[1] In a case where a lawsuit may be filed pursuant to Article 464 of the Debtor Rehabilitation and Bankruptcy Act, whether filing a lawsuit for confirmation of a bankruptcy claim pursuant to Article 462(1) of the same Act is legitimate (negative)

[2] In a case where, at the time of the declaration of bankruptcy under Article 6(1) of the Debtor Rehabilitation and Bankruptcy Act, the takeover of the rehabilitation claim that has been in progress at the time of the declaration of bankruptcy pursuant to Article 6(1) of the same Act was made pursuant to Article 464 of the same Act, and then the party seeks confirmation of the rehabilitation creditors’ claim from the confirmation of the rehabilitation creditors’ claim to the confirmation of the rehabilitation creditors’ claim, whether the court should determine it accordingly (affirmative in principle), and whether it is permissible to add the purport of the claim seeking confirmation of the rehabilitation creditors’ claim

[3] The measures to be taken by the court in a case where the plaintiff of an objection lawsuit does not modify or add the purport of the claim, even though the creditor or the other party taken over a lawsuit of objection brought in the previous rehabilitation procedure as a bankruptcy is declared pursuant to Article 6 (1) of the Debtor Rehabilitation and Bankruptcy Act

[4] The validity of the change of rights by rehabilitation creditors, etc. according to the rehabilitation plan approval and whether the discontinuation of rehabilitation procedures affects the effect (negative)

[1] In cases where a bankruptcy trustee, etc. raises an objection against any bankruptcy claim reported in the bankruptcy procedure, the bankruptcy creditor is in principle entitled to file a final claim inspection judgment with the court for the confirmation of its contents [Article 462(1) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “the Debtor Rehabilitation Act”). However, in cases where a lawsuit on such bankruptcy claim is pending at the time bankruptcy is declared, all of the objectors to the disputed claim shall take over the lawsuit pursuant to Article 464 of the Debtor Rehabilitation Act as the other party to the lawsuit. As such, in cases where a lawsuit on a bankruptcy claim is pending, taking over the lawsuit pending in lieu of an application for a final claim inspection judgment, it is for public interest to prevent the waste of the cost and time of the new lawsuit and to avoid the decentralization of the litigation procedures. Therefore, in cases where a lawsuit seeking the confirmation of the bankruptcy claim under Article 464(1) of the Debtor Rehabilitation Act can be filed, it is inappropriate to protect the rights of the debtor who is subject to the final claim inspection judgment, which is deemed to have no objection to the rehabilitation claim under Article 464 of the Debtor Rehabilitation Act.

[2] The entry of any entry in the table of bankruptcy creditors on confirmed claims has the same effect as the final and conclusive judgment on all bankruptcy creditors [Article 460 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter "the Debtor Rehabilitation Act"), and in cases where the debtor fails to raise an objection on the claim inspection date, the entry in the table of bankruptcy creditors has the same effect as the final and conclusive judgment on the debtor declared bankrupt (Article 535(1) of the Debtor Rehabilitation Act). Such effect of the table of bankruptcy creditors is no same as in the bankruptcy proceedings under Article 6(1) of the Debtor Rehabilitation Act. In other words, when the debtor is declared bankrupt, the bankruptcy proceedings will be abolished or terminated. In any case, the creditor may proceed with compulsory execution upon entry in the table of bankruptcy creditors (Articles 548(1) and 535(2) of the Debtor Rehabilitation Act). In light of the foregoing, if a party files an objection against the final and conclusive claim at the time of the declaration of bankruptcy under Article 6(1) of the Debtor Rehabilitation Act after taking over the claim inspection proceedings under Article 46464 of the Debtor Rehabilitation Act.

However, solely on the following grounds, solely on the grounds that the bankruptcy is declared and the bankruptcy claim inspection procedure is in progress pursuant to Article 6(1) of the Debtor Rehabilitation Act, it cannot be readily concluded that the legal interest to determine the existence and scope of the rehabilitation claim is extinguished through the previous rehabilitation claim inspection procedure. Therefore, if the parties to the lawsuit seeking confirmation of the rehabilitation claim inspection judgment seeking confirmation of the rehabilitation claim list while seeking confirmation of the rehabilitation claim list despite the bankruptcy declaration pursuant to Article 6(1) of the Debtor Rehabilitation Act and the preparation of the rehabilitation claim list is scheduled, if the parties to the lawsuit seeking confirmation of the rehabilitation claim inspection judgment intends

