[1] In a case where a practical legal dispute cannot be resolved by a literal interpretation or logical interpretation of the provisions of the positive law of civil law, or where a result is brought about considerably contrary to the concept of social justice, whether it may be analogically applied (affirmative) and the limitation thereof (affirmative)

[2] Where a creditor is a regional credit guarantee foundation, whether Article 37-3 of the Korea Technology Finance Corporation Act excluding the application of Article 250 (2) 1 of the Debtor Rehabilitation and Bankruptcy Act and Article 30-3 of the Credit Guarantee Fund Act are applied by analogy (negative)

[1] In a case where the literal interpretation or logical interpretation of the provisions of the Civil Act alone is unable to resolve a realistic legal dispute or brings about a result that substantially reflects on the concept of social justice, the court may apply mutatis mutandis to the application of legal norms on matters similar thereto, which are not subject to legal regulations, by examining the legislative spirit of the positive law, so that the court can reasonably resolve legal disputes and draw up a result that is compatible with the concept of justice. In order to such analogical application, there should be a common or similar point between a matter that does not have legal regulations and a matter that is subject to legal regulations. However, analogical application may only be recognized where it is deemed legitimate by analogical application in light of the legal system, legislative intent, and purpose.

[2] Under Article 250(2)1 of the Debtor Rehabilitation and Bankruptcy Act, the primary guarantee obligation has an infinite nature to be reduced within the scope of the primary obligation (Article 430 of the Civil Act), and Article 250(2)1 of the Debtor Rehabilitation and Bankruptcy Act provides for exceptions to the infinite nature of the guaranteed obligation on the grounds that if the obligor’s rehabilitation procedures include the infinite nature of the guaranteed obligation, it would result in an excessive harsh outcome to

Even in cases where a rehabilitation plan is approved and the debt settlement of a rehabilitation company is conducted, the effect of debt settlement does not extend to the joint and several managers who jointly and severally guaranteed the debtor company. Accordingly, in light of the fact that it is difficult for the management company to reorganize the debt, and that the management company's joint and several debt guarantee is eventually difficult to effectively recover the company, it was newly established Article 37-3 of the Korea Technology Finance Corporation Act and Article 30-3 of the Credit Guarantee Fund Act. The application of this provision is excluded from the application of Article 250 (2) 1 of the Debtor Rehabilitation Act, which provides for exceptions to the subsidiary nature of the guaranteed debt, and ultimately, the subsidiary nature of the guaranteed debt is recognized.

However, the Regional Credit Guarantee Foundation, which applies to the Regional Credit Guarantee Foundation, does not exclude the application of Article 250(2)1 of the Debtor Rehabilitation Act. In this case, in applying mutatis mutandis Article 37-3 of the Korea Technology Finance Corporation Act and Article 30-3 of the Credit Guarantee Fund Act to the Regional Credit Guarantee Foundation, where a creditor is a regional credit guarantee foundation, the conclusion that joint and several surety obligations shall be mitigated or exempted at the same rate when the principal obligation is mitigated or exempted according to the rehabilitation plan authorized.

Although the above provisions are inevitable in which the rights of creditors are sacrificed, the legislators decided to treat the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund differently from the general creditors, and provide special exceptions. Therefore, it cannot be said that the above provisions are defective on the ground that there is no such provision as the Regional Credit Guarantee Foundation Act.

Therefore, it is not necessary to affirm analogical application solely on the ground that there is a similar point that the Korea Technology Finance Corporation or the Korea Technology Finance Corporation provides guarantee services for debtors between the Korea Technology Finance Corporation and the Korea Credit Guarantee Fund or the Korea Credit Guarantee Fund. While the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund aims to contribute to the development of the national economy (Article 1 of the Korea Technology Finance Corporation Act, Article 1 of the Credit Guarantee Fund Act), the regional credit guarantee foundation aims to contribute to the revitalization of regional economy and the promotion of the welfare of the ordinary people (Article 1 of the Regional Credit Guarantee Foundation Act). Unlike the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund, the regional credit guarantee foundation is receiving contributions to raise funds from the Government and local governments (Article 13 of the Korea Technology Finance Corporation Act, Article 6 of the Korea Technology Finance Corporation Act, Article 7 of the Regional Credit Guarantee Fund Act). Unlike the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund, the Korea Technology Finance Corporation and the Korea Credit Guarantee Fund are limited to 3 billion won (Article 23 (2) of the Enforcement Decree of the Korea Technology Finance Corporation Act, Article 20 (3) of the Korea Technology Credit Guarantee Fund Act).

