Kwon, Smilegate's chief vision officer, contests court order to hand spouse a 35% stake in the gaming company

Kwon's legal team says he still hopes to preserve the marriage and will continue efforts toward reconciliation

Kwon Hyuk-bin, chief vision officer and founder of Smilegate [Yonhap]
Kwon Hyuk-bin, chief vision officer and founder of Smilegate [Yonhap]

Kwon Hyuk-bin, founder and chief vision officer of Smilegate, has appealed a first-instance court ruling that ordered him to divide 2.55 trillion won ($1.89 billion) in assets as part of his divorce.

The trial court had ordered Kwon to transfer a 35% stake in Smilegate to his spouse, identified by her surname Lee. With the appeal, the divorce proceedings are likely to drag on, leaving uncertainty over the gaming company's ownership structure for now.

Kwon's legal representatives said Monday they had filed an appeal against the Seoul Family Court's ruling on divorce and asset division. They added that Kwon, as a husband who wishes to keep his family together, would continue working toward reconciliation.

Kwon's side said it cannot accept the court's finding that Lee contributed to the formation of the couple's assets — the basis on which the 35% stake transfer was ordered — and intends to seek a fresh ruling from a higher court on the asset-division portion of the judgment.

"It was made sufficiently clear during the trial that the spouse had not contributed any capital, that there was no workspace for her at the company, and that she had never come to work or performed any duties," the legal team said.

"Despite this, the first-instance court relied on the spouse's claims without adequate evidence and ordered an asset division that could influence major management decisions at the company, creating serious uncertainty for the business going forward," the team added.

Kwon's lawyers also challenged the grounds on which the divorce itself was granted. "The first-instance ruling disregarded Kwon's efforts to preserve the marriage and instead cited factors that arose after the lawsuit was filed — including the spouse's unilateral blocking of contact, refusal to communicate, and the prolonged separation caused by the litigation — as reasons for the breakdown of the marriage," they said. "We find it impossible to accept the first-instance judgment."

Smilegate's headquarters in Seongnam, Gyeonggi Province [Smilegate]
Smilegate's headquarters in Seongnam, Gyeonggi Province [Smilegate]

The Seoul Family Court's Third Family Affairs Division, presided over by Chief Judge Jeong Dong-hyeok, ruled on Sept. 9 that Kwon must transfer to Lee a 35% stake in Smilegate in kind, along with a cash payment of 65 billion won.

The total asset division of 2.55 trillion won sets a new record for the largest property settlement in a domestic divorce case.

The ruling also directly affects Smilegate's ownership structure. Kwon has held a 100% stake in the company since 2012. If the first-instance ruling stands, his share would fall to 65%, with Lee holding the remaining 35%.

That split would not threaten Kwon's control of the company, but it could limit his ability to act unilaterally in certain situations.

Under the Commercial Act, major decisions — including amendments to the articles of incorporation, mergers and splits, and the dismissal of directors and auditors — require a special resolution at a shareholders' meeting. Such resolutions must be approved by at least two-thirds of the voting rights present and at least one-third of all issued shares. Under the new ownership structure, Kwon could not pass such resolutions without Lee's agreement.

The appeal leaves open the possibility that the scale of the asset division could change, adding further uncertainty to any potential shift in the company's governance structure.

Meanwhile, the trial court dismissed the claim for divorce consolation money, saying both parties bore equal responsibility for the breakdown of the marriage. "As both the plaintiff and the defendant share responsibility, and their degree of fault is considered equal, the divorce petition is granted but the claim for consolation money is dismissed," the court said.


sjpark@heraldcorp.com