Open Decision Ledger · Rehabilitation & bankruptcy
Whether a new share issuance by a reorganization company in consideration of an in-kind contribution is subject to the right of avoidance for intentional acts
Translated from the Korean original. Read the Korean
Supreme Court, Sept. 3, 2004, 2004Da27686 (judgment)
Case name: 부인의소
Official text on the National Law Information Center
Question
Is the act by which a reorganization company receives an in-kind contribution and issues new shares subject to the exercise of the right of avoidance under Article 78 (1) 1 of the Corporate Reorganization Act, even if the subject matter of the in-kind contribution was overvalued?
Holding
The issuance of new shares in consideration of an in-kind contribution, even if the subject matter was overvalued, does not decrease but rather increases the assets of the reorganization company, absent special circumstances. The Supreme Court held that, since this act does not run contrary to the intent of the foregoing provision, it is not subject to the exercise of the right of avoidance.
Summary of the holding, verbatim
정리회사가 현물출자를 받고 신주를 발행하는 행위는 비록 현물출자의 목적물이 과대평가되었다고 하더라도 특별한 사정이 없는 한 정리회사의 재산이 감소하지 아니하고 증가하게 되고
Unofficial English translation
An act whereby a company in reorganization receives a contribution in kind and issues new shares, even if the object of the contribution in kind has been overvalued, unless there are special circumstances, results not in a decrease but in an increase in the assets of the company in reorganization, and
Disposition
Dismissed Stated in the decision
상고를 기각한다.
Unofficial English translation
The appeal is dismissed.
Form of the test
Elements stated Read from the decision
회사정리법 제78조 제1항 제1호의 취지에 반하거나 그 실효성을 상실시키는 것이 아니므로 위 규정에 기초한 부인권행사의 대상이 되지 아니한다.
Unofficial English translation
and therefore it does not run counter to the purport of subparagraph 1 of paragraph (1) of Article 78 of the Court Reorganization Act or deprive that provision of its effectiveness, and accordingly it does not become the subject of the exercise of the right of avoidance based on the said provision.
Factors
- 회사가 부당하게 그 재산을 감소시키는 등 정리채권자나 정리담보권자를 해하는 행위
- 회사채권자 사이 등의 공평을 해하는 행위
- 현물출자의 목적물이 과대평가되었다고 하더라도
- 특별한 사정이 없는 한 정리회사의 재산이 감소하지 아니하고 증가하게 되고
Unofficial English translation
• An act whereby the company unfairly diminishes its assets or otherwise harms reorganization claimants or holders of reorganization security rights
• An act that prejudices fairness among company creditors and others
• Even if the object of the contribution in kind has been overvalued,
• Unless there are special circumstances, results not in a decrease but in an increase in the assets of the company in reorganization,
Relation to precedent
States a new standard Read from the decision
정리회사가 현물출자를 받고 신주를 발행하는 행위가 회사정리법 제78조 제1항 제1호에 정한 부인권행사의 대상이 되는지 여부(소극)
Unofficial English translation
Whether an act whereby a company in reorganization receives a contribution in kind and issues new shares becomes the subject of the exercise of the right of avoidance provided in subparagraph 1 of paragraph (1) of Article 78 of the Court Reorganization Act (negative)
Decisions referred to
None listed
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
In what circumstances are there special circumstances exceptionally causing the issuance of new shares in consideration of an in-kind contribution to decrease the assets of the reorganization company so as to become subject to avoidance?
This reading is checked again if a different determination concerning the issuance of new shares for an in-kind contribution emerges in the interpretation of the avoidance provisions of the Debtor Rehabilitation and Bankruptcy Act corresponding to Article 78 (1) 1 of the Corporate Reorganization Act.
Cross-family AI independent reading & axis check
7 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-16
Upon comparison with the independent reading by a separate model family AI (GPT-6 Astra), which read only the original text without seeing the primary reading, 7 of the 8 axes matched, and the readings diverged on Axis 6 (Relation to precedent).
Axis 6 (Relation to precedent): Primary “States a new standard” vs Independent “Cannot be determined”
Although the original text sets out a general determination on in-kind contributions and new share issuances, it does not specify the relation to earlier precedent, so the primary reading may attend to the statement of a new standard while the independent reading may attend to the uncertainty of the relation to precedent.
