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A Seoul court on Thursday ruled in favor of creditors of the now-defunct Samsung Motors, ordering Samsung Group chairman Lee Kun-hee and 28 Samsung affiliates to repay W3.15 trillion in overdue debt to creditors in the nation’s biggest civil lawsuit ever (US$1=W945). Samsung will have to repay about W2.3 trillion given that creditors have already converted about W800 billion worth of shares in Samsung Life Insurance they had received into cash.
The Seoul Central District Court on Thursday ruled in favor of the creditors -- 14 financial institutions including Seoul Guarantee Insurance Company. The court ruled an agreement Samsung signed with its creditors to repay the debt in listed shares is valid, rejecting claims by the conglomerate that it entered the agreement under duress
The court ruled Samsung is liable to repay the entire principal of W2.45 trillion and must sell Samsung Life Insurance shares worth about W1.63 trillion aside from about W800 billion worth of shares that creditors have already converted into cash themselves to repay part of the debt. Samsung is also liable for overdue interest of about W700 billion that has accrued since 2001.
The court also ruled if Samsung affiliates lack the money to repay their debt, Lee must make up for the shortfall from his own holding in Samsung Life Insurance shares.
The court dismissed Samsung's argument that the agreement was the outcome of undue pressure from the government and was therefore null and void. Samsung said it has yet to decide whether to appeal after reviewing the ruling carefully.
In June 1999 when losses were incurred in the wake of Samsung Motors' application for court receivership, the creditors received a total of 3.5 million shares of Samsung Life Insurance from the group chairman, worth W700,000 apiece. Unable to sell the shares because Samsung Life Insurance was not, as promised, listed, the creditors in 2005 sued for about W5 trillion -- W2.45 trillion in debt, W2.28 trillion in overdue interest, and an indemnity. The court reduced the interest claimed.
(englishnews@chosun.com )
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