(1) The purpose of the final claim inspection procedure, which is to determine the existence and scope of a rehabilitation claim as at the time of the decision to commence the rehabilitation procedure, is to determine the existence and scope of a bankruptcy claim as at the time the bankruptcy is declared. In cases where a bankruptcy is declared pursuant to Article 6(1) of the Debtor Rehabilitation Act, any bankruptcy claim that is the object of the final claim inspection in the bankruptcy procedure shall be determined as at the time of the declaration of bankruptcy. As such, the former rehabilitation claim that is confirmed in the rehabilitation procedure shall be determined by reflecting all the circumstances, such as the alteration of the rehabilitation claim and the repayment to the time

(2) In addition, when it is decided to grant authorization for the rehabilitation plan, the rights of rehabilitation creditors, etc. are substantially changed according to the contents of the rehabilitation plan (Article 252(1) of the Debtor Rehabilitation Act), and compulsory execution, etc. cannot be conducted based on the title of debt concerning any rehabilitation claim or any rehabilitation security right existing prior to the commencement of rehabilitation procedures, and only the entry of the table of rehabilitation creditors and the table of rehabilitation secured creditors becomes an executive title; however, after the decision to discontinue the rehabilitation becomes final and conclusive, the creditor may perform compulsory execution according to the entry in the table of bankruptcy creditors (Articles 548(1) and 535(2) of the Debtor Rehabilitation Act) and the title of debt concerning any bankruptcy claim that exists prior to the declaration of bankruptcy, such as the table of rehabilitation creditors, etc.

[3] In the event that a bankruptcy is declared pursuant to Article 6 (1) of the Debtor Rehabilitation and Bankruptcy Act, and the creditor or the other party has taken over a lawsuit of objection filed in the previous rehabilitation procedure, but the plaintiff of the lawsuit of objection does not express a clear intention, such as the modification or addition of the purport of the claim, the court shall point out this point and clarify the intention of the party.

[4] When it is decided to grant authorization for a rehabilitation plan, the rights of rehabilitation creditors, etc. are substantially altered according to the rehabilitation plan, and the effect of the rehabilitation plan is not affected even if rehabilitation procedures are discontinued (Article 288(4) of the Debtor Rehabilitation and Bankruptcy Act). Therefore, if rehabilitation creditors, etc. have the effect of wholly or partially exempting obligations pursuant to the provisions of the rehabilitation plan, and the grace period is prescribed, the time limit for obligations is extended, and where rehabilitation claims are converted into equity, the rights are extinguished at the time prescribed in the rehabilitation plan.

[1] Articles 6(1), 462(1), and 464 of the Debtor Rehabilitation and Bankruptcy Act / [2] Articles 6(1), 252(1), 460, 462(1), 464, 535(1) and (2), and 548(1) of the Debtor Rehabilitation and Bankruptcy Act, Article 262 of the Civil Procedure Act / [3] Articles 6(1), 462(1), and 464 of the Debtor Rehabilitation and Bankruptcy Act, Articles 136 and 262 of the Civil Procedure Act / [4] Articles 251, 252(1), and 288(4) of the Debtor Rehabilitation and Bankruptcy Act

[1] Supreme Court Decision 97Da17155 Decided August 22, 1997 (Gong1997Ha, 2803), Supreme Court Decision 2001Da22765 Decided June 29, 2001 (Gong2001Ha, 1738) / [2] Supreme Court Order 2016Ma1256 Decided May 23, 2017 (Gong2017Ha, 1337) / [3] Supreme Court Decision 2013Da69866 Decided July 9, 2015 (Gong2015Ha, 1129) / [4] Supreme Court Decision 2015Da22469 Decided October 26, 2017 (Gong2017Ha, 2017Ha17Ha17171)

Nonparty 2 (Law Firm Urban and Natural Persons, Attorneys Kim Il-hee et al., Counsel for the plaintiff-appellant)

[Defendant’s List] (Counterclaim Plaintiff) 2 and 54 others (Law Firm LLC, Attorneys Jeong-Gyeong et al., Counsel for defendant-appellant)

[Attachment List of Defendants, Co., Ltd and 100 others (Law Firm LLC et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2015Na2038710, 2016Na2034043 decided August 12, 2016

The part of the lower judgment against the Plaintiff (Counterclaim Defendant) shall be reversed, and that part of the case shall be remanded to the Seoul High Court.

The grounds of appeal are examined.

1. Facts of this case

According to the reasoning of the lower judgment and the record, the following facts are revealed.

