[Invest&Law] "'M&A Failure' Eastar Holdings Must Return 13.8 Billion Won to Jeju Air"

Return Amount Reduced by Approximately 10 Billion Won Compared to First Trial

Eastar Holdings has been ordered in an appellate court ruling to take responsibility for the failed merger and acquisition (M&A) and return the deposit and other payments to Jeju Air. However, the amount to be returned was reduced compared to the first trial ruling.

Eastar Jet. [Image source=Yonhap News]

The Seoul High Court Civil Division 18 (Presiding Judge Jeong Jun-young) ruled on the 2nd that Jeju Air partially won the lawsuit for monetary claims against Eastar Holdings, the former holding company of Eastar Airlines, and Daedong Investment, similar to the first trial. The court ordered, "Eastar Holdings shall pay 13.8 billion KRW, and Daedong Investment shall pay 450 million KRW to Jeju Air."

In the first trial, Eastar Holdings was ordered to pay 23 billion KRW, but the appellate court reduced the refund amount by about 10 billion KRW.

Previously, Jeju Air and Eastar Airlines signed a stock purchase agreement in March 2020, but conflicts arose over the fulfillment of preconditions stipulated in the contract, leading to the collapse of the M&A in July of the same year. Jeju Air demanded the settlement of unpaid wages amounting to 25 billion KRW and other unpaid amounts, but claimed that Eastar Airlines did not fulfill these obligations. Eastar Airlines countered that the preconditions in the contract had been completed.

Jeju Air filed a lawsuit against Eastar Holdings and Daedong Investment in September 2020, demanding the return of 23.45 billion KRW including the deposit, and Eastar Holdings and others filed a counterclaim in April of the following year, demanding Jeju Air pay approximately 5.3 billion KRW in purchase price.