Hello. I am Law Firm Cheongchul Attorney Lee Young-kyung.

If a creditor has filed a provisional seizure against a debtor's property, the debtor can cancel the provisional seizure through a release deposit.

In this case, we will look into how the effect of the provisional seizure operates and whether another creditor, not the provisional seizure creditor, can claim the seizure of the recovery right of the provisional seizure, and if so, whether the provisional seizure creditor is recognized to have preferential repayment rights.

[Question 1.]

What is the effect of the provisional seizure if there is a release deposit?

[Answer 1.]

The effect of the provisional seizure affects not the deposit itself but the right of recovery for the deposit by the provisional seizure debtor.

After the provisional seizure decision following the creditor's application for provisional seizure, if the debtor deposits the release amount stated in the provisional seizure order, the court must cancel the executed provisional seizure (Civil Execution Act Article 299 Section 1).

Typically, only cash deposits are allowed for the release amount, and deposits made with securities are not allowed even if the securities have substantial market value (Supreme Court Decision (Precedent) October 1, 1996, 96Ma162), and depositing only a part of the release amount and applying to cancel only a part of the provisional seizure execution is also not allowed.

A cancellation decision of the provisional seizure by a release deposit becomes effective upon notification even before it is finalized (Civil Execution Act Article 299 Section 4). Normally, a decision to cancel a compulsory execution procedure must be finalized to have effect (Civil Execution Act Article 17 Section 2), but if the debtor deposits the release amount and obtains a cancellation decision for the provisional seizure execution, then until the cancellation decision is finalized, the debtor cannot receive the cancellation of execution, which puts an unfair dual burden on the debtor. Thus, the Civil Execution Act Article 299 Section 4 excludes the application of Article 17 Section 2 of the same law. The creditor may file an immediate appeal against this decision (Civil Execution Act Article 299 Section 3).

Even if the provisional seizure execution is canceled as such, the effect of the provisional seizure order itself does not disappear. When the execution is canceled, the release deposit becomes the subject of execution when the provisional seizure creditor wins a final judgment on the main claim or obtains a victorious judgment with a provisional execution order.

In this case, voices differ, but it is confirmed that the effect of the provisional seizure is not on the deposit itself but affects the debtor’s right to recover the release deposit as the depositor, according to the court and practical stance.

[Question 2.]

If there is a release deposit for the provisional seizure, what is the method of execution for the provisional seizure creditor, and is a right of preferential repayment acknowledged?

[Answer 2.]

The court, according to the cash conversion order theory, states that the effect of the provisional seizure does not reside in the deposit itself but rather in the recovery right of the depositor, the debtor. The provisional seizure creditor can recover the deposit through a cash conversion order (all demands order or collection order) based on an enforceable judgment of a main claim.

Just as the provisional seizure creditor does not have the right to prefer repayment from the seized object, the creditor has no right to preferential repayment over the release deposit!

As previously explained, in practice, the effect of the provisional seizure affects not the deposit itself but the recovery right of the deposit by the debtor, and the provisional seizure creditor can recover the deposit through a cash conversion order (all demands order or collection order) based on an enforceable judgment of the main claim. This is the cash conversion order theory (Supreme Court Decision 1996. 11. 11. 95Ma252).

Therefore, to receive the release deposit, the provisional seizure creditor must obtain a separate cash conversion order (all demands order or collection order) for the debtor’s recovery right of the deposit based on the enforceable judgment for the main victory (Supreme Court Case Precedent 2-295).

That is, the provisional seizure creditor may request collection from the deposit by obtaining an order to transfer the recovery right from provisional seizure to a principal seizure with the enforcement judgment of the main victory (all demands order is to attach proof of enforcement, and collection order is to attach proof of delivery), and the execution judgment includes not only a finalized judgment but also a final judgment with a provisional execution order (Supreme Court Case Precedent 2-293).

Just as the provisional seizure creditor does not have the right to prefer repayment from the seized object, the creditor does not have the right to preferential repayment over the release deposit (Supreme Court Decision 1996. 11. 11. 95Ma252).

Therefore, the recovery right of the release deposit is in a state of common provisional seizure without preferential rights, so other creditors who have claims against the provisional seizure debtor can also apply provisional seizure or attachment over the release deposit. If another creditor of the provisional seizure debtor has received an attachment order over the recovery right of the release deposit, the provisional seizure creditor's provisional seizure and the other creditor's attachment will compete as they apply to the same execution subject (Supreme Court Decision 1996. 11. 11. 95Ma252). In this case, the deposit officer must promptly report to the execution court about this reason, and payment of the deposit to the creditors who received the attachment and collection orders is not allowed (Supreme Court Decision 2002. 8. 27. 2001Da73107).

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