Woman who received Gangnam apartment in divorce faces lawsuit from ex-husband's creditor bank

A woman who received a Seoul apartment through a US divorce settlement is now fighting to keep it, after the bank that lent her ex-husband tens of billions of won filed a lawsuit claiming the divorce was a sham designed to shield the property from creditors.

The case was featured Friday on YTN Radio's legal advice program "Jo In-seop's Counseling Office." The subject, identified only as A, had ended a 20-year marriage and was seeking advice on how to protect her ownership of the apartment.

A met her ex-husband, a Korean American businessman, while studying in the United States. The two maintained a long-distance relationship after she returned to South Korea, eventually marrying and settling in the US.

The husband's business flourished, and A worked alongside him day and night. But as the business grew, he became increasingly neglectful of their family life, and the couple gradually drifted apart.

Three years ago, a California court finalized their divorce.

The court awarded A sole ownership of the couple's jointly held apartment in Gangnam-gu, Seoul. A subsequently obtained an enforcement ruling from a South Korean court and completed the transfer of the title deed.

Shortly after the divorce, however, the ex-husband's company collapsed under the combined pressure of overextended business expansion and a rising exchange rate.

The bank that had lent the ex-husband tens of billions of won filed a lawsuit, alleging that A had staged a fraudulent divorce to avoid debt repayment and moved the apartment out of creditors' reach.

The ex-husband also challenged the US divorce ruling. The American court has since upheld the divorce itself while vacating only the property division portion of the judgment.

"Our marriage genuinely broke down — that is why we divorced," A said, seeking advice. "My ex-husband is demanding that the apartment title be transferred back to him. I had planned to wrap up the divorce in the US and return to South Korea for a fresh start, but everything has fallen apart. What can I do?"

Attorney Lee Hyeon-ho said that if the US court's property division ruling has been vacated, the title transfer completed in South Korea could also be affected. "You need to actively participate in the property division rehearing in the US court while simultaneously preparing for the litigation in South Korea," Lee said.

Whether a foreign court's ruling is recognized as valid in South Korea is also a key issue.

Article 217, Paragraph 1 of the Civil Procedure Act sets out the requirements for a final foreign court judgment to be recognized by a South Korean court, including international jurisdiction, proper service of process or appearance, compliance with public policy and good morals, and reciprocal guarantee.

"If a final foreign court judgment satisfies all the recognition requirements, filing the same lawsuit again before a domestic court is not permitted," Lee said.

On the bank's sham-divorce claim, Lee said that once a divorce is registered with the intent — even if temporary — to dissolve the legal marital relationship, it cannot be deemed to have lacked genuine divorce intent simply because other purposes existed. "If you can demonstrate that you have in fact been living separately since the divorce, you should be able to counter the claim," Lee said.

Whether the property division constitutes a fraudulent conveyance is also at issue. A fraudulent conveyance refers to a debtor's deliberate act of reducing assets or increasing liabilities to prevent creditors from receiving adequate repayment.

"If the property division resulting from the divorce did not deviate significantly from what would be considered a normal settlement, it would be difficult to recognize it as a fraudulent conveyance," Lee said.