Court Orders Former Namyang Dairy Products Chairman Hong Won-sik to Pay 66 Billion Won in Damages, Recognizing Responsibility for 'Acquisition Delay'

[Financial News] The court has ordered Hong Won-sik, former chairman of Namyang Dairy Products, to pay 66 billion won in damages for delaying the company's acquisition.
On the 27th, the Civil Agreement Division 31 of the Seoul Central District Court, presided over by Judge Nam In-soo, partially ruled in favor of Hahn & Company in a damages lawsuit of approximately 93.6 billion won filed against Hong. The court determined that Hong must pay 66 billion won to Hahn & Company. However, all other claims Hahn & Company filed against Hong's family were dismissed.
This ruling comes about three years after Hahn & Company filed a lawsuit in November 2022 seeking over 50 billion won in damages. During the proceedings, Hahn & Company increased its claim to approximately 93.6 billion won.
The dispute began in May 2021 when both parties signed a Stock Purchase Agreement (SPA) for the transfer of management rights. At the time, Hong and his family agreed to sell their 53.08% stake in Namyang Dairy Products for 310.7 billion won. However, two months later, Hong failed to attend an extraordinary shareholders' meeting, effectively overturning the agreement. Later that September, he notified Hahn & Company of the contract's termination.
Hahn & Company filed a lawsuit to enforce the stock transfer and won the first trial in September 2022. This ruling was upheld by the Supreme Court of Korea in January last year. In March of the same year, Hahn & Company appointed its recommended directors at the annual shareholders' meeting, finally securing management rights over Namyang Dairy Products after about 33 months.
Hahn & Company argued that Hong's unauthorized absence from the extraordinary shareholders' meeting significantly delayed the acquisition, during which time the company's assets and cash reserves declined and operating losses accumulated, damaging corporate value.
Conversely, Hong's side contended that Namyang Dairy Products' deteriorating performance was due to a broader industry downturn and that even if Hahn & Company had acquired management rights as scheduled, it would have been difficult to reverse the situation. However, the court did not accept these arguments.
scottchoi15@fnnews.com Choi Eun-sol Reporter