Case of Proactively Eliminating Risk by Restructuring the Legal Framework Amid a Delayed Asset Transfer

The client was a business operator that had been entrusted with operating facilities within a particular business site for a fixed period. As its consignment operation agreement came to an end, it was in the process of transferring the facilities and related assets to a successor operator. The client had succeeded, from the previous operator, to assets corresponding to the residual value of interior expansion and improvement construction work, and it intended to enter into an asset transfer agreement with the successor operator on the premise that the contract term would expire.

However, citing a separate dispute with the site owner concerning settlement and sale, the successor operator continuously delayed the execution of the asset transfer agreement and the payment of consideration. As a result, even though the successor operator was in actual possession and use of the assets, the related licenses, permits, and filings remained registered under the client's name, and this unstable situation persisted for an extended period. Accordingly, the client requested a legal review as to whether this situation might lead to future contractual problems or additional legal liability.

The core issues in this matter were the ownership structure depending on the legal nature of the assets, and how to address the possession, use, and liability problems arising while no contract had been concluded. Insight Law Firm first reviewed the assets to be transferred by distinguishing between equipment and machinery whose independence could be recognized, and the expansion and improvement construction physically integrated with the existing building. For assets constituting independent movable property, such as equipment and machinery, since there was room to assess that the client still retained ownership, the firm organized the legal framework centering on the possibility of a claim for return or a claim for an amount equivalent to consideration premised on actual use.

By contrast, for the expansion and improvement construction work that had become integrated with the existing facilities and was difficult to separate, the firm explained a structure under which, on the premise that it might be assessed as an accession under the Civil Act, the client could be settled by way of a claim for an amount equivalent to the investment cost or residual value, separate from real property ownership. In addition, the firm specifically pointed out, where the successor operator possesses and uses the assets over a long period without an asset transfer agreement having been concluded, the question of to whom the risk of asset value decline such as depreciation, damage, or loss is attributed, and that the burden of proof could operate unfavorably for the client.

Furthermore, the firm focused on advising on the practical risk that, where business is conducted while the license, permit, and filing names remain under the client, administrative, tax, and criminal liability under the relevant statutes could be attributed to the client as the apparent business operator. The firm also conducted a comprehensive review of the possibility of an expanding dispute, including the point that, as the negotiation stage premised on contract conclusion continued for a long period, if the successor operator delays concluding the contract or refuses performance without reasonable grounds, liability in contract negotiations contrary to the principle of good faith could arise.

Through this advisory, the client was able to clearly recognize that this was not merely a problem of delayed asset transfer, but rather involved legal and practical risks that could arise if the possession and use structure and the name management were prolonged in a state where no contract had been concluded. In particular, by organizing the matter so as to distinguish between the issue of real property ownership of the assets and the issue of recovering and settling the investment cost, the client was able to realistically set the response directions it could take regardless of whether a contract would ultimately be concluded.

This case shows that, in a situation where asset transfer is delayed after the termination of a consignment operation agreement, unexpected administrative and financial risks may expand unless one reviews not only the contract wording but also the legal nature of the assets, the state of possession, and the apparent liability attribution structure. By preemptively organizing these structural risk factors before the dispute fully materialized, Insight Law Firm contributed to minimizing the client's uncertainty and potential losses.

Insight Law Firm's "Your Legal Team" provides advice that takes into account even the gap period after contract termination, examining in advance liability risks that companies tend to overlook and presenting practical response strategies.