Law: "'Insu Musan' Eastar Holdings to Pay 23 Billion Won to Jeju Air"

[Asia Economy Reporter Kim Daehyun] Jeju Air won the first trial against Eastar Jet, holding them responsible for the return of the deposit and damages due to the failed 2020 merger and acquisition (M&A).

On the afternoon of the 19th, the Civil Division 21 of the Seoul Central District Court (Presiding Judge Kang Minseong) ruled in favor of Jeju Air in the first trial of a monetary claim lawsuit worth 23.45 billion KRW filed against Eastar Holdings and Daedong Investment.

The court ordered "Eastar Holdings to pay 23 billion KRW and Daedong Investment to pay 450 million KRW to Jeju Air respectively." The counterclaim worth about 5 billion KRW filed by Eastar Holdings and Daedong Investment was dismissed. All litigation costs were to be borne by Eastar Holdings and others.

Eastar Jet Headquarters, Gangseo-gu, Seoul / Photo by Jinhyung Kang aymsdream@

Earlier, Jeju Air, which was pursuing the acquisition of Eastar Jet, officially declared the termination of the stock purchase agreement (SPA) and abandonment of the acquisition in July 2020, stating that "the preconditions for acquisition were not met." Jeju Air’s position was that Eastar Holdings needed to resolve Eastar Jet’s various overdue wages, operating expenses, handling fees, and fuel costs for the acquisition negotiations to be completed, but Eastar Holdings insisted that the acquiring party should be responsible for these.

In September of the same year, Jeju Air filed a lawsuit against Eastar Holdings and Daedong Investment, which holds shares in Eastar Holdings, demanding payment of the deposit and other amounts.

Eastar Holdings and others filed a counterclaim against Jeju Air, demanding 5,050,147,920 KRW in sales proceeds, arguing that holding them responsible for the failed sale was unfair. During the trial, they also requested the court to delay the proceedings, citing that they were undergoing corporate rehabilitation procedures.

During the COVID-19 outbreak, Eastar Jet, which experienced crises such as failing the M&A with Jeju Air and suspension of its Air Operator Certificate (AOC) leading to rehabilitation procedures, was acquired by private equity firm VIG Partners on the 6th and signed an investment attraction contract worth 110 billion KRW.