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Asiana’s legal dispute with HDC emerges as contingent risk for Korean Air Case expected to continue for years after completion of combination of two airlines

Translated by Ryu Ho-joung 공개 2021-10-27 08:08:42

이 기사는 2021년 10월 27일 08:07 더벨 유료페이지에 표출된 기사입니다.

A legal dispute is underway between Asiana Airlines and a consortium led by Hyundai Development Company (HDC) over a down payment for a collapsed deal between the two parties, emerging as a potential contingent risk for Korean Air, the new owner of the struggling carrier.

The Seoul Central District Court will hold a trial for the case on November 8, according to industry sources. This is the third trial after the first two trials were held in June and September.

This legal battle started last year when a consortium consisting of HDC and Mirae Asset Daewoo dropped its planned acquisition of Asiana Airlines.

In November 2019 the consortium was named as the preferred buyer for the South Korea’s second largest airline. In the following month, it signed a share purchase agreement and made a down payment.

However, the deal was hamstrung by the Covid-19 pandemic which struck the world last year. After months of renegotiations on conducting due diligence again, the deal ultimately fell through in September 2020.

Two months later, the country’s number one carrier Korean Air announced a deal to buy Asiana Airlines in partnership with Korea Development Bank, the main creditor of the debt-ridden carrier, in the biggest ever deal in the country’s airline industry.

Shortly after the deal was announced, Asiana Airlines filed a suit against HDC and Mirae Asset Daewoo to confiscate the money it received as a down payment, with 251.5 billion won at stake. The plaintiff hired law firms Yoon & Yang and Shin & Kim, while HDC and Mirae Asset Daewoo are represented by Yulchon and Lee & Ko respectively.

The case is expected to continue several more years after the competition of the takeover, which is subject to regulatory approvals. A case similar to this includes a legal battle waged by Hanwha Group over a 300 billion won down payment for its failed acquisition of Daewoo Shipbuilding & Marine Engineering.

Hanwha was named as the preferred buyer for the shipping company in 2008, but the deal collapsed in the following year in the aftermath of the global financial crisis. The lower court and the appeal court ruled against Hanwha. But the Supreme Court sided with Hanwha, ordering a partial return of the down payment. Hanwha eventually received some 195 billion won back in the case that took almost 10 years to complete.

However, the two cases are not exactly the same. The Daewoo Shipbuilding & Marine Engineering deal collapsed before an agreement was signed, while the HDC consortium signed a deal. This difference may have an impact on the court’s ruling in the case, legal experts said. (Reporting by Gyoung-tae Kim)
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