Plaintiff LLC (Law Firm Han & Lee, Attorneys Lee Il-hoon et al., Counsel for the plaintiff-appellant)

Intervenor Co., Ltd. (Attorney next-hwan, Counsel for the intervenor-appellant)

Defendant (Law Firm Jin, Attorneys Lee Jae-in et al., Counsel for the defendant-appellant)

November 13, 2008

1. The Seoul Central District Court (2007. 8. 10 August 10, 2007) authorize the final claim inspection judgment of 2007. 55

2. The costs of lawsuit shall be borne by the intervenor succeeding to the plaintiff.

On August 10, 2007, the Seoul Central District Court rendered a final claim inspection judgment No. 2007da555 dated August 10, 2007, as follows. The rehabilitation claim of the plaintiff's defendant corporation is KRW 28,670,00,000 for the rehabilitation claim of the defendant corporation.

1. Facts of recognition;

A. On December 8, 1997, Nonparty 2 Co., Ltd. entered into a bill trading agreement with the Defendant Company under the joint and several guarantee of Nonparty 1 Co., Ltd. (the Supreme Court decision). Accordingly, Nonparty 2 Co., Ltd. acquired three copies of a promissory note issued by the Defendant Company. The claim based on the above bill trading agreement against the Defendant Co., Ltd. was transferred in sequence to Nonparty 3, Nonparty 4, Plaintiff, and Plaintiff’s successor.

B. On November 24, 200, the Seoul District Court 2000. The defendant company was ordered to commence a company reorganization procedure by the Seoul District Court 2000. On May 11, 2001, the defendant company was declared bankrupt on May 11, 2001, and was decided to commence a company reorganization procedure as Seoul Central District Court 2006Kahap16 on January 9, 2007. On October 16, 2007, the rehabilitation procedure was completed on March 28, 2008. On the other hand, the non-party 1 was decided to commence a company reorganization procedure by the Seoul District Court on November 24, 200, and was approved by the same court on June 12, 200, and was decided to complete a company reorganization procedure by March 28, 2008.

C. On June 1, 2006, the Plaintiff received 610,000 shares of the non-party 1 corporation by means of allocating one share per share per face value of 5,000 per share to the non-party 1 corporation according to the reorganization plan in reorganization proceedings against the non-party 1 corporation.

D. On February 21, 2007, the Plaintiff reported the claim as a rehabilitation security right on the ground that the right to collateral security was established on real estate, such as Geumdo-si Administrative Ri (number omitted) in connection with the above bill transaction agreement with the Defendant Company, and reported the claim as a rehabilitation security right, and reported the claim amount to KRW 15,250,000,000 (25,000 x 610,000 x 610,000), which was assessed as KRW 25,000 per share, which was assessed as KRW 141,575,146,693, which was assessed as KRW 146,693 per share in the reorganization proceedings of the Nonparty Company 1 Company.

E. On the other hand, the administrator calculated the Plaintiff’s rehabilitation claim amount of KRW 43,920,000 ( KRW 72,000 x 610,000) which assessed the market price of June 1, 2006 as KRW 72,000 per share of the shares of Nonparty 1, which were converted into investment in the reorganization proceedings of Nonparty 1, as the claim termination amount, as the claim termination amount, and calculated the amount of KRW 94,478,131,615, as the rehabilitation claim amount of KRW 65,683,348 among them, as the rehabilitation claim, the remaining amount of KRW 94,412,48,267 as the rehabilitation claim.

F. Accordingly, the plaintiff filed a final claim inspection judgment against the administrator of the defendant company at the court No. 2007.55, and the reorganization plan of the non-party company 1 provides that the claims of KRW 25,000 per share of the stock into equity investment shall be extinguished on the effective date due to the plaintiff's conversion into equity investment. Thus, the amount of the rehabilitation claim extinguished due to the plaintiff's conversion into equity investment is merely 15,250,000 won, and the amount of the rehabilitation claim extinguished due to the plaintiff's conversion into equity investment is merely 43,920,000 won assessed by the administrator, which is equivalent to the difference between the amount of KRW 43,920,000,000, which is 28,670,0000,000 won. However, on August 10, 2007, the competent full bench rejected the plaintiff's claim for the rehabilitation claim against the defendant company.

G. Meanwhile, the non-party 1 corporation reported the claim for indemnity determined by the Plaintiff’s debt-equity swap in the rehabilitation procedure of the Defendant company, and calculated the amount of the claim based on approximately KRW 71,336 per share of the non-party 1 corporation.

[Reasons for Recognition]

Facts without dispute, Gap evidence 1, 2, Eul evidence 1 to 3, the purport of the whole pleadings

2. The plaintiff's successor's assertion

A. The scope of the claims asserted in the rehabilitation procedure against the defendant company

The plaintiff succeeding intervenor asserts that for the following reasons, the amount of claims extinguished by conversion of investment in the reorganization proceedings against the non-party 1 corporation may be exercised in the rehabilitation proceedings against the defendant corporation.

