Court rules for Shin Dong-kook in W60b penalty suit, deepening cracks in Hanmi's four-way alliance

A Seoul court has ruled in favor of Hanmi Pharm Group major shareholder Shin Dong-kook, chairman of Hanyang Precision, dismissing a 60 billion won ($44.3 million) penalty suit brought against him by Hanmi Pharm Group Chairwoman Song Young-sook and Vice Chairwoman Im Joo-hyun, along with Killington LLC — a decision that is accelerating the collapse of the "four-way alliance" formed in 2024 among Shin, Song, Im and Killington.

However, analysts caution that it is too early to declare a final winner or to conclude that the underlying contract has lost its force. Unlike ordinary civil suits over damages, this case involved a punitive penalty clause — a contractual sanction triggered by breach alone — and the losing side may still appeal.

The 30th Civil Division of the Seoul Central District Court, presided over by Chief Judge Kim Seok-beom, dismissed all claims by Song, Im and Killington on Thursday.

The central issue, according to the court, was whether Shin's exercise of voting rights during the withdrawal of a 16 billion won investment in a senior-residence development project in Banpo-dong, Seocho-gu, Seoul constituted a breach of the shareholders' agreement.

The plaintiffs — Song, Im and Killington — argued that Shin had violated a provision requiring unanimous consent before any new investment proposal could be placed on the agenda or voted down. They contended that Shin unilaterally put the investment back on the agenda for reconsideration and then voted to cancel it.

The court, however, found that Shin's actions in placing the item on the board's agenda and voting it down fell within the normal scope of a director's authority.

The panel noted that the Hanmi Science board's prior resolution of June 5, 2026 had been a conditional approval, contingent on "active cooperation from Seoul St. Mary's Hospital, subject to confirmation of a memorandum of understanding."

"Because the prior resolution was a conditional approval, a follow-up board meeting to verify whether the conditions had been met was already anticipated," the court said. "The resolution at issue was also substantively aimed at finalizing whether to proceed with the investment in this project, and therefore cannot be regarded as a new board meeting convened on a different agenda from the prior one."

The court added that "in the absence of evidence that the directors had been notified of whether the conditions set out in the prior resolution had been fulfilled, placing the reconsideration of the investment on the agenda cannot be seen as departing from the agreement."

On the claim arising from the vote to reject the investment, the court found "no evidence of a definitive agreement between the plaintiffs and the defendant to invest in this project beyond an agreement to place the matter on the agenda of the target company's board," and dismissed all claims.

Shin's side said immediately after the ruling that "the facts and the legal principles were clear from the outset — this was the expected outcome." A representative for Shin said the ruling reaffirmed that independent business judgment by a board of directors must be respected.

Industry observers noted that while Shin has escaped judicial punishment, the rift between the two sides has deepened to a point that may be beyond repair.

A penalty clause suit differs in character from a main action over breach of fiduciary duty or damages, and the possibility of an appeal by the losing side remains.

A Hanmi Group official said the litigation among the four-way alliance members has had no effect on the company's operations or management, as a professional management structure is already in place.

The first-instance ruling is seen less as a definitive resolution of the dispute than as a formal acknowledgment that the voting bloc binding the four-way alliance has effectively broken down.

With Shin's eldest son Im Jong-yoon's side having recently acquired a 35.10 percent stake, former Hanmi executives filing embezzlement and breach-of-fiduciary-duty complaints against Shin, and whistleblower Kim Tae-ho waging a public disclosure campaign, the ruling is expected to intensify both sides' efforts to build independent power bases and compete for votes at future shareholder meetings.