bhc, BBQ Win Lawsuit for Product Supply Payment, Awarded 30 Billion KRW Compensation

Seoul Central District Court: "None of the Termination Grounds Claimed by BBQ Are Recognized"

[Asia Economy Reporter Lee Seon-ae] bhc announced on the 14th that it received a 30 billion KRW compensation ruling in the ‘product supply payment’ lawsuit against BBQ, which unilaterally terminated the contract.

On this day, the 16th Civil Division of the Seoul Central District Court recognized bhc’s liability for damages regarding BBQ’s unilateral termination of the ‘product supply payment’ contract, which was exclusively contracted with bhc for up to 15 years.

The court did not accept all the termination reasons claimed by BBQ and ruled that the damages would be calculated by multiplying the contractually agreed operating profit margin of 19.6% by the expected sales amount over 15 years as presented by bhc.

In June 2013, BBQ sold bhc to improve its financial condition, which had a high debt ratio of 49,238% (as of the end of 2012) due to reckless management.

At the time of sale, an exclusive product supply contract was signed to supply sauces, powders, etc., guaranteeing 19.6% of operating profit, but BBQ unilaterally terminated the product supply contract on October 30, 2017. Accordingly, bhc filed a lawsuit claiming product supply payments due to the unilateral termination notice.

The industry regards this ruling as a natural outcome and expects that the remaining ‘logistics service fee’ damage claim lawsuit will also be won. It is anticipated that if BBQ does not pay the court-ordered compensation amount to bhc and bhc enforces compulsory execution against BBQ, a red light will be lit on BBQ’s financial structure.

Kim Dong-han, head of bhc’s public relations team, stated, “Despite significantly reducing BBQ’s considerable debt through the sale of bhc, BBQ suddenly and unilaterally notified contract termination,” adding, “The fact that none of BBQ’s termination reasons were accepted proves that BBQ had been making unilateral claims ignoring facts and legal principles, which is highly suggestive.”

This content was produced with the assistance of AI translation services.