At the stakeholders' meeting for the Homeplus Co. rehabilitation plan held at the Seoul Bankruptcy Court on the 2nd, an unusual event occurred in which a single creditor cast both a vote in favor and a vote against the same plan. Lotte Card voted in favor with 103.06 billion won of its voting rights and against with 34.63 billion won. The rest abstained. Hyundai Card also split its votes into for and against in proportion to investors' opinions.
How is it possible for a single creditor to simultaneously support and oppose the same agenda item? The Debtor Rehabilitation and Bankruptcy Act has a system called "non-unified exercise of voting rights." Even if a single legal creditor holds the voting rights, when there are multiple underlying economic or contractual interests, the system allows the creditor to split and exercise the rights separately rather than bundling them into one.
◇ Card companies are legal creditors, investors are economic stakeholders
The Homeplus Co. card receivables claim is a representative example. Based on card receivables to be collected from Homeplus Co., an investment product called asset-backed electronic short-term bonds was issued, and investors bought them. Investors are not Homeplus Co.'s direct legal creditors, but the amount of their recovery varies depending on how much card receivables Homeplus Co. repays.
Park Kyu-hee, an attorney at Barun Law LLC specializing in corporate rehabilitation, explained that in Homeplus Co.'s case, the structure differs from typical securitization in which a card company completely transfers the claim itself to a special purpose company (SPC). It is closer to a "participation method," in which the card company maintains its status as a legal creditor to Homeplus Co. while transferring, under contract, the economic benefits from card receivables collection to an SPC and others.
Simply put, the right to vote on the rehabilitation plan remains with the card company, but the economic interests tied to how much cash is actually recovered are also linked to the investors.
In practice, card companies said they reflected investors' opinions in exercising their voting rights. Lotte Card said, "We exercised our rights after receiving investors' opinions on asset-backed electronic short-term bonds issued by a securities company based on Homeplus Co. card receivables." It said it exercised its own held claims "under the principle of creditor protection." Hyundai Card also said, "We asked investors for their opinions and split votes into for and against according to those ratios."
◇ Why does the rehabilitation law allow simultaneous for-and-against voting?
Article 189 of the Debtor Rehabilitation and Bankruptcy Act provides that a voter may exercise voting rights in a non-unified manner. This takes into account that even when voting rights are vested in a single legal voter, different underlying economic or contractual interests may exist.
Kim Sang-gyu, an attorney at Lawfix LLC who served as a judge at the Suwon Bankruptcy Court, said, "Even when voting rights are vested in a single legal voter, different underlying economic or contractual interests may exist," and added, "The core purpose of the system is to allow the rights to be split and exercised according to those interests."
A typical case is where, as with a trust company, there is a single creditor in name but multiple actual funders. Non-unified exercise can also arise when a debt collection company manages multiple claims or when a single creditor holds multiple claims with different repayment terms.
A creditor seeking to split voting rights must notify the court in writing of that intent by seven days before the stakeholders' meeting. However, attorney Kim said this does not mean the exact allocation between for and against must be finalized seven days in advance. Kim noted, "It is necessary to distinguish between the statutory filing requirement and the court's actual procedural operation."
◇ Investors' wishes do not automatically become votes
However, allowing non-unified exercise does not grant voting rights in the rehabilitation process to investors in securitized products. The legal party casting votes on the rehabilitation plan remains the card company as a rehabilitation creditor.
Attorney Park explained, "There is no general provision requiring that the final investors' intentions must be reflected in deciding for or against the rehabilitation plan." How much influence investors can have over a card company's exercise of voting rights depends on the individual securitization contract.
In this Homeplus Co. case, Lotte Card and Hyundai Card received investors' opinions through a securities company and reflected them in the actual exercise of voting rights. In the class of Homeplus Co. rehabilitation creditors, 75.90% of the total voting rights were in favor, exceeding the two-thirds threshold for passage, and the court approved the rehabilitation plan the same day.
This case shows that when multiple economic interests exist behind a single legal creditor, non-unified exercise of voting rights can serve as a channel to reflect different interests in the vote on a rehabilitation plan.