Yuanta Securities Korea lost the first trial in a civil suit of about 130 billion won it filed, arguing that VIG Partners should also share part of the roughly 190 billion won in damages it bore after selling Tongyang Life Insurance.
The Civil Division 30 of the Seoul Central District Court on the 28th ruled against the plaintiff in a lawsuit filed by Yuanta Securities Korea seeking the return of unlawful distributions from 14 people, including VIG Partners officials. The court dismissed the suit against some defendants and rejected the claims against some defendants, including VIG Partners. Yuanta Securities Korea was ordered to bear the litigation costs.
The case stems from a dispute over inadequate disclosure of a meat-collateral loan that surfaced after the sale of Tongyang Life Insurance in 2015. A meat-collateral loan is a financial transaction in which money is lent with meat stored in cold storage and similar facilities as collateral. Tongyang Life Insurance was exposed to risks related to this loan at the time, and China's Anbang Insurance, which acquired Tongyang Life Insurance, argued that the sellers failed to properly disclose those risks.
Anbang Insurance filed arbitration with the International Chamber of Commerce (ICC), and the arbitral tribunal found that the sellers must pay 166.6 billion won in damages. Afterward, proceedings for recognition and enforcement of the award were carried out in Korea, and Yuanta Securities Korea was said to have paid Anbang Insurance a total of 191.1 billion won, including damages, delay damages, and litigation costs.
Yuanta Securities Korea filed this lawsuit on the premise that VIG should also share a significant portion of the money it first paid. The company argued that because VIG realized investment recovery gains from the sale of Tongyang Life Insurance, it should bear part of the liability for damages that arose after the sale. The claim structure covered not only simple contribution but also whether the distributions VIG received during its investment recovery should be legally returned.
VIG, on the other hand, contested that the liability for damages borne by Yuanta Securities Korea in connection with the sale of Tongyang Life Insurance could not be shifted to it. The key issue was whether there was a legally sufficient link between the proceeds VIG received from its investment recovery and the liability for damages to Anbang Insurance. In other words, the question was whether merely making money from the sale required sharing responsibility for an international arbitration award imposed later.
The first-instance court did not accept Yuanta Securities Korea's arguments. It found that the lawsuit itself did not meet procedural requirements for some defendants, and it did not recognize the return liability asserted by Yuanta Securities Korea against defendants related to VIG Partners.
The ruling drew attention as a case over whether a private equity fund must bear liability for breaches of representations and warranties or subsequent dispute expenses arising from a sale even after it has exited its investment.