LBO와 배임죄성부: redux -부산지방법원 2009.2.10.선고 2008고합482/516/656(병합)-

Subsequent to the Shinhan decision, Busan District Court recently rendered a “not guilty” decision relating to Dongyang Major/Hanil Textile merger case. Dongyang Major acquired a majority equity interest in Hanil Textile under court protection with borrowed funds, merged it, and paid back the bank debts with the cash reserve of Hanil Textile. The court, inter alia, reasoned its decision for lack of evidence on damages or likelihood of damages. In addition, the court listed several reasons for its conclusion that include, among others, (i) the Korean Commercial Code (“KCC”) regulates mergers on their procedural aspects and as to legal mergers from KCC perspectives criminal liability issue should be cautioned; and (ii) the legal effect of a merger is integration of assets and liabilities of the merging company and the merged company and thus disposal of any assets of the merged company should be legal. I agree with the court that has raised the question about the desirability of criminalization of corporate decisions such as mergers. I, however, believe the court should delve into the relationship between the board and the corporation in order to analyse the damages arising from a breach of fiduciary duty. A hasty and faulty observation about the regulations of a merger or the legal effect of a merger has failed to increase the persuasiveness of the final conclusion, but has substantially ameliorated the strength thereof.