[1] The base period for calculating the amount of compensation in a case where compensation for the equivalent value is based on restitution following the revocation of fraudulent act (=the time of closing argument in the court of fact-finding)

[2] Whether a beneficiary's bad faith is presumed in a case where a debtor's act of offering security to a third party constitutes a fraudulent act objectively (affirmative)

[3] In a case where a debtor provided security to one obligee to be postponed from the performance of an existing obligation without financing new funds, whether it constitutes a fraudulent act in relation to other obligees (affirmative in principle)

[1] Restoration following the revocation of a fraudulent act must be based on the return of the object itself, but in cases where it is impossible or considerably difficult, compensation shall be based on exceptional cases, and in calculating the amount of compensation, the value shall be objectively assessed based on the time of closing argument at the fact-finding court regardless of the price actually received by the beneficiary from the subsequent purchaser.

[2] If the debtor's act of offering security to a third party objectively constitutes a fraudulent act, the beneficiary's bad faith is presumed, so unless the beneficiary proves that he/she was bona fide at the time of the legal act, the creditor may cancel the legal act and claim restitution for the original state accordingly.

[3] In a debtor who has already been in excess of his/her obligation, business promotion difficulties arising from enforcement and preservation measures for recovery of claims, such as compulsory execution or provisional seizure, may occur at the same time regardless of the creditor’s amount of claims or the maturity for collection of claims. Moreover, it is difficult to assess discriminatory measures as to the necessity of preferential security among creditors solely on the ground that a specific creditor, as at the time, actively showed such measures against the debtor. Furthermore, the economic significance of the debtor’s introduction of new funds that the debtor could actually utilize in business activities and the extension of the period for the fulfillment of existing obligations or the postponement of collection of claims is the same as the rehabilitation of the business, or continuous implementation of the business. Therefore, even if the debtor intended to complete or continue the business, the debtor’s offering of security to one of his/her creditors for the repayment of existing obligations without new funds should be deemed as fraudulent act in relation to other creditors, unless there are any special circumstances.

[1] Article 406 of the Civil Code / [2] Article 406 of the Civil Code / [3] Article 406 of the Civil Code

[1] Supreme Court Decision 2004Da35465 Decided September 28, 2006 / [2] Supreme Court Decision 2006Da5710 Decided April 14, 2006 (Gong2006Sang, 807) / [3] Supreme Court Decision 2008Da29215 Decided March 12, 2009 (Gong2009Sang, 448) Supreme Court Decision 2008Da80807 Decided May 28, 2009

Korea Credit Guarantee Fund (Law Firm Sejong, Attorneys Kang-gu et al., Counsel for the defendant-appellant)

Industrial Bank of Korea (Law Firm Han, Attorney Lee Jong-soo, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2009Na36816 decided November 19, 2009

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

We examine the grounds of appeal.

1. Regarding ground of appeal No. 1

A. Reinstatement following the revocation of a fraudulent act should, in principle, be based on the return of the subject matter itself. However, in cases where it is impossible or considerably difficult, the equivalent compensation should be exceptionally applied, and in calculating the equivalent compensation, the equivalent value should be objectively assessed based on the time of closing argument at the fact-finding court regardless of the price actually received by the beneficiary from the subsequent purchaser (see Supreme Court Decision 2004Da35465, Sept. 28, 2006, etc.).

B. According to the reasoning of the judgment below, even if the defendant, a beneficiary, transferred the second collateral collateral security of this case to a limited company specializing in securitization without receiving any consideration, the defendant is obligated to compensate the plaintiff for the value of the plaintiff if the plaintiff, a creditor, claims restitution after receiving a final judgment in favor of the creditor in the lawsuit for the revocation of this case. The value calculation should be objectively evaluated as at the time of closing argument in the fact-finding proceedings, regardless of the amount received from the limited company specializing in securitization in the first half half of the year. Therefore, as long as the plaintiff's revocation of fraudulent act against the defendant and the claim for restitution of the value of the fraudulent act is profitable, the lawsuit in this case shall not be deemed to be an unlawful lawsuit without any interest in the lawsuit, as long as it is beneficial to the claim for restitution of the value of the fraudulent act after receiving a final judgment in favor of the defendant. In light of

2. Regarding ground of appeal No. 2

A. A debtor's act of offering security to a third party constitutes an objective fraudulent act is presumed to have been malicious by the beneficiary. Thus, unless the beneficiary proves that the third party was bona fide at the time of the juristic act, the creditor may cancel the juristic act and claim restitution for the original state accordingly (see Supreme Court Decision 2006Da5710, Apr. 14, 2006, etc.).

Meanwhile, in a debtor who has already been in excess of his/her obligation, business promotion difficulties arising from enforcement and preservation measures for recovery of claims, such as compulsory execution or provisional seizure, may occur at the same time regardless of the creditor’s amount of claims or the maturity of such measures. Moreover, it is difficult to assess discriminatory treatment as to the necessity of preferential security among creditors solely on the ground that a specific creditor, as at the time, actively showed such collection measures against the debtor. Furthermore, the economic significance of the debtor’s introduction of new funds that the debtor could actually utilize in business activities, extension of the period of due to the repayment of the existing obligation, or postponement of collection of claims, is the same as the rehabilitation of the business, or continuous implementation of the business. Therefore, even if the debtor intended to complete or continue the business, the act of offering security to one of his/her creditors for the repayment of the existing obligation without new funds, should be deemed as fraudulent act in relation to other creditors (see Supreme Court Decisions 2008Da29215, Mar. 12, 2009; 208Da878, Aug. 28, 2009

B. Based on the reasoning of the judgment of the court of first instance, the court below presumed that the defendant's bad faith as the beneficiary was presumed, and in this case, the defendant was in excess of his obligation at the time when the contract for the second collateral security was concluded, and even if only the registration of the land and the building in this case was made, it appears that the defendant was aware of the above circumstances at the time when the contract for the second collateral security was concluded. Further, the defendant also knew of the above circumstances at the time of the contract for the second collateral security of this case, and the measures such as filing and withdrawal of the defendant's request for auction and extension of the loan period are against the balance between the creditors, including the plaintiff, if the defendant has priority over the building of this case newly incorporated into the P P P P P P P P PP with the responsible property. In light of the above legal principles and records, the judgment of the court below is just, and it did not err by failing to exhaust all necessary deliberations as to the defendant's intention of understanding as otherwise alleged in

3. Conclusion

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 Hong-hoon (Presiding Justice)