Lee & Ko successfully obtained a Supreme Court judgment confirming that if a company had violated anti-trust laws prior to filing for a rehabilitation proceeding, the Korea Fair Trade Commission (the “KFTC”) should file the fines imposed on the company as rehabilitation claims following commencement of the proceeding. The outcome of this decision is particularly meaningful as it rectifies past practices of the KFTC.
This particular case involved Company S, which had violated Korean anti-trust laws, but then filed for a rehabilitation proceeding before the KFTC imposed the relevant fine. On the issue of whether the fine could be imposed on the company after the approval of the company’s rehabilitation plan, without the KFTC having reported the fine as a rehabilitation claim, the Supreme Court on 28 January 2016 ruled that “If the cause of the fine occurred prior to the commencement of the rehabilitation, the KFTC should have reported the fine during the rehabilitation proceeding, as the fine is considered as a rehabilitation claim. Where the fine was not reported by the KFTC and was thus not included in the debtor company’s rehabilitation plan, the fine is nullified and therefore can no longer be imposed on the debtor company.” (Supreme Court Decision Case No. 2015Du54193)
Prior to this decision, there was a divided view on the issue as there was no clear Supreme Court precedent. The KFTC’s position had always been that companies under rehabilitation would still be subject to the KFTC’s fines, even if the fines were not reported as rehabilitation claims. Accordingly, the KFTC had been imposing fines on debtor companies even after a company’s rehabilitation plan was approved. However, changes in the KFTC’s practices regarding rehabilitation fines are now expected as Lee&Ko obtained a Supreme Court judgment against the KFTC.