① The case where rehabilitation proceedings against Defendant Company commence immediately in the course of bankruptcy proceedings, falls under the so-called insolvency proceedings that are not interrupted, and thus, in applying the existing principle of value, the rehabilitation proceedings against the Defendant Company ought to be deemed as having the claims reported at the time of bankruptcy, instead of distinguishing the bankruptcy proceedings and the rehabilitation proceedings, and can be exercised with the claims reported at the

② Where the initial bankruptcy procedure has been pending or the first rehabilitation procedure has been progress, a creditor may participate in the relevant procedure with the full amount of claims reported even if the entire obligor fully pays a part of claims, and even in cases where converting the rehabilitation procedure into the bankruptcy procedure, the content of the declaration of rehabilitation claims and the confirmation of the rehabilitation claim inspection procedure, etc. under Article 6(5) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “Rehabilitation Act”) is recognized as they are in the bankruptcy procedure, and may participate in the continuing bankruptcy procedure with the full amount of claims reported in the initial rehabilitation procedure. However, it is against the principle of equity and fairness, which is the basic principle of the insolvency procedure, inasmuch as the claims are partially extinguished by the partial repayment of the entire obligor before the commencement of the rehabilitation procedure, solely on the ground that there is no express provision in the bankruptcy procedure.

(b) Calculation of the amount of claims extinguished upon conversion;

Even if it is determined that the family bankruptcy procedure is not continuous, since the plaintiff's guaranteed claim in the reorganization proceedings of the non-party 1 corporation was treated as being paid at KRW 15,250,000 per share in accordance with the conversion of investment, the principal obligation against the plaintiff of the defendant company was also extinguished as much as the above amount. However, the principal obligation against the plaintiff of the defendant company was paid at KRW 43,920,000 in excess of the above guaranteed obligation amount goes against the basic principles of the Civil Act concerning the relationship between the principal obligation and the guaranteed obligation.

3. Determination

A. Determination on the first argument

First of all, in applying the existing principle of value to a bankruptcy procedure where a rehabilitation procedure has commenced in the course of bankruptcy procedure as in the instant case, the same procedure should be grasped in applying the existing principle of value. ① The rehabilitation procedure reflects the legal relationship among interested parties, such as creditors, shareholders and equity right holders, etc. with respect to a debtor faced with a failure due to financial difficulties, to facilitate efficient rehabilitation of the debtor or debtor's business. The bankruptcy procedure differs from the two system's purpose, procedure, regulation principle, etc. (2) where a rehabilitation procedure is commenced in the course of bankruptcy procedure, the former bankruptcy procedure is suspended (Article 58(2)1); (3) where a rehabilitation procedure is commenced in the course of rehabilitation procedure, the suspended bankruptcy procedure loses its effect (Article 256(1)); and (4) where a bankruptcy procedure is commenced in the course of bankruptcy procedure, a report on rehabilitation claim, inspection or confirmation is deemed as a bankruptcy claim, inspection or confirmation conducted in the bankruptcy procedure; and (5) where the bankruptcy procedure begins separately from the bankruptcy procedure's independent procedure (Article 6).

Next, it can be deemed that the current principle of equity and equity is applied only to cases where rehabilitation procedures are converted into rehabilitation procedures, on the ground that there is no express provision in the rehabilitation procedures. ① Where a company’s debt amount is converted from rehabilitation procedures to bankruptcy procedures, it is necessary to assess the amount of debt amount of the company’s debt. However, it is unreasonable to put creditors at a disadvantage than the case where rehabilitation procedures are commenced due to erroneous rehabilitation procedures. Furthermore, if creditors can exercise their rights in the bankruptcy procedures only when the amount of debt is deducted from the amount of repayment under the rehabilitation procedures, the creditors who received repayment under the premise of rehabilitation such as debt-equity swap would suffer losses. Therefore, in order to solve these problems, the same provision as Article 6(5) of the Debtor Rehabilitation Act is necessary to determine the debtor’s debt amount in the rehabilitation procedures, and thus, it is difficult to determine that the company’s debt amount would go against the principle of equity and equity, even if the repayment was performed in the bankruptcy procedures before the rehabilitation procedures, and thus, it is difficult to determine that the company’s debt amount would go against the principle of equity and equity procedures.

Therefore, since the amount of claims extinguished by conversion of investment in the reorganization proceedings against the non-party 1 corporation before the commencement of rehabilitation proceedings against the defendant corporation cannot be exercised in the rehabilitation proceedings against the defendant corporation, the plaintiff's succeeding intervenor's above assertion is without merit.

B. Judgment on the second argument

In a case where it is decided to substitute a reorganization claim or security in whole or in part due to conversion of investment in the method of issuing new shares in the reorganization plan, it shall be deemed that the principal obligation of the reorganization company is substantially satisfied with respect to the amount equivalent to the market price of the new shares that the reorganization creditor or security holder acquired at the time of the entry into force of the issuance of new shares, and the guaranteed obligation shall also be deemed extinguished (see Supreme Court Decision 2004Da27143, Jan. 27, 2005, etc.). In a case where the reorganization procedure is to substitute a payment in whole or in part of a claim through a conversion of investment in the reorganization procedure, it cannot be found any reason to be different depending on whether the subject of the above reorganization procedure is a principal obligor or a joint and several surety obligor. Rather, deeming a difference is contrary to the principle of fairness and equity that should be most important in the bankruptcy procedure and rehabilitation procedure. Therefore, it is reasonable to deem that the foregoing legal principle is likewise applicable to a case where a conversion of investment in the reorganization procedure against a joint and several surety.

Therefore, as seen earlier, the Plaintiff’s principal obligation shall also be deemed to have been repaid KRW 43,920,000, which is calculated by applying KRW 72,000,000, which is the market price, on June 1, 2006, which is the effective date of the issuance of new shares by Nonparty 1 Company. Accordingly, the Plaintiff’s principal obligation shall be deemed to have been repaid.

4. Conclusion

Therefore, the plaintiff's claim by the plaintiff succeeding intervenor is without merit and this court is justified in the final claim inspection judgment No. 2007.55, and it is decided as per Disposition with the approval of the final claim inspection judgment.

Judges Ansan-jin (Presiding Judge)