Successfully won a lawsuit seeking cancellation of sanctions imposed on a company undergoing rehabilitation

Rehabilitation proceedings commenced in May 2012 for construction company P while the company was performing the subcontract it had entered into with the Korea Expressway Corporation in 2007. Following the commencement of the proceedings, the administrator of the construction company terminated the aforesaid subcontract as an executory contract pursuant to Article 119 of the Debtor Rehabilitation and Bankruptcy Act. The Korea Expressway Corporation imposed an “unlawful business” sanction for a period of six months in October 2012 against the construction company for “not performing the contract without any justifiable cause.” Lee & Ko represented construction company P in an administrative litigation and argued that the contract was terminated under legal proceedings pursuant to the Debtor Rehabilitation and Bankruptcy Act to reorganize a company undergoing rehabilitation. The Seoul High Court held that “even if the administrator of the construction company going through a rehabilitation proceeding terminated the construction contract that the construction company had entered into prior to the commencement of the rehabilitation decision, if the reason for applying for the commencement of the rehabilitation proceeding is not to avoid its obligations, such termination is legal and the construction company shall not be deemed as an unlawful business” and cancelled the sanction in April 2014. The Korea Expressway Corporation did not appeal the case and the above decision was affirmed.