Namyang Dairy's 44.3 Billion Won Severance Pay Lawsuit with Former Chairman Hong Wonsik to Continue into Next Year

Court: "Former Chairman Hong Requested Document Submission Order"
"Hearing to Resume in March 2026"

The first-instance trial proceedings in the severance pay lawsuit between former Namyang Dairy Products Chairman Hong Wonsik and Namyang Dairy Products will continue into next year. On December 4, during a hearing (2024Gahap71532) at the Seoul Central District Court Civil Division 41 (Presiding Judge Jeong Hoeil), the court stated, "We considered concluding the proceedings, but the former chairman's side has requested a document submission order," and announced, "We will resume the hearing on March 5, 2026." This suggests that, as the two sides remain far apart on the amount and calculation criteria for the severance pay, the court has decided that further legal arguments are necessary rather than setting a date for the verdict.

In May 2024, former Chairman Hong filed a lawsuit against Namyang Dairy Products, seeking payment of approximately 44.3 billion won in severance pay. This amount exceeded 6.5% of Namyang Dairy Products' consolidated equity capital of about 678 billion won as of 2023.

Former Chairman Hong led Namyang Dairy Products for over 30 years after becoming CEO in 1990. As the company faced difficulties due to a series of negative events, including the forced sales to distributors and the exaggerated advertising controversy over Bulgaris, Hong decided in May 2021 to sell his 53.08% stake in Namyang Dairy Products to private equity firm Hahn & Company (hereafter Hahn & Co.) for 310.7 billion won. However, in September of the same year, Hong terminated the share purchase agreement (SPA), claiming that Hahn & Co. had failed to fulfill promises such as appointing him as an advisor. This led to an intense legal battle between the two sides, during which the severance pay claim was also filed.

The courts have been ruling in favor of Hahn & Co. In January 2024, the Supreme Court ruled in favor of Hahn & Co. in the share transfer lawsuit. Management control of Namyang Dairy Products was transferred to Hahn & Co. In November 2025, in a first-instance ruling on a damages lawsuit filed by Hahn & Co. for delayed SPA execution, the court ordered, "Former Chairman Hong must pay Hahn & Co. approximately 66 billion won and related delayed damages," and stated, "Of the 47.7 billion won in retroactive damages, provisional execution is permitted."

Lee Sangwoo, Law Times Reporter

※This article is based on content supplied by Law Times.

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