A court put the brakes on a move by members of a condominium association in Seoul's Gangnam district to file for bankruptcy, saying they cannot repay money borrowed from construction firms. The association members had planned to dissolve the association that borrowed the funds and hold a general meeting to file for bankruptcy with the court, but the court accepted an injunction request to ban the meeting. The amount the condominium borrowed totals about 17 billion won, including principal and interest.
On the 19th, the 51st Civil Division of the Seoul Central District Court (Presiding Judge Park Sang-eon, Director General) granted an injunction request by the Seongwon Daechi 2nd Complex Reconstruction Preparatory Committee (the preparatory committee) to ban an extraordinary general meeting aimed at dissolving the remodeling association, prohibiting the meeting from being held. Earlier, the preparatory committee planned to hold the meeting on the 20th to dissolve the remodeling association, but officials of the existing remodeling association filed for an injunction to ban the meeting.
Earlier, the complex established a remodeling housing association in 2008 to carry out vertical expansion, but the new construction method it sought to apply failed technical verification, preventing the project from moving forward for 17 years. During this process, it borrowed 11,245.8 million won from DL E&C and HDC Hyundai Development Company, which had been selected as contractors, for project costs and other expenses, and the court ruled that it must repay 17 billion won in principal and interest.
In response, association members devised a plan to dissolve the indebted remodeling housing association through a general meeting and seek bankruptcy to reduce the debt. However, officials of the existing remodeling association, who are obligated to repay the debt, filed for an injunction to ban the meeting, and the meeting scheduled for February was prohibited. They again pushed to hold a meeting and planned to convene it on the 20th, but the injunction was granted again.
An industry official said, "Courts usually do not readily accept injunction requests to ban general meetings. Typically, they allow the meeting first and then examine whether it has legal effect," adding, "It is highly unusual for a court to find a serious procedural defect, as in this case, and block the meeting from being held at all." The official added, "It appears the court took into account the moral hazard of attempting to dissolve without compensating the amount that should rightfully be repaid to the contractors."
☞Refer to our Feb. 5 exclusive article on a Gangnam condominium applying for bankruptcy after borrowing 17 billion won and saying it cannot repay the money: https://biz.chosun.com/real_estate/real_estate_general/2025/02/05/NM6YQS6IQBB5FBHBG777FJKIIA/