Background
A number of investors (our clients) believed an inducement that "nursing homes would be built across the greater Seoul area and residents recruited for them," and invested large sums under real estate purchase and construction contracts with a developer. With almost no capital of its own, however, the developer pushed several sites forward on a roll-over basis, construction halted one after another, and the developer transferred the real estate it did hold to affiliated companies at knockdown prices, putting it beyond reach. Changchun represented the investors (the creditors) who had lost their money.
The Issue — Can Diverted Assets Be Brought Back?
Where a debtor unable to pay its debts transfers its only assets to a third party, creditors can have the disposal revoked and the assets returned (revocation of a fraudulent transfer, Civil Act art. 406). The key was to establish without gaps ① the existence of the investors' damages claims (the claims to be preserved), and ② that transferring the real estate was a fraudulent transfer harming the creditors.
How Changchun Helped
Changchun (attorney Donghwan Shin) reconstructed the sequence chronologically — from the investment inducements through the roll-over financing, the halted construction and the transfers of real estate — and framed the claims by calculating precisely the amount of each investor's preserved claim. The other side was unable to contest the case, and the claims were granted without any defense being argued.
Outcome
The court revoked the sale contracts over the diverted real estate up to the amount of each investor's claim, and ordered the company that had received the property to pay the investors approximately KRW 12.7 billion in aggregate.
Even in the desperate situation of losing an investment and watching the wrongdoer put assets beyond reach, precisely proving the claim and the fraudulent transfer opens a path to recovering what was diverted. (Outcomes may differ depending on the facts of each matter.)