A. Status of the parties

As a result of the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act (hereinafter referred to as the " Debtor Rehabilitation Act") with respect to the Daewoo Motor Sales Co., Ltd., it was divided into the Treatment Automobile Sales Co., Ltd., the Treatment Industry Development Co., Ltd., and the Treatment Forwarding Development Co., Ltd., Ltd. (hereinafter referred to as "Treatment Forwarding Development") on December 19, 201.

(b)the rehabilitation plan for the development of treatment limit;

The main contents of the authorized rehabilitation plan shall be as follows:

1) Rehabilitation claims were divided into nine per cent for the Daewoo Motor Sales Co., Ltd., 5.2 per cent for the Treatment Industry Development Co., Ltd., and 85.8 per cent for the Treatment Forwarding Development.

2) Treatment Review Development determined as follows with respect to the repayment of the obligation of commercial transactions among rehabilitation claims. 28.1% of the principal and interest prior to commencement shall be exempted, and 45.2% shall be converted into 5,000 won per share, and 26.7% of the interest shall be paid in cash. After commencement, interest shall be exempted, and the amount of the obligation to be converted into equity shall be substituted for the repayment of the rehabilitation claim on the date of entry into force of new shares. With respect to any undetermined obligation, the repayment shall be made in accordance with the method of changing the rights of rehabilitation security rights and rehabilitation claims most similar in accordance with the nature

(c) Process of the inspection procedure for rehabilitation claims;

The Defendant (including the Defendant entered in the attached list of the Defendant, the Counterclaim Plaintiff; hereinafter “Defendant”) asserted that the creditors of the Daewoo Automobile Sales Company filed a claim for refund related to the sale of apartment units in the rehabilitation procedure, and filed an application for the final inspection judgment by raising an objection (Seoul Central District Court Decision 2011No. 1363). On March 7, 2013, the court decided that “the rehabilitation claim against the Defendant’s treatment-based development (the company treatment-based Motor Vehicle Sales Company prior to the division) is the amount recorded in the cited amount in the attached table 2 of the final inspection judgment,” and the administrator of treatment-based development filed a lawsuit of objection.

(d)Declaration of bankruptcy for the development of treatment delivery channels;

1) On July 23, 2014, the rehabilitation procedures for the development of treatment delivery was abolished, and on August 7, 2014, the bankruptcy was declared pursuant to Article 6(1) of the Debtor Rehabilitation Act regarding the development of treatment delivery, and on the same day, the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) was appointed as the bankruptcy trustee for the development of treatment delivery.

2) In the instant bankruptcy proceeding, the Defendants filed a claim cited in the final inspection judgment as a bankruptcy claim in the instant bankruptcy proceeding (However, the Defendants filed a report on the statutory interest claim in addition to the cited claims), and the Plaintiff denied all the Defendants’ bankruptcy claims on the ground that there is no debt in the open meeting of creditors on November 20, 2014.

E. On March 27, 2015, the first instance court sentenced the judgment approving the judgment in claim allowance proceedings. Upon submitting the petition of appeal, the Plaintiff stated that “the entire judgment of the lower court is revoked. The judgment of the Seoul Central District Court is revoked on March 7, 2013, 201 and the rehabilitation claim allowance proceedings are revoked. The Defendants’ bankruptcy claims against the bankrupt Song-do Development Co., Ltd. are not nonexistent.” In addition, the lower court added the Defendants’ assertion that the said claims were modified according to the contents of the rehabilitation plan, and each of the above documents was delivered lawfully to the other party, and was stated on the date of pleading.

F. However, the Plaintiff submitted a preparatory document dated June 3, 2016, stating that on June 3, 2016, when the lower court was proceeding, the purport of the appeal for which the non-existence of a bankruptcy claim was sought as a claim for confirmation of non-existence of a rehabilitation claim, and the said document was stated on the second date for pleading of the lower court, but the lower court rejected a change in the purport of the appeal.

2. Judgment on ground of appeal No. 1

A. 1) Where a bankruptcy trustee, etc. raises an objection against any bankruptcy claim reported under the bankruptcy procedures, a bankruptcy creditor shall file a final claim inspection judgment with the court as the other party (Article 462(1) of the Debtor Rehabilitation Act). However, if a lawsuit on such bankruptcy claim is pending at the time the bankruptcy is declared, all of the objectors to the claim under Article 464 of the Debtor Rehabilitation Act shall take over the lawsuit as the other party to the lawsuit. As such, in a case where a lawsuit on a bankruptcy claim is pending, taking over the lawsuit pending in the final claim inspection judgment instead of filing an application for the final claim inspection judgment, it is for public interest to prevent any waste of the costs and time of the lawsuit and to avoid the spread of the litigation procedures. Thus, it is unreasonable for the court to ex officio file a lawsuit for final claim confirmation under Article 462(1) of the Debtor Rehabilitation Act to protect the rights of the debtor, and thus, to interpret the same effect as the former Debtor Rehabilitation Act’s discontinuation of rehabilitation claim under Article 462(1)28 of the Debtor Rehabilitation Act.

