Category Archives: Banking & Financing

Chung & Partners Successfully Advised Korean Real Estate Developer on Project Financing For Acquisition and Development of Commercial Building in the amount of USD 140 Million

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In September 2012, Chung & Partners successfully advised a Korean real estate development company(the “Company”) in connection with a project financing for the land acquisition, development and construction of commercial building to be built in downtown Seoul.  The financing package enabled our client to receive funds in the amount equivalent to USD 140,000,000.  Thanks to this transaction, the Company has successfully launched the project.

Our attorney Mr. Wonil Chung acted as counsel for the Company and provided legal advice on every aspect of the deal from structuring to documentation.

Provisional Attachment of Assets under Korean Law – How to Secure Your Monetary Claim in Korea

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Let’s assume a creditor has a monetary claim against a debtor in Korea but the debtor refuses to pay it.  The creditor would proceed to file a lawsuit to get a judgment to collect his claim.  Unfortunately, however, the chances are that, knowing the complaint was filed, the debtor would try to conceal or transfer his assets to evade from the judgment to be made later.  This shows why provisional attachment is highly required to secure the judgment to be obtained.

Provisional attachment is a judicial measure available to anyone who has a monetary claim to lock down certain assets to keep the debtor from selling or giving them away until the court issues a judgment on the merit. The creditor can, and usually does, seek a provisional remedy before she files a complaint on the merit.  So, this is a very powerful weapon for the creditor.  For example, as many Korean creditors do, if the creditor succeeds in putting a provisional attachment on the debtor’s bank account, the debtor would not be able to use the money and could face several penalties regarding its banking/financing transactions with the bank.  This could heavily deteriorate the ability for a small com­pany to con­duct business, which makes the debtor Continue reading →

HSBC, “No More Bid for Korean Bank”

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It is reported that Mr. Matthew Deakin, the president of the HSBC Korea, said on last Wednesday that HSBC Holdings Plc had no plan to acquire a local Korean bank for now.  Last year, HSBC walked away from the deal with the Lone Star, a U.S. private equity fund, which provided HSBC the right to buy 51 percent stake of Korea Exchange Bank due to the global financial crisis and continued legal disputes surrounding the 2003 purchase of the bank by Lone Star Funds. (Here is a related previous post)

Things have changed.  The Seoul Central District Court in last November ruled the purchase legal, and as the financial markets are now stabilizing.  But Mr. Deakin, at the press conference which took place for the purpose of introducing the bank’s new Emerging Markets Index, said “right now, we have no interest in any acquisition of Korean banks”.

Here is a related news article.

Fund Buyers Keep Filing Lawsuits against Fund-Sellers Alleging So-called “Irresponsible Sale”

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Recently there can be seen so many lawsuits are being filed against domestic banks with regard to the bank’s irresponsible fund sale.  The Korean fund buyers are alleging the losses in the funds which are still on-going were caused by the fund-sellers’ not informing sufficient information on the risk and possibilities of losses when they put the money to the funds.

As a matter of law, Korean court has ruled that the banks are obliged to inform the customer of the structure of the investment such as fund or option transaction and the risk of possible losses sufficiently when they solicit the customers for investments.  If they neglect that obligation, it constitutes a breach of contract and Continue reading →

FSS Signed MOU on Government Guarantees of Banks’ External Debt with 18 Domestic Banks

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It was reported that Financial Supervisory Service(FSS) of Korea had signed a MOU on Government Guarantees of Banks’ External Debt with 18 domestic banks on November 14.  The MOU was comprised of Part 1 on “Government guarantees of banks’ external debt” and Part 2 on “Extending support to the real economy and management rationalization”.  SC First Bank Korea and Citibank Korea signed only Part 2 of the MOU with the FSS.

The MOU is to increase credit lines by improving foreign-currency liquidity, move forward with the disposition of non-core foreign-denominated assets, and diversify sources of banks’ foreign liquidity. Contingency plans were also included to prevent risk to the guarantee.

To provide relief to holders of household debt, the maturity date and the interest-only and payment-option will be extended. Borrowers wanting to convert their variable interest rate loans to fixed will have their e Continue reading →

Lone Star Sent a Letter to Korean Government Notifying Potential Lawsuit for Damages by KEB Sale Deferment?

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Last week, Korean government announced that it would initiate reviewing process for the approval of KEB sale soon.  Interestingly enough, today it was reported also that before the government’s announcement, Lone Star Fund had sent an official letter to Korean government regarding government’s approval issue on the long-waited sale of Korea Exchange Bank(KEB) from Lone Star Fund to HSBC bank.  Lone Star Fund and HSBC had entered into the stock purchase agreement and the deadline of the agreement is coming on the end of this July.  It was reported that Lone Star Fund stated in that problematic letter that if the Korean government kept delaying the approval, the fund would file a lawsuit domestically and internationally against Korean government for the compensation of damages by the sale’s deferment(here is a news article).

Well, one, especially western people, can say that there would be no problem in sending a letter to the other party noticing potential legal disputes.  However, it is quite unusual in Korean legal culture that a private enterprise warns the government stating otherwise it would sue the government.

As a matter of law, the fund would be permitted to file a lawsuit to a Korean court, however the chances are that the fund would not win the case.  Under Korean law, in order for the fund to win the case, the fund must prove there have been an unlawful act of Korean government in delaying the approval.  But, the approval itself is a right, not a obligation, of the government provided by the law and there have been lawsuits affecting the validity of the ownership of KEB by the fund, which have made Korean government hold the approval procedures Continue reading →

Lone Star Not Guilty in Stock Price Manipulating Case, Seoul High Court Reversed Lower Court’s Ruling

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Today just a few hours ago, the Seoul High Court sentenced partly not guilty to the head of U.S. private equity fund Lone Star’s South Korean operations (Lone Star Advisory Korea).

Last February Seoul Central District Court had sentenced all guilty and had detained Mr. Paul Yoo, the head of Lone Star Advisory Korea, for stock rigging and misappropriation charges. Also the court had ordered Korea Exchange Bank and LSF-KEB Holdings SCA, a Belgium-based unit which holds Lone Star’s stake in KEB, to pay 25 billion won ($26.50 million) each in fines, saying both secured unfair profits as a result of the stock-rigging.

The defendants all had appealed and the Seoul Court today reversed and amended the lower court’s ruling, saying “as the Lone Star Fund did actually discuss a capital decrease in meeting of board of directors, there had been no falsehood in its reporting of possible capital decrease to the public and therefore no stock price manipulating”.

Also the High court found not guilty in Mr. Paul Yoo’s tax evasion charge and also found not guilty in 2 out of 4 misappropriation charges against Mr. Paul Yoo.  Finally the court sentenced  2 and half year of imprisonment to Mr. Paul Yoo, however, suspended the execution for 3 years.  Mr. Paul Yoo Has been released out of prison today by the court’s decree(see the photo). Continue reading →