gap submitted Gap's amendment to the first instance court's correction but subsequently rejected Gap's petition for bankruptcy on the ground that Gap submitted evidence while filing a complaint, but the court below rejected Gap's petition on the ground that Gap's petition was not bona fide, and the court below rejected Gap's petition for bankruptcy on the ground that Gap did not submit evidence as to the contents which were not legally required, and the court below rejected Gap's petition for bankruptcy on the ground that Gap filed a complaint against the first instance court's order and filed a second explanation

[1] Article 305(1) of the Debtor Rehabilitation and Bankruptcy Act / [2] Article 305(1) of the Debtor Rehabilitation and Bankruptcy Act / [3] Article 309(1)5 of the Debtor Rehabilitation and Bankruptcy Act / [4] Article 309(1)5 of the Debtor Rehabilitation and Bankruptcy Act

[1] Supreme Court Order 2009Ma1464, 1465 dated November 6, 2009 / [3] Supreme Court Order 2008Ma1070 dated September 25, 2008 (Gong2008Ha, 1451)

Re-appellant

Subu District Court Order 2010Ra32 dated May 4, 2011

The order of the court below shall be reversed, and the case shall be remanded to the Panel Division of Suwon District Court.

The grounds of reappeal are examined.

1. According to the reasoning of the court below's order, the court below affirmed the court of first instance's order that the re-appellant's order of correction of the first instance court, which revealed the source of 5,199,00 won of the sale price of 24,19,00 won of the lease deposit and the loan of 19,000 won, converted from the lease deposit out of the above sale price, was asserted as the money that the non-applicant was supported by the non-applicant under the name of friendship 12,00,000,000 won, on the ground that the non-applicant did not submit supporting documents as to the above 12,00,000,000 won for the purpose of marriage, on the ground that the bankruptcy petition of this case was dismissed on the ground that the non-applicant's order of correction constitutes a case where the explanation of the causes of bankruptcy is insufficient or the application is not bona fide.

2. However, we cannot agree with the above judgment of the court below.

A. Article 305(1) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “the Act”) provides that “if a debtor is unable to pay, the court shall, by its ruling, declare bankruptcy.” In this context, “if the debtor is unable to pay the debtor,” that means an objective condition in which the debtor is unable to repay his/her obligation immediately due to lack of the ability to repay, and where the debtor is an individual, it shall be determined that the debtor is not insolvent even though his/her obligation exceeds his/her current assets, taking into account the debtor’s age, occupation, career, qualification, skills, labor ability, etc., the future income that the debtor can specifically obtain in the future shall be calculated by taking into account the debtor’s age, occupation, and career, skills, labor ability, etc. In order to determine that the debtor is not insolvent, it shall be determined that the debtor can continuously repay most of his/her obligation that the debtor has to pay with his/her assets and available income. Therefore, it shall not be determined that the debtor’s ability to repay the individual debtor is in an objective condition where the debtor can repay more than 164.

However, according to the records, the court below determined that the re-appellant did not submit the supporting documents on the source of KRW 12,00,000 out of the apartment sale price of this case, and it was insufficient to prove the cause of bankruptcy. The re-appellant paid a certain amount of living expenses in order to maintain the livelihood of his wife and his/her father (her dependants in 2008) who is his/her family living together with his/her family living together with his/her family living together, and calculated the amount of available income used as the repayment financial resources. Therefore, the court below did not have deliberated specifically and objectively on what kind of repayment financial resources the re-appellant bears, and there was no specific and objectively on whether the re-appellant can continuously repay most of his/her liabilities of KRW 164,446,361, which he/she bears at the time of his/her application (According to the records, the re-appellant is currently engaged in daily labor at the construction site and supported his/her family's income, and it can be

Examining the above circumstances in light of the legal principles as seen earlier, the lower court’s order that concluded that there was insufficient vindication as to the cause of bankruptcy without going through a concrete and objective evaluation on the size of future income, living expenses, and household income of the re-appellant was erroneous by misapprehending the legal doctrine on the cause of bankruptcy as stipulated in Article 305(1) of the Act.

B. Meanwhile, Article 309(1)5 of the Act provides that “when an application is not bona fide,” which provides for the grounds for dismissing a petition for bankruptcy, refers to a case where a debtor has failed to enter in the application under Article 302(1) of the Act, or has failed to submit the documents required under Article 302(2) of the Act and Article 72 of the Regulations on Debtor Rehabilitation and Bankruptcy; and where a debtor has urged the court to revise the documents, but the debtor has failed to comply with the request without justifiable grounds. Therefore, if the matters ordered to revise are not related to the legal requirements as above, it is not allowed to dismiss the petition for bankruptcy for this reason even if the debtor has failed to comply with the request of the court for revision, and it is not allowed to immediately dismiss the petition for bankruptcy without any additional request or examination even if the contents failed to meet the requirements of the court (see Supreme Court Order 2008Ma1070, Sept. 25, 2008).

According to the records, the court of first instance ordered the re-appellant to disclose the source of the apartment sale price of this case. The Re-Appellant's petition for bankruptcy was dismissed on the ground that the details of KRW 24,199,000 and KRW 12,000 among the sale price of this case were not clearly explained despite the Re-Appellant's submission of the written correction and explanatory materials. The Re-Appellant filed a complaint for bankruptcy of the Re-Appellant on the ground that the above down payment 24,199,000 won was converted from the lease deposit while the Re-Appellant filed a complaint. However, the court below did not order additional correction or undergo any procedure such as questioning, and the court below dismissed the Re-Appellant's appeal on the ground that the Re-Appellant's application was not bona fide and maintained the first instance court's decision.

However, in light of the aforementioned legal principles and records, it is not permissible for the re-appellant to dismiss the petition for bankruptcy on the ground that the matters concerning the source of the purchase price of the apartment of this case in the name of the re-appellant is not stated in the application under Article 302(1) of the Act, but does not correspond to the attached documents under Article 302(2) of the Act and Article 72 of the "Rules on Debtor Rehabilitation and Bankruptcy" (applicable only to the submission of the list of creditors, the debtor's list of assets, the debtor's list of revenues and expenditures), and even if the applicant failed to submit the supporting documents (the law requires submission of the list of creditors, the debtor's list of assets, the debtor's list of revenues and expenditures), and it is also not allowed for the re-appellant to immediately dismiss the petition in response to the order of the first instance court's correction, even if the court below presented the supporting documents in response to the order of the first instance court's correction, even

3. Conclusion

Therefore, the order of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Nung-hwan (Presiding Justice)