Creditors of failed Samsung auto unit to file lawsuit

Creditors of former Samsung Motor Inc. plan to file a civil lawsuit against the Samsung Group next week to recover billions of dollars owed by the group`s now-defunct automotive subsidiary, officials said yesterday.

The creditors, including the main Seoul Guarantee Insurance Co. and Woori Financial Holding Co., are set on filing the lawsuit next Friday, demanding a total of 4.73 trillion won ($4.55 billion). This comprises of 2.45 trillion won in principal sum while the remaining 2.28 trillion won accounts for interest fees that have accrued over the years.

Creditors have hired Bae Kim & Lee and Yoon & Yang to act as their legal representatives, officials said. If creditors go ahead with their plan, it will be the most expensive civil lawsuit ever to be filed in the country.

The history of this financial dispute dates back to 1999, when Samsung chairman Lee Kun-hee handed out 3.5 million shares of Samsung Life Insurance Co. to the creditors of its failed motor-making arm, to compensate for debts of 2.45 trillion won ($2.4 billion).

At the time, the non-listed insurer`s share was estimated at 700,000 won ($677.4) each.

Samsung Group pledged to pay back the debts after its insurance subsidiary is listed on the market, in an agreement with the creditors.

However the group kept putting off the listing, and with the agreement about to expire at the end of this month, the coalition of creditors decided take a collective action in filing the lawsuit against South Korea`s largest conglomerate.

Samsung responded in claiming that the agreement is invalid, that the group will not be responsible for repaying the debts.

"Chairman Lee was not bound by law to hand out the shares, but we decided to distribute the shares out of moral responsibility to our creditors," said Yun Jong-yong, Samsung Electronics vice chairman during a parliamentary audit session.

"We will do our best to settle this disagreement, but if this goes to court, we will respond to it in a legal manner," said the Samsung Group official yesterday.

Meanwhile, the creditors ended talks in August this year with Kohlberg Kravis Roberts & Co., a U.S. buyout fund, about sales of its Samsung Life Insurance shares.

"As we proceed with this legal action, we will also actively seek the share buyers," said one of the creditors.

Samsung Life, the largest insurer in South Korea, is also the largest shareholder of Samsung Electronics Co., the world`s largest memory chip maker.

(jpark731@heraldm.com)



By Park Jung-youn