'200 Billion Won M&A Deal Collapse Deposit Lawsuit' Asiana Wins Again Against HDC Hyundai Development in Second Trial

The court has once again ruled that Asiana Airlines, whose M&A (merger and acquisition) fell through, does not need to return the performance bond received from the HDC Hyundai Development Consortium.

Asiana Airlines office set up at Gimpo Airport, Gangseo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

On the morning of the 21st, the Civil Division 16 of the Seoul High Court (Presiding Judge Kim In-gyeom) dismissed all appeals by HDC Hyundai Development and others in the appeal trial of the pledge extinction claim lawsuit filed by Asiana Airlines and Kumho Construction against HDC Hyundai Development and Mirae Asset Securities, and ruled in favor of the plaintiffs as in the first trial. The court upheld the first trial’s judgment and also dismissed the counterclaim newly asserted by HDC Hyundai Development in the appeal trial.

The court stated, "Asiana Airlines and others complied with the representations, warranties, and covenants stipulated in the acquisition contract, and no materially adverse effects occurred after the reference date, so all conditions precedent for closing the transaction were met. Nevertheless, Hyundai Development and others refused to perform their obligation to close the transaction under the acquisition contract by demanding re-inspection and renegotiation, which constitutes refusal to perform," and added, "The termination of the acquisition contract by Asiana Airlines and others and the forfeiture of the deposit are lawful."

Additionally, the court noted, "The penalty clause in the acquisition contract cannot be deemed contrary to public order and morals and is therefore valid."

Previously, the first trial court ruled in favor of Asiana Airlines and Kumho Construction in the pledge extinction claim lawsuit against HDC Hyundai Development and Mirae Asset Securities. At that time, the court ordered HDC Hyundai Development and others to notify the extinction of the pledge (security interest) on the deposit and to pay 1 billion KRW to Asiana Airlines and 500 million KRW to Kumho Construction.

In response, in December 2022, HDC Hyundai Development and Mirae Asset Securities, who had attempted to acquire Asiana Airlines, appealed the ruling after losing the 250 billion KRW deposit lawsuit.

Earlier, in November 2019, HDC Hyundai Development formed a consortium with Mirae Asset Daewoo to pursue the acquisition of Asiana Airlines. After being selected as the preferred bidder, they signed a Stock Purchase Agreement (SPA) and paid a performance bond of approximately 250 billion KRW, which is 10% of the transaction amount.

However, Asiana Airlines judged that HDC Hyundai Development lacked the intention to acquire and notified the termination of the M&A contract. They also filed a pledge extinction claim lawsuit to forfeit the performance bond. The purpose was to have the pledge released so that the amounts paid by HDC Hyundai Development for the acquisition of new and existing shares could be used.

On the other hand, HDC Hyundai Development argued that the responsibility for the contract failure lay with Asiana Airlines. They claimed that Asiana Airlines refused the requested re-examination due to changes in the business environment caused by the spread of COVID-19 and that there were undisclosed liabilities in the financial statements.

If the lawsuit result is finalized in favor of Asiana Airlines, the deposit paid by HDC Hyundai Development and others will be attributed to Asiana Airlines (217.7 billion KRW) and Kumho Industrial (32.3 billion KRW), respectively.

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