The plaintiff, an online investment-related financial business entity as defined by the Online Investment-linked Financial Business and Protection of Users Act, filed a lawsuit against the defendant, a lending service provider. The plaintiff sought the defendant’s purchase of its non-performing mortgage loans in accordance with a loan management agreement. Ultimately, the Court rendered a judgment dismissing all claims brought forth by the plaintiff.

On September 14, 2021, the plaintiff entered into a loan management agreement with the defendant, wherein the defendant agreed to purchase the plaintiff’s mortgage loans in the event of a default. However, in July 2022, following requests of the Financial Supervisory Service and the Association of Korean Marketplace Lending, the parties partially amended the terms of the agreement stipulating that the purchase price would be negotiated at a later date.

On January 20, 2023, the plaintiff filed a lawsuit against the defendant contending that its request to transfer non-performing loans following a default constituted an exercise of its right to fulfill the promise of sale, and that the defendant had an obligation to agree to a receivable transfer agreement. Kim & Chang represented the defendant in this matter and obtained a partial denial of certain claims and dismissal of the remaining claims (the judgment of the district court was rendered on May 24, 2024 and finalized on June 8, 2024.

The District Court, accepting all of our firm’s arguments, held that the amended agreement superseded previous terms. The District Court also held that that under the terms of the amended agreement as well as the defendant’s right to deny purchase, there was no obligation on the defendant’s part to automatically make the purchase or enter into a purchase agreement merely based on the plaintiff’s request.

This case marks the first instance of examining whether a lending service provider is obligated to purchase non-performing loans under a loan management agreement between an online investment-related financial business entity and a lending service provider. By analyzing the context that led to the formation of the loan management agreement and considering specific provisions in the agreement, our firm successfully convinced the District Court that the agreement must be interpreted as requiring the execution of a separate purchase agreement in advance. As a result, the District Court dismissed all of the plaintiff’s claims.