2) Any entry in the table of bankruptcy creditors on confirmed claims has the same effect as the final and conclusive judgment on all bankruptcy creditors (Article 460 of the Debtor Rehabilitation Act), and in cases where the debtor fails to raise an objection on the claim inspection date, entry in the table of bankruptcy creditors in the table of bankruptcy creditors has the same effect as the final and conclusive judgment on the debtor declared bankrupt (Article 535(1) of the Debtor Rehabilitation Act). Such effect of the table of bankruptcy creditors is no different from that of the bankruptcy creditors pursuant to Article 6(1) of the Debtor Rehabilitation Act. In other words, when the debtor is declared bankrupt, the bankruptcy procedure shall be abolished or terminated. In any case, the creditor may perform compulsory execution according to entry in the table of bankruptcy creditors (Articles 548(1) and 535(2) of the Debtor Rehabilitation Act). In light of the foregoing, in a lawsuit raising an objection against the final and conclusive judgment on the rehabilitation claim that has been pending at the time of the declaration of bankruptcy under Article 6(1) of the Debtor Rehabilitation Act, if any special circumstance exists to the court to seek the confirmation of the claim inspection creditors.

3) However, solely on the following grounds, solely on the grounds that the bankruptcy is declared pursuant to Article 6(1) of the Debtor Rehabilitation Act and the rehabilitation claim inspection procedure is in progress, it cannot be readily concluded that the legal interest to determine the existence and scope of the rehabilitation claim is extinguished through the previous rehabilitation claim inspection procedure. Therefore, if a party to a lawsuit objection to the rehabilitation claim inspection judgment seeks to add the purport of the claim seeking confirmation of the rehabilitation claim creditors while seeking the confirmation of the rehabilitation claim list, notwithstanding the bankruptcy declaration pursuant to Article 6(1) of the Debtor Rehabilitation Act and scheduled to be prepared in the table of bankruptcy creditors, it should be permitted.

A) The first rehabilitation procedure is aimed at determining the existence and scope of a rehabilitation claim as at the time of the decision to commence the rehabilitation procedure, and the claim inspection procedure that takes place in the bankruptcy procedure is aimed at determining the existence and scope of a bankruptcy claim as at the time of declaration of bankruptcy. In a case where a bankruptcy is declared pursuant to Article 6(1) of the Debtor Rehabilitation Act, any bankruptcy claim subject to the claim inspection procedure in the bankruptcy procedure should be determined as at the time of declaration of bankruptcy. As such, the former rehabilitation claim that became final and conclusive in the rehabilitation procedure ought to be determined by reflecting all the circumstances, such as the alteration of the rehabilitation claim in the rehabilitation

B) In addition, when it is decided to grant authorization for the rehabilitation plan, the rights of rehabilitation creditors, etc. are substantially changed according to the contents of the rehabilitation plan (Article 252(1) of the Debtor Rehabilitation Act), and compulsory execution, etc. cannot be conducted by title with respect to any rehabilitation claim or rehabilitation security right existing prior to the commencement of rehabilitation procedures, and only the entry of the table of rehabilitation creditors and the table of rehabilitation secured creditors becomes an executive title (see Supreme Court Order 2016Ma1256, May 23, 2017). In addition, the creditor may perform compulsory execution by way of the entry of the table of bankruptcy (Articles 548(1) and 535(2) of the Debtor Rehabilitation Act), and the compulsory execution may be conducted by title with respect to any bankruptcy claim that existed prior to the declaration of bankruptcy, such as the table of rehabilitation creditors, etc.

4) Furthermore, in the event that a bankruptcy is declared pursuant to Article 6(1) of the Debtor Rehabilitation Act, and the creditor or his counterpart took over a lawsuit of objection brought in the previous rehabilitation procedure, but the plaintiff of the lawsuit of objection does not express its clear intent, such as without modifying or adding the purport of the claim, the court shall point out this point and state clearly the parties’ intention (see Supreme Court Decision 2013Da69866, Jul. 9, 2015).