정리회사가 현물출자를 받고 신주를 발행하는 행위가 회사정리법 제78조 제1항 제1호에 정한 부인권행사의 대상이 되는지 여부(소극)Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The Seoul High Court held that the issuance of new shares did not cause the company's assets to flow out externally, and that, even if the subject matter of the in-kind contribution was overvalued, the assets available to creditors had increased, so that reorganization creditors and others suffered no harm; it therefore held that the in-kind contribution agreement and the issuance of new shares were not subject to avoidance. It also cited the circumstance that a new share issuance impairing capital maintenance could be remedied through the liability for damages of directors and others, an action for invalidity of a new share issuance, and the cancellation without consideration, under a reorganization plan, of excess shares issued. The share purchase agreement within the same transaction was treated as subject to avoidance, but that lay outside the scope of adjudication on final appeal.
Supreme Court standard: The Supreme Court viewed the intent of the foregoing provision as lying in preventing an unjust decrease in the company's assets or unfairness among creditors, and accepted the determination of the court below that the issuance of new shares in consideration of an in-kind contribution increases the assets and is therefore not subject to avoidance. The other remedies cited by the court below were no more than additional circumstances, and the Court found no misapprehension of legal principles regarding the point in time for determining the right of avoidance either, and thus dismissed the final appeal.
Distinguishing conditions
- Where a transaction causing the company's assets to flow out externally, such as a share purchase agreement under which the company pays consideration, is combined with an in-kind contribution agreement
- Where the subject matter of the in-kind contribution does not substantially vest in the company, or where special circumstances exist that decrease the assets because the company assumes a separate burden
- Where a type of avoidance other than Article 78 (1) 1 of the Corporate Reorganization Act, or a remedy under corporate law such as invalidity of a new share issuance, is at issue
Record verification notes
Before asserting the same conclusion, one must first confirm whether the new share issuance actually increased the assets available to creditors of the reorganization company, and whether there are special circumstances or combined transactions resulting in a decrease in assets.
From the official text
Points at issue
[1] 회사정리법 제78조 제1항 제1호 본문의 규정 취지 [2] 정리회사가 현물출자를 받고 신주를 발행하는 행위가 회사정리법 제78조 제1항 제1호에 정한 부인권행사의 대상이 되는지 여부(소극)
Unofficial English translation
[1] The purport of the main text of subparagraph 1 of paragraph (1) of Article 78 of the Court Reorganization Act [2] Whether an act whereby a company in reorganization receives a contribution in kind and issues new shares becomes the subject of the exercise of the right of avoidance provided in subparagraph 1 of paragraph (1) of Article 78 of the Court Reorganization Act (negative)
Summary of the holding
[1] 회사정리법 제78조 제1항 제1호 본문은 회사가 정리채권자 또는 정리담보권자를 해할 것을 알고 한 행위를 부인의 대상으로서 규정하고 있는바, 그 취지는 회사정리절차개시 전에 회사가 부당하게 그 재산을 감소시키는 등 정리채권자나 정리담보권자를 해하는 행위를 하거나 회사채권자 사이 등의 공평을 해하는 행위를 모두 부인의 대상으로 함으로써 회사기업의 재건을 위한 회사재산의 회복과 채권자의 평등을 꾀하려고 하는 것이다. [2] 정리회사가 현물출자를 받고 신주를 발행하는 행위는 비록 현물출자의 목적물이 과대평가되었다고 하더라도 특별한 사정이 없는 한 정리회사의 재산이 감소하지 아니하고 증가하게 되고, 따라서 그와 같은 행위는 회사정리법 제78조 제1항 제1호의 취지에 반하거나 그 실효성을 상실시키는 것이 아니므로 위 규정에 기초한 부인권행사의 대상이 되지 아니한다.
Order
상고를 기각한다. 상고비용은 원고가 부담한다.
Unofficial English translation
The appeal is dismissed. The costs of the final appeal shall be borne by the plaintiff.
Provisions referred to
[1] 회사정리법 제78조 제1항 제1호 [2] 회사정리법 제78조 제1항 제1호
Read 2026-10-16 · Cross-read 2026-10-16. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.
Every entry is published only after all quotes have been matched character by character against the official text, and audited by an independent second reading from a different model family across all eight axes. Both agreed axes and text-grounded interpretive divergences are recorded openly. The ledger is a research record, not an assessment of the court or advice on any matter.
Back to the ledger