[1] Article 105 of the Civil Code / [2] Article 430 of the Civil Code, Article 250 (2) 1 of the Debtor Rehabilitation and Bankruptcy Act, Article 37-3 of the Korea Technology Finance Corporation Act, Article 30-3 of the Credit Guarantee Fund Act

[1] Supreme Court Decision 93Da52808 delivered on August 12, 1994 (Gong1994Ha, 2291)

Gyeonggi Credit Guarantee Foundation (Law Firm Yang, Attorneys Park hwan-si et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm L&W, Attorneys Kim Chungcheong-hwan et al., Counsel for the defendant-appellant)

Seoul Central District Court Decision 2018Na53926 Decided March 22, 2019

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

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

1. Progress and key issues

According to Article 250(2)1 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”), the alteration of the right that arises from the authorization of the rehabilitation plan for a debtor does not affect the creditor’s right to the guarantor of the debtor. In the Korea Technology Finance Corporation Act and the Credit Guarantee Fund Act, where the creditor is the Korea Technology Finance Corporation or the Korea Technology Finance Fund, the Korea Technology Finance Corporation and the Korea Credit Guarantee Fund established a provision that the debtor’s joint and several liability shall also be mitigated or exempted at the same rate when the principal obligation is reduced or exempted at the time when the rehabilitation plan is authorized (Article 37-3 of the Korea Technology Finance Corporation Act and Article 30-3 of the Credit Guarantee Fund Act). However, unlike Article 37-3 of the Korea Technology Finance Corporation Act and Article 30-3 of the Credit Guarantee Fund Act, the Regional Credit Guarantee Foundation applied to the Plaintiff does not provide for the reduction or exemption of the principal

The first instance judgment determined that the Defendant’s joint and several liability obligations are either mitigated or exempted at the same rate according to the approval plan for rehabilitation plans of the non-SP in this case where the non-SP Co., Ltd., a small enterprise (hereinafter “non-SP”) and the representative director of the non-SP, under a credit guarantee agreement with the Plaintiff that is a regional credit guarantee foundation in order to obtain a loan from a financial company. In accordance with the legislative process and intent of Article 37-3 of the Korea Technology Finance Corporation Act or Article 30-3 of the Credit Guarantee Fund Act, the exception to Article 250(2) of the Debtor Rehabilitation Act should be recognized. However, the lower judgment determined that the alteration of the right according to the authorization for the rehabilitation plan does not affect the debtor’s guarantor pursuant to Article 250(2)1 of the Debtor Rehabilitation Act, and that the Regional Credit Guarantee Foundation applied to the Plaintiff does not have the same provision as the Korea Technology Finance Corporation Act or Article 30-3 of the Credit Guarantee Fund Act.

The main issue of the instant case is whether, in cases where a creditor is a regional credit guarantee foundation, if the principal debtor’s rehabilitation plan is authorized and the principal debtor’s debt is mitigated or exempted, the joint and several liability is reduced or exempted at the same rate. The conclusion differs depending on whether Article 37-3 of the Korea Technology Finance Corporation Act or Article 30-3 of the Credit Guarantee Fund Act is applied by analogy.

2. Whether Article 37-3 of the Korea Technology Finance Corporation Act or Article 30-3 of the Credit Guarantee Fund Act applies mutatis mutandis to a regional credit guarantee foundation (ground of appeal No. 2)

A. In a case where the literal interpretation or logical interpretation of the positive legal provision of the civil law alone cannot resolve a realistic legal dispute or brings about a result that substantially reflects on the concept of social justice, it may be applied by analogy so that the court can resolve a legal dispute reasonably by examining the legislative spirit of the positive law and draw up a result that is compatible with the concept of justice (see, e.g., Supreme Court Decision 93Da52808, Aug. 12, 1994). The analogical application of the law is to supplement the defect of the law, and to apply the legal norm on similar matters to which there is no legal regulation. For such an analogical application, there must be a common point or a similar point between a case without a legal regulation and a case where a legal regulation is established. However, analogical application can only be recognized only when it is evaluated that analogical application is justifiable in light of the legal system, legislative intent and purpose, etc.