B. The lower court determined as to the existence and scope of the Plaintiff’s bankruptcy claim against the Defendants on the ground that the Plaintiff’s amendment to the purport of the Plaintiff’s appeal seeking the confirmation of rehabilitation claims, which is not the confirmation of bankruptcy claims, was denied, where an objection to the final claim inspection judgment is pending at the time of the declaration of bankruptcy, and the filing of a new final claim inspection judgment, was made by non-economic and unreasonable and unfair.

C. However, in light of the aforementioned legal principles and records, it is difficult to accept the judgment of the court below as it is for the following reasons.

In the lower court’s argument as to the absence of a bankruptcy claim, the Plaintiff presented a written statement to seek confirmation of non-existence of a rehabilitation claim and to revise the purport of the appeal. If so, the court should have ordered the intent of the Plaintiff to seek confirmation of non-existence of a bankruptcy claim and confirmation of non-existence of a rehabilitation claim at the same time.

Nevertheless, the lower court rejected the Plaintiff’s amendment of the purport of claim seeking confirmation of non-existence of a rehabilitation claim. In so doing, the lower court erred by misapprehending the legal doctrine on the filing of an objection to the judgment in claim allowance proceedings under Article 6(1) of the Debtor Rehabilitation Act and the interpretation of Article 464 of the Debtor Rehabilitation Act. The Plaintiff’s ground of appeal on the same purport is with merit.

3. Judgment on the second ground for appeal

A. When it is decided to grant authorization for a rehabilitation plan, the rights of rehabilitation creditors, etc. are substantially altered according to the rehabilitation plan, and the effect of the rehabilitation plan is not affected even after the rehabilitation procedures are discontinued (Article 288(4) of the Debtor Rehabilitation Act). Therefore, when the rehabilitation plan is authorized, the rights of rehabilitation creditors, etc. have the effect of wholly or partially exempting obligations pursuant to the provisions of the rehabilitation plan, where the deadline is extended, and where rehabilitation claims are converted into equity, the deadline for obligations is extended, and the rights are extinguished at the time prescribed in the rehabilitation plan (see Supreme Court Decision 2015Da22469, Oct. 26, 2017).

B. The lower court determined as follows on the grounds stated in its reasoning.

1) The Defendants had a rehabilitation claim equivalent to the amount indicated in the cited amount in the attached table No. 2 of the judgment of the court below with respect to Daewoo Motor Sales Co., Ltd. prior to the split-off. However, according to the approved rehabilitation plan of this case, only 85.8% of the Defendants’ rehabilitation claims against Daewoo Motor Sales Co., Ltd. prior to the split-off was divided into treatment and transmission-up development, and again, interest was exempted, respectively.

2) There is no evidence to deem that rehabilitation claims for the Defendants’ development of treatment delivery system were actually paid in cash or converted into equity based on the issuance of new shares. Therefore, 71.9% of the principal and interest of the rehabilitation claim for treatment delivery development remains.

3) Therefore, any bankruptcy claim against the Defendants’ treatment delivery development under the instant rehabilitation plan constitutes 61.6% of the amount indicated in the cited amount column in the attached Table 2 table of the lower judgment (i.e., 85.8 x 71.9% of the total amount).

C. However, in light of the aforementioned legal principles and records, it is difficult to accept the judgment of the court below as it is for the following reasons.

If rehabilitation procedures were abolished and bankruptcy was declared pursuant to Article 6(1) of the Debtor Rehabilitation Act, the court shall take into account the circumstances in which the contents of the previous rehabilitation plan were modified in determining the existence and scope of the bankruptcy claim as at the time of declaration of bankruptcy. If part of the rehabilitation claims were to be converted into equity, the court below should have further examined the time when the effect of the conversion into equity and at the time of declaration of bankruptcy. Even if the aforementioned development was not carried out against the Defendants, who are creditors, at the time of the declaration of bankruptcy, the effect of the conversion into equity as at the time of the declaration of bankruptcy, if the rehabilitation plan had already become effective as at the time of the declaration of bankruptcy, it would be difficult to view that the Defendants’ value of the right to request issuance of new shares for the transfer into equity as at the time of the declaration of bankruptcy was equivalent to the amount of the rehabilitation claim to substitute the original repayment.

Nevertheless, the lower court, based on its stated reasoning, determined that the Defendants’ bankruptcy claims against the Plaintiff were equivalent to 61.6% of the original rehabilitation claim including the part that the Defendants decided to convert into investments in the rehabilitation plan. In so doing, the lower court erred by misapprehending the legal doctrine on the validity of the rehabilitation plan approval. The Plaintiff’s ground of

4. Conclusion

Therefore, the part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

[Separate] List of Defendants: omitted

Justices Ahn Jae-chul (Presiding Justice)