[1] Where the reorganization company offered a guarantee for an affiliated company, which is the principal debtor, directly causes the creditor's contribution to the principal debtor, whether the act of guarantee is gratuitous

[2] Whether the exercise of the avoidance power is restricted where the act subject to avoidance under the former Company Reorganization Act is recognized (affirmative), and the standard for determining the reasonableness of the denial of gratuitous act

[1] Even in cases where the reorganization company's offering of a guarantee for the principal obligor directly causes a creditor's contribution to the principal obligor, it is nothing more than that of a de facto relationship between the creditor's act of guarantee and the creditor's contribution derived therefrom, and it cannot be viewed that the reorganization company's right to indemnity acquired by the reorganization company constitutes an economic interest as consideration for the act of guarantee. Thus, the reorganization company cannot deny the gratuitous nature of such guarantee unless the reorganization company receives a direct and realistic economic interest in return for the guarantee. This legal principle does not change even in cases where the reorganization

[2] An act subject to avoidance under the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Act on Debtor's Recovery and Bankruptcy, Act No. 7428 of March 31, 2005) is deemed to have been socially necessary, reasonable, or inevitable, depending on individual and specific circumstances at the time of the act. In such exceptional cases, the denial of gratuitous act cannot be subject to the exercise of avoidance power under Article 78 of the former Company Reorganization Act, in light of the guiding ideology or justice concept of creditor equality, debtor protection and interests adjustment. However, since the act is not accompanied by consideration, it is considerably dangerous to harm the company's profit and general interest of reorganization creditors, the determination of reasonableness of such act should be made by taking into account the purpose and intent of the act, motive of the act, whether a beneficiary in collusion with a beneficiary, etc., subjective reorganization of the company's property at the time of such act, economic and economic situation, and social factors, such as objective reorganization of the company's act, and objective economic and economic factors at the time of such act.

[1] Article 78 (1) 4 of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see current Article 100 (1) 4 of the Debtor Rehabilitation and Bankruptcy Act), Article 428 of the Civil Act / [2] Article 78 of the former Company Reorganization Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see current Article 100 of the Debtor Rehabilitation and Bankruptcy Act)

[1] Supreme Court Decision 97Da20755 delivered on March 26, 199 (Gong1999Sang, 760) Supreme Court Decision 2003Da29128 Delivered on September 26, 2003 / [2] Supreme Court Decision 2001Da78898 Delivered on August 23, 2002 (Gong2002Ha, 2199) Supreme Court Decision 2003Da65049 Delivered on March 26, 2004 (Gong2004Sang, 723)

Seoul High Court Decision 2006Na14488 delivered on August 1, 2006

New Bank (Attorney Lee Sang-hoon et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Na40626 decided June 16, 2006

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Even in cases where the reorganization company's offering of a guarantee for the principal debtor directly causes a creditor's contribution to the principal debtor, it is nothing more than that of a de facto relationship between the act of guarantee by the reorganization company and the creditor's contribution derived therefrom, and the right to indemnity acquired by the reorganization company does not always constitute an economic interest in consideration of the act of guarantee. Thus, the reorganization company cannot deny the gratuitous nature of such guarantee unless the reorganization company receives a direct and realistic economic benefit in return for the guarantee. Even in cases where the reorganization procedure was conducted for the principal debtor's affiliated company, it is for the purpose of reorganization reorganization and satisfaction of the reorganization company separate from the affiliated company, in view of the fact that the reorganization procedure is conducted for the purpose of satisfaction of the creditors through the reorganization of the reorganization company and the satisfaction of the total creditors through this (see, e.g., Supreme Court Decision 2003Da29128, Sept

Meanwhile, there may be cases where the act subject to avoidance under the former Company Reorganization Act (repealed by Act No. 7428 of March 31, 2005, Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005, hereinafter the "Company Reorganization Act") may be deemed to have been socially necessary or considerable, or unavoidable, depending on the individual and specific circumstances at the time of the act, and it may be deemed that the reorganization creditor should suffer decrease in the assets of the reorganization company or unfair business practices. In such exceptional cases, it shall not be subject to the exercise of avoidance power under Article 78 of the Company Reorganization Act in light of the guiding ideology or justice concept of the Company Reorganization Act (see Supreme Court Decisions 97Da20755, Mar. 26, 199; 2003Da29128, Sept. 26, 2003).

2. Comprehensively taking account of the evidence duly adopted by the court below, 0.00 U.S. 2, 2000 U.S. 8's total amount of loans borrowed from 0.0 billion U.S. 200 million won, and 0.0 billion U.S. 1's total amount of loans borrowed from 0.0 billion U.S. 2's financial institutions' 200 billion won and 0.0 billion U.S. 2's financial assets and 0.0 billion U.S. 2's financial assets and 0.0 billion U.S. 1's financial assets and 0.0 billion U. 2's financial assets and 0.0 billion U.S. 2's financial assets and 1's financial assets and 0.0 billion won were 1's financial assets and 2's financial assets and 0.0 billion won were 1's financial assets and 1'00 billion won.

In light of the aforementioned facts in light of the legal principles as seen earlier, Clothal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Ethal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Estal Est.

Nevertheless, the court below denied the exercise of the avoidance power of this case on the ground that it is reasonable and inevitable as at the time, and there is a special circumstance that cannot be deemed a gratuitous act under Article 78 (1) 4 of the Company Reorganization Act, since it erred by misapprehending the legal principles as to gratuitous father under the Company Reorganization Act, and thereby adversely affecting the conclusion of the judgment.

3. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Hong-hoon (Presiding Justice)