Late Filing of Rehabilitation Claims, Standards for Confirmation of the Plan, and Extinction of Trust Beneficial Rights: Three Supreme Court Decisions

Question

In a case where a claim arising after the reporting period for rehabilitation claims had elapsed was supplemented by a supplementary report, the first issue is whether, even after the rehabilitation court has accepted the report and referred it to the investigation procedure, interested parties may still contest the existence or non-existence of the rehabilitation claim on the ground of defects in the requirements for supplementation. In particular, it is also at issue whether there were grounds for which participation within the reporting period could not reasonably be expected, and whether the statement of objection made at the special investigation date was a statement contesting the substance of the claim.

It is also at issue at what point in time, and on the basis of which materials, the court shall determine the requirements for approval of the rehabilitation plan, which of the several reports submitted by the examiner shall be chosen, and to what extent differential treatment among holders of rights of the same kind is permitted. In addition, whether the appropriateness of the price of a transfer of business or a sale of assets conducted prior to approval is automatically proven in the examination of the approval requirements must be examined together.

The third issue is the order in which the legal nature and duration of the priority beneficial right in a mortgage trust are to be viewed, and whether a payment in kind made after the beneficial right was extinguished upon termination of the trust contract constitutes an act prejudicing creditors. Overlapping with this are the scope of recognition of the receivables stated in the audit report and of the assertion of set-off, and the requirements for a claim exercised by way of subrogation of the debtor's rights.

Material to check

As to the claim issues, one must first collect the supplementary report and the time of its submission, the prima facie supporting materials establishing that the claim arose after the reporting period had elapsed, the record that the rehabilitation court accepted the report, and, where an order of dismissal on procedural grounds was issued, the document setting out its reasons. One then confirms the records showing who made the statement of objection at the special investigation date and what its content was, and whether that statement contests the existence or non-existence of the claim or instead raises an issue as to the statutory requirements for the report.

As to the plan approval issues, one must secure the rehabilitation plan and its amendments, the examiner's report and the time of preparation and underlying materials of the several reports, the minutes of the meeting of interested parties and the content of the dissenting proposal, and the liquidation value calculation materials. One also reviews together the ruling granting permission for the pre-approval transfer of business and the grounds for the price calculation, the materials showing whether the transaction was carried out as part of disposal and realization, and the procedural documents showing that the procedure for soliciting opinions was followed.

As to the trust issues, one confirms the originals of the first trust contract and the second trust contract, the provisions fixing in concrete terms the content of the priority beneficial right, the notice of termination and the time of its arrival, and the materials showing whether the trustee was involved in the settlement of the disposal proceeds. Who the seller and the party effecting registration were under the sales contract, and by what route the disposal proceeds flowed, are also subjects of cross-checking.

As to the accounting and subrogation issues, one must collect the audit report and the statement of receivables, the contract and transaction records underlying the assertion of set-off, and the materials showing the existence or non-existence of the rights that are the subject of the subrogation claim. The written opinions and records of statements submitted in the creditors' meeting or in the objection procedure are also necessary to understand the flow of the reasoning.

Possible readings

As to the supplementary report, one side takes the view that, once the report has been accepted and referred to the investigation procedure, the statutory requirements for the report can no longer be contested, and that the statement of objection at the special investigation date must be understood as a statement concerning the existence or non-existence of the claim. The other side takes the view that the acceptance ruling is confined to a procedural determination as to whether the report is accepted, so that substantive defects may be contested in the claim investigation and determination procedure, and that the meaning of the statement of objection is determined according to whether there was an intent to block confirmation.

As to the approval examination, one side takes the view that the standard is the time of the determination on approval, that where an immediate appeal against a ruling is filed, all materials submitted up to the time of the ruling of the appeal instance must be examined, and that the examiner's report is difficult to reject absent special circumstances such as its being contrary to the truth. The other side takes the view that the scope of the investigation of approval requirements is confined to the materials of the court below, or assigns low probative value to the examiner's report, and that the appropriateness of the pre-approval sale price must also be proven separately.

In the trust matter, one side takes the view that the priority beneficial right is merely a contractual right to receive priority payment out of the disposal proceeds and not a security interest, so that a payment in kind made after the right was extinguished upon termination of the trust becomes the subject of a fraudulent act determination. The other side takes the view that, in light of the circumstances of the registration and the trustee's involvement, the disposal must be regarded as part of the disposal and realization, so that the payment in kind is not a fraudulent act, and that receivables and set-off may be recognized on the basis of the entries in the audit report alone.

