Court sides with Stonebridge Capital

Han & Brothers found to have violated agreement

Bodyfriend's headquarters building. [Provided by Bodyfriend]
Bodyfriend's headquarters building. [Provided by Bodyfriend]

A court has ruled that a partners' meeting resolution stripping private equity firm Han & Brothers of management control over massage chair manufacturer Bodyfriend was lawful.

The 30th Civil Division of the Seoul Central District Court ruled Thursday against Han & Brothers in its lawsuit against Stonebridge Quantum Nos. 2 and 3, in which Han & Brothers had sought to have the resolution removing it as general partner declared void.

The court found "no grounds to conclude that the convening or voting procedures of the partners' meeting were defective," and determined that valid grounds for Han & Brothers' removal did exist. Specifically, the court noted that Han & Brothers had appointed a chairman without a board resolution and had named a chief financial officer without prior agreement.

The court also found that Han & Brothers had entered into consulting contracts involving conflicts of interest or entities of unclear substance, in violation of the fund's articles of association and the agreement among general partners. Taking these factors together, the court concluded that Han & Brothers had breached applicable laws, the articles of association, and the inter-GP agreement.

The lawsuit stems from a dispute between Han & Brothers and private equity fund manager Stonebridge Capital, which had jointly exercised management control over Bodyfriend before falling out.

The two sides had earlier established a limited partnership investment vehicle, Stonebridge Quantum, and acquired a stake in Bodyfriend through it to gain management control. The relationship later soured when Stonebridge Capital raised allegations of embezzlement and breach of fiduciary duty against Han & Brothers' management, triggering the legal battle.

Stonebridge Capital and Quantum held a partners' meeting in March 2023 and voted to remove Han & Brothers as general partner. Han & Brothers filed suit in April of that year, arguing the removal was procedurally flawed and lacked valid grounds.

The court rejected all of Han & Brothers' arguments.

Han & Brothers said it plans to appeal the ruling.

Han & Brothers said it had filed for an injunction against the disposal of shares held by Kang Ung-cheol, Bodyfriend's second-largest shareholder, on the grounds that some of those shares had been transferred to Han & Brothers as a gift, and that the injunction had been granted. It added that it had prevailed in both the first and second instance courts in the subsequent challenge to that injunction brought by Kang and BF Heart.


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