Hyundai Motor Securities ordered to compensate Yuanta, Shinyoung for damages

Hyundai Motor Securities Co. has been ordered by a higher court to pay 17 billion won ($15 million) in compensation to Yuanta Securities Korea and Shinyoung Securities for failing to buy back faulty debts as promised.

The Seoul High Court, in overturning a lower court’s decision, recently ruled that Hyundai Motor Securities should pay 10.35 billion won to Yuanta Securities Korea and 6.88 billion won to Shinyoung Securities for the wrongful abrogation of contract negotiation regarding asset-backed commercial papers (ABCP) collateralized by bonds issued by China Energy Reserve & Chemicals Group Co (CERCG)’s subsidiary, according to sources on Sunday.

Yuanta Securities Korea and Shinyoung Securities claimed that Hyundai Motor Securities asked them to keep the ABCPs with a promise to buy back the debts but took back only a part when default risk emerged. In 2018, a total of 165 billion won worth of the ABCPs defaulted in Korea. Yuanta and Shinyoung each filed a suit against Hyundai Motor Securities in July 2018.

The first trial ended with the court siding with Hyundai Motor Securities, stating that it was difficult to see there had been a definitive and binding agreement. The appellate court found a breach in the agreement, but limited compensation to 70 percent of the damaged amount.

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