What the decisions held

In 2015Da56789, the Supreme Court held that where a rehabilitation claim that arose after the expiry of the filing period is filed under Article 153 of the Debtor Rehabilitation and Bankruptcy Act, the rehabilitation court must examine the requirements of Article 153(1) and of Article 152(2) and (3) as applied mutatis mutandis by Article 153(2), and, depending on whether the filing is lawful, must either issue a decision dismissing it or put it through the investigation procedure as a rehabilitation claim. Because the determination of whether a late filing is lawful is a procedural determination on whether to accept the filing, and the claim investigation and determination procedure is not a procedure for causing rehabilitation claims to be forfeited, once the rehabilitation court has found a late filing lawful, held a special investigation hearing and completed the investigation procedure, the filing can no longer be challenged on the ground that the requirements for supplementation were not met. The Court further held, however, that where there are grounds on which participation within the filing period could not have been expected, supplementation is permitted even after the meeting of interested parties, and that a statement concerning whether the filing is lawful does not constitute an objection under Article 170(1).

In 2016Ma5352, the Supreme Court held that the court must examine ex officio the requirements for confirmation of a rehabilitation plan, that the assessment is to be made as at the time of the decision on whether to confirm the plan, and that where an immediate appeal has been lodged, whether any confirmation requirement is lacking must be assessed on the basis of all materials submitted up to the time of the appellate decision. The examiner's report on the circumstances at the commencement of proceedings is not lightly to be rejected absent special circumstances, such as its being contrary to the truth; the choice among multiple reports falls within the court's discretion unless it is manifestly erroneous; and a failure to subdivide classes of the same kind is not unlawful unless it exceeds the bounds of discretion. The Court stated that fairness and equity mean differentiation between rights of different kinds and substantive equality among rights of the same kind, and that feasibility means the likelihood of attaining a sound financial condition after repayment; that a failure to consult opinions is a matter of procedural compliance rather than of the feasibility requirement; and that a provision guaranteeing at least the liquidation value applicable where the plan is rejected may be used as a rights-protection clause.

In 2016Da223357, the Supreme Court held that under Article 56(1) of the Trust Act a person designated as beneficiary as provided in the trust instrument acquires the beneficial right as a matter of course, and that while its specific content may be determined in various ways in accordance with the principle of freedom of contract, a preferential beneficial right is not a real security right but a right under the trust agreement to receive payment in priority out of the proceeds of disposition. The second trust agreement was terminated by the request for termination dated 23 July 2012, so that the defendant company could no longer exercise the beneficial right; and since DM Saneop Gaebal was both the seller under the sale contracts and the party in whose name registration was made, and the trustee was not involved in the settlement, the disposition cannot be regarded as part of the realisation of the trust property. Accordingly, the Court held that the court below, in finding that the accord and satisfaction was not a fraudulent act on the premise that the preferential beneficial right remained in effect, had misapprehended the legal principles, and that its acceptance of the receivables and set-off based on audit reports and similar documents either ran contrary to logic and experience, exceeded the limits of the free evaluation of evidence, or resulted from a failure to conduct a full examination.

Practical checklist

First, check whether the time of submission of the supplementary report and the prima facie supporting materials for the reasons therefor are organized, and whether it remains in the Records whether the rehabilitation court accepted the report or issued an order of dismissal on procedural grounds. In addition, record separately the party who made the statement of objection at the special investigation date and the content of the statement, distinguishing whether it contests the existence or non-existence of the claim or raises an issue as to the statutory requirements for the report.

Second, fix in advance the point in time of determination and the scope of materials to be submitted in the approval examination, and cross-check the underlying materials of the examiner's report, the differences among the several reports, and the grounds for the price calculation of the pre-approval transfer of business. Check together whether there are materials to be newly submitted in the appeal instance.

Third, leave in documentary form the reasons for not subdividing rights of the same kind at the time of class classification, and the rational grounds for adopting differential treatment within the same kind. Organize separately the underlying materials for equity and fairness and for feasibility, and separately review the documents showing procedural propriety, such as the procedure for soliciting opinions.

Fourth, cross-check against one another the priority beneficial right provision of the trust contract, the time of arrival of the intent to terminate, whether the trustee was involved in the settlement, and the circumstances of the registration. Then confirm the entries in the audit report, the underlying materials of the assertion of set-off, and whether the rights that are the subject of the subrogation claim actually exist.

