Asiana Airlines still off the $187M hook following Seoul court's decision

An Asiana Airlines aircraft takes off at an unspecified airport in October. [YONHAP]

Seoul’s appeals court ruled that Asiana Airlines is not required to refund the down payment of 250 billion won ($187 million) that the carrier received from HDC Hyundai Development Company during the failed acquisition attempt in 2019.

The civil division of the Seoul High Court on Thursday upheld the lower court’s decision, ruling in favor of the plaintiffs Asiana and Kumho E&C in their lawsuit filed against HDC and Mirae Asset Securities.

“HDC and the defendants’ request for renegotiation constitutes a refusal to fulfill obligations, and therefore Asiana’s termination of the acquisition agreement is lawful,” the court said in its ruling.

The latest ruling solidifies Asiana’s case, affirming that it is not obligated to return the 250-billion-won down payment to HDC.

Asiana and Kumho E&C were both under the now-dismantled Kumho Asiana Group before Asiana’s merger into Korean Air.

In 2019, HDC signed a 2.5-trillion-won contract to acquire Asiana Airlines and paid 10 percent of the total acquisition price as a down payment to Asiana and Kumho E&C. Asiana received 218 billion won, and Kumho 32.3 billion won.

Following the breakout of Covid-19, HDC demanded a renegotiation citing a change in the business environment, which Asiana’s creditors including the Korea Development Bank refused to accept.

The acquisition deal fell through in September 2020, leading to a years-long legal dispute over which party is accountable for the failure.

In November 2022, the district court ruled in favor of Asiana, saying that “the acquisition contract has been terminated lawfully,” thereby “the defendant has the obligation to compensate for the losses incurred to the plaintiff.”

In its latest ruling, the Seoul High Court said that “while it is true that Asiana’s financial status and operating conditions suffered a significant deterioration, such an occurrence was due to Covid-19 and therefore is considered an exception caused by ‘natural disaster.’” The court also dismissed HDC's argument that the amount of the payment was unjustly huge.

HDC is likely to appeal against the decision, as the company said “we will closely review the ruling and take a proactive approach for the benefit of our shareholders and stakeholders, including appealing the decision” in a statement issued following the court ruling.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]