Kwon Hyuk-bin, founder and chief vision officer (CVO) of domestic game company Smilegate, was ordered in the first trial of his divorce case to partitioning approximately 2.55 trillion won in assets with his spouse. The court included Smilegate shares held by Kwon in the scope of asset partitioning and recognized the spouse's contribution at 35%. It is the largest disclosed ruling on asset partitioning in a divorce case in Korea.
The Family Division 3 of the Seoul Family Court (Presiding Judge Jeong Dong-hyeok, Director General) on the 9th accepted the divorce claim in the divorce and asset partitioning lawsuit filed by Kwon's spouse, a person surnamed Lee. It came about four years after the suit began in Nov. 2022. Lee's claim for consolation money was dismissed.
The court said, "The marital relationship between the plaintiff and the defendant has reached an irreparable breakdown, responsibility lies with both, and the degree is equal." It found there were "other serious reasons making it difficult to continue the marriage" under Article 840, Item 6 of the Civil Act.
◇ Smilegate shares worth about 7 trillion won also subject to asset partitioning
The key issue in the asset partitioning was the Smilegate shares held by Kwon. The court included the shares in the scope of asset partitioning, citing that Lee held equity and was registered as CEO in the company's early days, and handled housework and child-rearing during a marriage of more than 20 years.
Lee was registered as Smilegate's CEO for about four months starting in July 2002. It is known that Lee held 30% equity at the company's founding, and that equity was disposed of around 2010. Citing the company's founding and growth process and the long marriage, Lee's side demanded half of Kwon's Smilegate equity. Kwon's side countered that Lee neither actually contributed capital nor worked at the company and therefore could not be considered a co-founder.
During the court appraisal, Smilegate's corporate value was presented at up to 8.016 trillion won. The court ultimately recognized Kwon's net assets at about 7.3375 trillion won. Of that, the value of Smilegate shares was about 7.1049 trillion won, accounting for 96.8%. The court evaluated the share value by reflecting future cash flows, considering the growth potential and intangible value of a game company.
◇ Kwon Hyuk-bin's role decisive in company growth; spouse's contribution 35%
The court viewed that Kwon's business capability and management decisions in Smilegate's founding and operation had a decisive impact on the company's growth. It set Lee's contribution at 35% and Kwon's contribution at 65%.
However, it also considered Lee's contributions to the company's founding and growth and to housework and child-rearing, as well as the economic support from Lee's family of origin in the early marriage. It reflected that after the lawsuit was filed, Kwon received large dividends and that in another civil case, the corporate value of Smilegate RPG was assessed higher than in this appraisal. The circumstances of the marriage and its breakdown, and both sides' age, income, and economic power were also factors.
◇ Stock instead of 2.5 trillion won in cash; control retention also considered
The court ordered Kwon to transfer to Lee Smilegate shares equivalent to about 2.4867 trillion won, which is 35% of the shares Kwon holds, and to pay the shortfall of 65 billion won in cash as the residual asset partitioning portion. The total scale of the asset partitioning is about 2.55 trillion won.
Given that most of Kwon's assets are in unlisted shares, raising about 2.55 trillion won solely in cash would make share disposal unavoidable, and unlisted shares are difficult to dispose of and incur expense and taxes. It also determined that even if Kwon transfers 35% out of 100% equity, there is no risk of losing control.
The total amount of this asset partitioning is about 2.7 times the 944 billion won recognized in the remand trial in July for Chey Tae-won, chairman of SK Group, and Roh Soh-yeong, director of Art Center Nabi. However, this ruling is at the first-instance stage and is not final.
◇ Kwon Hyuk-bin's side "will respond after reviewing the judgment"; Smilegate calls it "a personal matter"
The court designated Lee as the person with parental authority and the custodian of the minor child, and ordered Kwon to pay 20 million won in child support every month until the child reaches adulthood.
Immediately after the ruling, a representative for Kwon said, "We understand it as finding no fault on the defendant's part," and added that they would decide on the next steps after reviewing the written judgment. Lee's side said, "We respect the court's decision."
Smilegate said, "The company has nothing particular to say regarding the personal matters of the major shareholder," adding, "We will faithfully carry out our core duties as before."