Glossary

A supplementary report is the supplementation of the report of a rehabilitation claim by stating the reasons therefor after the reporting period has elapsed, and a claim investigation and determination action is an action to determine the existence or non-existence of a rehabilitation claim that was not determined in the investigation procedure. The starting point of this white paper is that the claim investigation and determination procedure is not a procedure that forfeits rehabilitation creditors.

Approval requirements are matters that the court must investigate ex officio (by the court's own authority) for the approval of the rehabilitation plan, and equity and fairness mean at once differential treatment between different kinds of rights and substantive equality among rights of the same kind. Feasibility means the possibility that the debtor may reach a sound financial condition after completing payment in accordance with the rehabilitation plan.

The priority beneficial right is a right under the trust contract to receive priority payment out of the proceeds from the disposition of the trust property, and a fraudulent act is an act that reduces the debtor's property subject to liability and prejudices creditors. A subrogation claim is a means by which, when the debtor fails to exercise his or her own right, the creditor exercises that right in the creditor's own name so as to maintain the property subject to liability.

Sources and limitations

This brief is general research material prepared solely on the basis of Supreme Court Judgment 2015Da56789, Supreme Court Decision 2016Ma5352 and Supreme Court Judgment 2016Da223357, and of the statutory provisions cited in those judgments and that decision; it is not legal advice. Because the conclusion may differ depending on the facts and evidence of a given case, advice should be obtained from the responsible attorney for any actual determination.

The verification was carried out as at 15 October 2026 by comparing the statutory texts in the Korean National Law Information Center with the texts of the three decisions above, and the statutory provisions may change through subsequent amendment. No cases other than the three decisions set out here are cited, and the facts of each decision are summarised only to the extent recorded in the original text.

Points left open

The decision held that a statement made at a special investigation hearing concerning whether a late filing is lawful does not constitute an objection under Article 170(1), and indicated that whether a statement by an interested party constitutes an objection is to be determined according to whether the statement stems from an intention to block the determination of the claim. The scope of application of this approach, which assesses whether an interested party has objected by reference to an intention to block determination, also remains open.

Debate also remains over the limits within which differentiation within the same class of general rehabilitation claims can be justified on reasonable grounds, and over whether a preferential beneficial right extinguished by termination of the trust can be revived merely by reason of the circumstances of registration. A further open question is the extent to which the adequacy of the price in a transfer of business made before confirmation may be contested in the review of the confirmation requirements.

When to reconsider

This white paper needs to be reviewed anew if new matters arise in which the rehabilitation court concluded a supplementary report with an order of dismissal on procedural grounds, in which supplementation became an issue after the meeting of interested parties, or in which the meaning of the statement of objection at the special investigation date was at issue. Cases in which the scope of recognition of grounds for which participation within the reporting period could not reasonably be expected changes fall under the same condition.

The grounds for each section must be re-cross-checked if a new judgment is handed down addressing the choice among several reports of the examiner, the operation of class classification, the procedure for soliciting opinions and the use of the rights protection provision, or the relationship between the registration after termination of the trust and the payment in kind, or if the relevant provisions are amended.

Statutes referred to

• 채무자 회생 및 파산에 관한 법률 제87조, 제90조, 제91조, 제92조, 제152조 제1항, 제2항, 제3항, 제153조, 제162조, 제170조, 제217조 제1항, 제218조 제1항, 제226조 제2항, 제236조 제1항, 제2항, 제3항, 제243조, 제244조 제1항, 제247조 제1항, 제7항
• 민사소송법 제202조, 제442조
• 신탁법 제56조 제1항
• 민법 제105조, 제406조
• 회생사건의 처리에 관한 예규 제7조

Decisions referred to

• 대법원 2018. 7. 24. 선고 2015다56789 판결 · Decision ledger
• 대법원 2018. 5. 18. 자 2016마5352 결정 · Decision ledger
• 대법원 2018. 4. 12. 선고 2016다223357 판결 · Decision ledger

Verification status

The original texts of the relevant provisions and the written judgments of Supreme Court Decision 2015Da56789, Supreme Court Decision 2016Ma5352, and Supreme Court Decision 2016Da223357 were cross-checked against the Korea Law Information Center as of 2026-10-15. This white paper cites only the three judgments stated in the judgments it covers.