1. Introduction (Summary of Results)

Law Firm Cheongchul (Lead Attorney: Park Jong-han) represented the client in a case where former employees of the existing company filed a lawsuit for unpaid severance against the client, despite the client having sold the shares and management rights of the company they operated. They succeeded in achieving a non-prosecution decision from the prosecutor.

2. Background of the Case

The client sold A Company, which he operated, to a buyer by selling his shares and management rights and simultaneously conducted a transfer of a specific business sector of another B Company to the buyer. In the process, all tangible and intangible assets of the specific business sector of A Company and B Company were transferred.

However, the buyer who purchased A Company could not manage the company properly, and the business situation of A Company deteriorated rapidly. Feeling at risk of not receiving severance pay from A Company, the employees demanded the client, the former employer, to pay the severance, and when the client refused, they sued the client for violating the Labor Standards Act regarding unpaid severance.

The client consulted Law Firm Cheongchul based on the above circumstances to inquire whether there was any responsibility to pay severance to the employees of the sold company and transferred business sector, and entrusted the criminal defense to Law Firm Cheongchul.

3. Legal Issues (Key Grounds and Issues of Cheongchul)

During the defense process, Law Firm Cheongchul emphasized that the client is no longer the employer of the problematic employees and clarified that the employees were also aware of this situation.

① The sales contract regarding A Company between the client and the buyer states that the buyer will assume all rights and obligations of the shares and management rights, and this management transfer actually occurred as stated.

② If we examine the transfer agreement for the specific business sector of B Company between the client and the buyer, it clearly states that all tangible and intangible assets of that business are to be transferred, and that the employment succession for the employees followed accordingly.

③ Regarding the business transfer, the transferred employees were aware of the transfer and continued their work for the new operator without raising issues or objections.

The prosecution accepted Cheongchul's opinion and issued a non-prosecution decision based on "no charges," which not only spared the client from the risk of criminal penalties for unpaid severance but also allowed them to avoid responsibilities for severance payments amounting to hundreds of millions of won to the problematic employees.

4. Significance (The Meaning of This Case)

This case is not merely about the non-payment of wages or severance; it raised issues regarding whether the employment succession of employees was valid in relation to the sale of the company and the transfer of certain business sectors. Various legal principles regarding the sale of the company and business transfer should be brought to the forefront.

However, the labor office tends to view cases of unpaid wages and severance from the perspective of employees first, so it was crucial to provide a political explanation of the specific circumstances surrounding employment succession in the investigation.

Cheongchul detailed the circumstances under which the client sold the company while simultaneously transferring the business sector of another company, as well as the legal principles related to employment succession, securing active evidence such as relevant contracts and the operating methods of the buyer to obtain a non-prosecution decision from the prosecution.

If you need a solution to related disputes, do not hesitate to contact Law Firm Cheongchul.

Law Firm Cheongchul is comprised solely of attorneys from Korea's top five law firms, prosecutors, and legal teams of large corporations, and a team of specialized attorneys related to the case, rather than just one attorney, manages the response. Cheongchul provides legal consulting focused on achieving what clients ultimately want by offering comprehensive solutions beyond just resolving specific issues. If you need help achieving your goals, do not hesitate to contact Cheongchul.