[Corporate Litigation] Reframing a Fraudulent Conveyance Claim as a Violation of Article 398 of the Commercial Act to Secure a Full Victory Ordering Return of Assets Worth KRW 40 Billion

The Challenge: A Deadlock Over Fraudulent Conveyance

The Plaintiff, the client in this case, was a company that made a large-scale investment in Company A and the Defendant Company, and recruited Company A's CEO as the CEO of the Defendant Company. As he came to concurrently serve as CEO of both companies and pursue his own private interests, the Plaintiff found itself at serious risk of being unable to recover its investment. After the defendant was in charge of the factory expansion project of Company A and incurred various payment claims, the entire factory was transferred from Company A on the grounds that Company A failed to repay its debts, and Company A effectively ceased operations.

The plaintiff filed a lawsuit against the defendant to void the fraudulent conveyance and sought to restore Company A's assets to its original state, but the parties became mired in a prolonged dispute over whether the preclusive period for the creditor's right of revocation had lapsed.

The Seo&Lee Strategy: Shifting the Legal Approach

Upon being appointed as new counsel, Seo&Lee conducted a comprehensive re-evaluation of the case. We recognized that the essence of the dispute was not merely a matter of fraudulent transfer, but a clear instance of illegal self-dealing by a dual-serving CEO.

We strategically reframed the litigation by introducing a new primary claim: the invalidity of the transaction under Article 398 of the Commercial Act (Restrictions on Transactions between Directors and Company). This shift allowed us to bypass the expiration issues of the revocation right by focusing on the fundamental illegality of the corporate governance breach.

The Result: A Full Recovery of KRW 40 Billion

The court granted the plaintiff's primary claim, finding that no legitimate prior board approval had been obtained for the transaction and that its content and procedure were significantly unfair. Accordingly, the court ruled in favor of the plaintiff in full, ordering the defendant to return all assets worth more than KRW 40 billion transferred from Company A.

This victory is an example of how a new perspective and deep legal insights can produce completely different results. Seo&Lee will remain committed to protecting our clients' interests by approaching each case with fresh legal angles unconstrained by the conventional frameworks, and will provide the best solution that is tailored to the core of the issue.