HDC Group Chairman Chung Mong-gyu, center, speaks during a press conference at HDC Hyundai Development Company's headquarters in Seoul, Nov. 12, 2019, after the builder was selected as the preferred bidder for the Asiana Airlines takeover. Korea Times photo by Hong In-kee

Mirae Asset Financial Group founder Park Hyeon-joo

By Park Jae-hyuk

HDC Hyundai Development Company and Mirae Asset Securities are not entitled to be refunded the combined 250 billion won ($190 million) they had paid previously for their acquisition of Asiana Airlines from its parent company, Kumho E&C, which eventually ended in failure, according to a court ruling, Thursday.

The Seoul Central District Court accepted the request from Asiana and Kumho to refuse the refund to HDC and Mirae Asset from the escrow account. The justice also ordered the defendants to pay a combined 1.5 billion won to the plaintiffs in compensation for their breach of contract.

HDC unveiled its plan to lodge an appeal against the recent ruling, claiming that its appeal is intended to protect its shareholders and stakeholders.

"It is regrettable that the court did not take into account negative effects from the seller's fault," the company said in its press release.

Asiana welcomed the court's ruling.

"HDC should accept the court decision and take follow-up measures in compliance with the ruling," the air carrier said in a statement.

An Asiana Airlines airplane / Courtesy of Asiana Airlines

Their legal battle started two years ago after the HDC-led consortium, which had been selected as the preferred bidder for the Asiana takeover in November 2019, abruptly scrapped its plan to acquire the air carrier in September 2020, citing its snowballing debt.

After hiring two of Korea's top law firms ― Yoon & Yang and Shin & Kim ― Asiana and Kumho filed the lawsuit in November 2020, claiming that the contract was canceled as HDC had remained reluctant to finish the deal.

In response, HDC and Mirae Asset were once expected to hire the nation's leading law firm, Kim & Chang, or Bae, Kim & Lee, another major law firm that offered advice to the builder when it was considering the Asiana takeover.

However, HDC eventually hired Yulchon, while Mirae Asset hired Lee & Ko. The defendants have attributed the contract's cancellation to Asiana's refusal to provide enough information.

If the upper courts reject HDC's appeal, the builder and the securities firm will lose 200 billion won and 50 billion won, respectively. The air carrier and its parent, on the other hand, will be able to secure 220 billion won and 30 billion won, respectively.

In that case, HDC will face heavier cost burdens, given that the company has already spent a lot of money to compensate the buyers of I'Park apartments in Gwangju, which is under reconstruction after its collapse in January this year.

The court ruling takes some pressure off Asiana for the moment amid growing uncertainties about its acquisition by airline rival, Korean Air.