Hanyang Co., Ltd., which participated in the Gwangju Jungang Park District 1 Private Park Special Project, has lost various lawsuits in its attempt to regain construction rights. In addition, KNG Steel, which sided with Hanyang against Lotte Construction, also lost in the appellate court regarding the securing of shareholder rights.
The appellate court's decision effectively legitimized Lotte Construction's acquisition of shares through the exercise of a pledge (a right over collateral). Although a final appeal is still possible, Lotte Construction has now laid the groundwork to stably proceed with the project by securing a majority stake.
The Civil Division 2 of the Gwangju High Court (Presiding Judge Kim Sungju) on the 6th accepted the defendant's appeal and overturned the first trial verdict, ruling against the plaintiff in the appellate case filed by KNG Steel against Woobin Industry and Bitgoeul Jungang Park Development (a special purpose company, SPC), among others, regarding the confirmation of shareholder rights.
The appellate court dismissed the lawsuit filed by KNG Steel against the defendants and also rejected all claims against Lotte Construction, which had succeeded to the lawsuit by acquiring Woobin Industry's shares through the exercise of a pledge.
In 2018, Hanyang formed a consortium as a proposer and contractor and submitted a proposal for the Jungang Park District 1 Private Park Special Project promoted by Gwangju City, being selected as the preferred negotiation partner.
In January 2020, the consortium established the Bitgoeul Jungang Park Development SPC to carry out the project, with share ratios of Hanyang 30%, Woobin 25%, KNG Steel 24%, and ParkM 21%. However, a conflict arose between Hanyang and the non-Hanyang side, with the latter selecting Lotte Construction as the contractor, leading to ongoing disputes.
Hanyang, having lost construction rights to Lotte Construction in the Jungang Park District 1 Private Park Special Project, attempted to recover those rights through various lawsuits but was mostly unsuccessful, making it virtually impossible to regain the construction rights.
On the other hand, Hanyang achieved a reversal by securing business rights instead of construction rights, as it ultimately won a Supreme Court ruling to recover Woobin's shares (25%) from the non-Hanyang side.
However, Lotte Construction exercised its pledge rights to acquire both Woobin's 25% and KNG Steel's 24% shares, leaving Hanyang with no shares to recover.
Thus, the main issue in this lawsuit was the legitimacy of Lotte Construction's exercise of the pledge, and the appellate court ruled in favor of Lotte Construction.
The appellate court stated, "Lotte Construction acquired 49% of the shares through the exercise of the pledge and completed the transfer of title in the shareholder register, so the plaintiff has no interest to confirm in this lawsuit," and added, "Lotte Construction's exercise of the pledge and acquisition of shares do not appear to be invalid."
Ultimately, the appellate court's decision legitimized Lotte Construction's acquisition of 49% of Woobin and KNG Steel's shares through the exercise of the pledge, making it difficult for Hanyang and KNG Steel, who share a common adversary in Lotte Construction, to secure their stakes.
KNG Steel stated, "We will decide whether to file a Supreme Court appeal after analyzing the written judgment."
The Bitgoeul Jungang Park SPC, which won in the appellate court, commented, "This lawsuit effectively recognized the legitimacy of Lotte Construction's exercise of the pledge," and added, "We hope this outcome will solidify the project, and we will do our best to ensure the apartment and park construction proceeds smoothly."
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