Background
Our client, the purchaser of shares in an acquisition, entered into an agreement to acquire equity in an unlisted company and paid the deposit. The seller then sued, claiming that "the transaction has closed, so pay the remaining balance of approximately KRW 55 billion," and our client lost at first instance. Changchun represented the purchaser (the defendant) on appeal.
The Issue — Was the Purchase Price Fixed, and Did the Closing Obligation Arise?
The heart of the case was ① whether the purchase price had actually been fixed (the joint appointment of an accounting firm and the effect of the due diligence report); ② whether the purchaser's closing obligations, including payment of the balance, had arisen (whether the "conditions precedent" to closing were satisfied); and ③ whether the seller had performed its own obligations first (concurrent performance).
How Changchun Helped
To reverse the unfavorable outcome at first instance, Changchun (attorneys Jaesun Yoon, Donghwan Shin and Sungjoong Kim) reconstructed the issues with precision.
① The purchase price was never fixed: there was no agreement between the parties on the "joint appointment of an accounting firm," a precondition for fixing the price, and a due diligence report prepared without adequate materials from the seller could not serve as the basis for fixing the purchase price.
② Conditions precedent to closing unsatisfied: material records relating to the company's core assets (an amended lease agreement, records of substantial advances to the representative director and the like) were not provided before closing, so the contractual "conditions precedent to closing" were not satisfied; and the mere passing of the closing date did not immediately give rise to an obligation to pay the balance.
③ Defense of concurrent performance: we identified deficiencies in the seller's own tender of performance.
Outcome — Settling a Large Dispute Through Mediation
Despite the unfavorable position of having been ordered at first instance to pay a very large sum, Changchun used these issues to build negotiating leverage and resolved the dispute through a court-approved settlement (mediation). As a result, the share purchase agreement was confirmed to have been lawfully terminated, and our client was released from an obligation to pay a balance of approximately KRW 55 billion. The dispute ended with the deposit already paid being treated as liquidated damages, and all of the opposing party's attachment and collection measures released.
Even after a large adverse judgment at first instance, precisely contesting the requirements for fixing the purchase price and for closing can create negotiating leverage. This case used that leverage to manage risk and settle the dispute favorably through mediation. (Outcomes may differ depending on the facts of each matter.)