B. Under Article 250(2)1 of the Debtor Rehabilitation Act, the primary guarantee obligation has the nature of reduction within the scope of the primary obligation (Article 430 of the Civil Act); and on the ground that the obligor’s rehabilitation procedures also bring about an excessive harsh result to the obligee if the subsidiary nature of the guarantee obligation is fulfilled, an exception to the subsidiary nature of the guarantee obligation is stipulated.

Even in cases where a rehabilitation plan is approved and the debt settlement of a rehabilitation company is conducted, the effect of debt settlement does not extend to the joint and several managers who jointly and severally guaranteed the debtor company. Accordingly, in light of the fact that it is difficult for the management company to reorganize the debt, and that the management company's joint and several debt guarantee is eventually difficult to effectively recover the company, it was newly established Article 37-3 of the Korea Technology Finance Corporation Act and Article 30-3 of the Credit Guarantee Fund Act. The application of this provision is excluded from the application of Article 250 (2) 1 of the Debtor Rehabilitation Act, which provides for exceptions to the subsidiary nature of the guaranteed debt, and ultimately, the subsidiary nature of the guaranteed debt is recognized.

However, Article 250(2)1 of the Debtor Rehabilitation Act does not exclude the application of the Regional Credit Guarantee Foundation applicable to the Plaintiff, such as the Plaintiff. In this case, in applying mutatis mutandis Article 37-3 of the Korea Technology Finance Corporation Act and Article 30-3 of the Credit Guarantee Fund Act to the Regional Credit Guarantee Foundation, where a creditor is a regional credit guarantee foundation, the conclusion that joint and several surety obligations shall also be mitigated or exempted at the same rate when the principal obligation is reduced or exempted according to the rehabilitation plan approved. The reasons are

Although the above provisions are inevitable in which the rights of creditors are sacrificed, the legislators decided to treat the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund differently from the general creditors, and provide special exceptions. Therefore, it cannot be said that the above provisions are defective on the ground that there is no such provision as the Regional Credit Guarantee Foundation Act.

Therefore, it is not necessary to affirm analogical application solely on the ground that there is a similar point that the Korea Technology Finance Corporation or the Korea Technology Finance Corporation provides guarantee services for debtors between the Korea Technology Finance Corporation and the Korea Credit Guarantee Fund or the Korea Credit Guarantee Fund. While the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund aims to contribute to the development of the national economy (Article 1 of the Korea Technology Finance Corporation Act, Article 1 of the Credit Guarantee Fund Act), the regional credit guarantee foundation aims to contribute to the revitalization of regional economy and the promotion of the welfare of the ordinary people (Article 1 of the Regional Credit Guarantee Foundation Act). Unlike the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund, the regional credit guarantee foundation is receiving contributions to raise funds from the Government and local governments (Article 13 of the Korea Technology Finance Corporation Act, Article 6 of the Korea Technology Finance Corporation Act, Article 7 of the Regional Credit Guarantee Fund Act). Unlike the Korea Technology Finance Corporation or the Korea Credit Guarantee Fund, the Korea Technology Finance Corporation and the Korea Credit Guarantee Fund are limited to 3 billion won (Article 23 (2) of the Enforcement Decree of the Korea Technology Finance Corporation Act, Article 20 (3) of the Korea Technology Credit Guarantee Fund Act).

C. The lower court determined that the Defendant could not oppose the Plaintiff on the ground that the primary obligation was changed or reduced in accordance with the rehabilitation plan. In light of the foregoing legal doctrine, the lower court did not err in its interpretation of statutes and the error in the application of statutes, as otherwise alleged in the

3. Whether the company violated its duty to examine the value of stocks converted into investment or to explain (ground of appeal No. 1)

The lower court determined that, inasmuch as there was no evidence to prove that the Plaintiff acquired profits equivalent to the market price of the shares by acquiring new shares that could be disposed of, even if the primary debtor had issued new shares according to a conversion into investment according to the rehabilitation plan of the primary debtor, the Defendant’s guaranteed liability was not deemed to have extinguished within the same scope, on the

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by failing to exhaust all necessary deliberations or by failing to exercise the right to explain, contrary to what is alleged in the grounds of appeal.

4. Conclusion

The Defendant’s appeal is dismissed as it is without merit, 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.

Justices Lee Dong-won (Presiding Justice)