Is a tax assessment lawful when a tax claim goes unlisted before the rehabilitation plan is approved? Supreme Court Decision 2025Du33118 on 'the tax obligation itself survives'

Question

Article 251 of the Debtor Rehabilitation and Bankruptcy Act provides that when a rehabilitation plan is approved the debtor is discharged from all rehabilitation claims and rehabilitation security interests, except rights recognised under the plan or under the Act. Article 118(1) makes a claim against the debtor arising from a cause before the commencement order a rehabilitation claim. Where a tax claim of that kind is neither entered in the list of creditors nor filed before the plan is approved, the question is when the discharge takes hold: whether the taxing authority may no longer impose the tax at all once the claim goes unrecorded, and whether a tax assessment already imposed is undermined by the plan's later approval.

Decision 2025Du33118 raises that question on an appeal by the plaintiff, whose tax claim was established before a rehabilitation proceeding was opened against the plaintiff. The head of Seocho-gu Office imposed the tax before the decision approving the rehabilitation plan, and the tax claim was never filed as a rehabilitation claim. The plaintiff argued that the assessment was unlawful and the liability discharged under Article 251, and brought an administrative action; the appeal to the Supreme Court failed.

Material to check

The statutes are Articles 118 and 251 of the Debtor Rehabilitation and Bankruptcy Act. Article 118 lists what counts as a rehabilitation claim, and item 1 covers a property claim against the debtor arising from a cause before the opening of the rehabilitation proceeding. Article 251 provides that when a decision approving a rehabilitation plan is made, the debtor is discharged from all rehabilitation claims and rehabilitation security interests except rights recognised under the plan or the Act, that the rights of shareholders and equity holders and all security interests in the debtor's property are extinguished, and that claims under Article 140(1) are excepted.

The decisions are the decision itself and two judgments it cites. Decision 2001Da3122 (24 July 2001) concerned accident-report security money deposited with a paying bank and held that the discharge then in the Company Reorganisation Act means that the debt itself survives although performance cannot be enforced against the company. Decision 2017Da286577 (29 November 2018) concerned a mortgage creditor in a real estate auction and held, among other things, that 'discharge' under Article 251 means the debt itself survives though performance cannot be enforced against the debtor, while 'modification of rights' under Article 252(1) means the rights themselves are substantively modified under the plan. Decision 2005Da43883, which the appeal relied on, is described in the decision as a case in which the tax assessment was made after the decision approving the rehabilitation plan.

Possible readings

Read with Article 118(1), a tax claim established before the order opening the rehabilitation proceeding is a rehabilitation claim, and Article 251 then governs what happens to it. Where such a claim is neither entered in the list of creditors nor filed before the decision approving the plan, the debtor is discharged from that claim under the main text of Article 251. That is the decision's statement of the position of the claim itself.

The discharge, however, does not work backwards over the taxing authority's power to impose the tax. On the decision's reading, before the decision approving the rehabilitation plan the mere fact that a rehabilitation tax claim has not been entered in the list of creditors or filed does not extinguish the taxing authority's power to assess, so an assessment made in that window is not unlawful. The condition is the timing of the assessment relative to the plan approval, not the completeness of the creditor list at the moment of assessment.

A third point follows from the two cited judgments. The discharge under Article 251 means that the debt itself survives while performance cannot be enforced against the debtor, and the decision draws the consequence that an approval of the plan after an assessment does not change the effect of that assessment. The tax obligation persists even though the debtor cannot be forced to perform it, so the legality of a validly made assessment is judged as at the time it was made.

What the decisions held

Decision 2025Du33118 (8 May 2026) dismissed the appeal and ordered the plaintiff to bear the costs of appeal, with the Justices unanimous. The bench comprised Justices Cheon Dae-yeop (presiding), Seo Gyeong-hwan, Shin Suk-hee (reporting Justice) and Ma Yong-joo.

On the merits the Court held that a tax claim established before the order opening the rehabilitation proceeding is a rehabilitation claim under Article 118(1), that the debtor is discharged from such a claim if it goes unentered in the list of creditors or unfiled by the time of the decision approving the rehabilitation plan under the main text of Article 251, but that before that decision the taxing authority's power to assess is not extinguished by that omission alone, so an assessment made then is not unlawful; and that if the plan is approved later with the claim still unrecorded, the debtor cannot be forced to perform the tax obligation but the obligation itself survives, so the effect of the originally lawful assessment is not altered.

The court below, the Seoul High Court in its judgment of 17 January 2025 (2024Nu48031), had reasoned that although the tax claim here, established before the rehabilitation proceeding was opened against the plaintiff, was not filed as a rehabilitation claim, the assessment imposed before the approval of the plan could not have been made at a time when the power to assess had already been extinguished, and so was not unlawful. The Supreme Court held that this finding was correct and that there was no misunderstanding of the law on Article 251 affecting the judgment. It added that Decision 2005Da43883, cited in the appeal, concerned a tax claim assessed after the approval of the plan and so differed from the present case, where the assessment preceded the approval, and was not apt to be invoked here.

Points left open

The decision does not state the position where the assessment itself comes after the decision approving the rehabilitation plan. It observes only that Decision 2005Da43883 involved such a case and that the case is different, without saying whether or on what reasoning a later assessment would be unlawful. That boundary is left for a case that raises it.

The decision also does not spell out what remains possible once the discharge applies. It says the debtor cannot be compelled to perform the tax obligation while the obligation itself survives, but it does not address how the surviving obligation may be realised, whether voluntary payment, set-off or other means are open to the taxing authority, or how the surviving obligation interacts with rights recognised under the plan or with claims under Article 140(1), which Article 251 excepts.

When to reconsider

We revisit this brief if the Supreme Court rules on the lawfulness of a tax assessment made after the decision approving the rehabilitation plan, if a later decision explains what enforcement remains possible against a debtor discharged under Article 251 from an unfiled tax claim, or if Articles 118 or 251 of the Debtor Rehabilitation and Bankruptcy Act are amended.

Statutes referred to

• 채무자 회생 및 파산에 관한 법률 제118조, 제251조

Decisions referred to

• 대법원 2026. 5. 8. 선고 2025두33118 판결 · Decision ledger
• 대법원 2001. 7. 24. 선고 2001다3122 판결
• 대법원 2018. 11. 29. 선고 2017다286577 판결 · Decision ledger

Verification status

The texts read for this brief were read at the National Law Information Center on 24 October 2026. They are the decision in its published holdings, summary and reasons, the current text of Articles 118 and 251 of the Debtor Rehabilitation and Bankruptcy Act, and the holdings and summaries of Decisions 2001Da3122 and 2017Da286577.