A South Korean court has recognized a property division worth about 2.55 trillion won ($1.84 billion) in the divorce case of Kwon Hyuk-bin, founder and chief visionary officer of game developer Smilegate. The amount far exceeds the 944 billion won recognized in July in the retrial of the divorce suit between SK Group Chairman Chey Tae-won and Art Center Nabi Director Noh Soh-yeong, and if finalized it would be the largest property division in a South Korean divorce case. Kwon retains his position as largest shareholder and management control, but with his spouse set to hold a 35% stake, some observers say key management decisions could face new variables.
The Seoul Family Court's 3rd Family Division, presided over by Chief Judge Jung Dong-hyuk, granted the divorce on the 9th in the suit between Kwon and his spouse, surnamed Lee, and ordered Kwon to hand over 35% of his Smilegate shares and pay 65 billion won in cash. The ruling is the first-instance conclusion, coming about four years after Lee filed the suit in November 2022.
Kwon met Lee, a fellow student at Sogang University, and married her in 2001 before founding Smilegate. When Lee filed for divorce in 2022, she sought half of his holdings as a property division, while Kwon had opposed the divorce.
The court found that the marriage had broken down beyond repair, citing the prolonged conflict and the lack of any prospect for reconciliation. It held both sides equally responsible for the breakdown, granting the divorce claim while rejecting Lee's claim for damages.
The Smilegate shares, the central issue in the case, were included in the assets subject to division. The court took into account that Lee had contributed to some degree to the founding and growth of the company, that she had previously held company shares and been registered as a director and representative, and that she had handled housework and child-rearing over a long period.
The division ratio was set at 65% for Kwon and 35% for Lee. The court found that Kwon's business acumen and management judgment played a decisive role in Smilegate's founding and growth. But it recognized Lee's contribution at 35%, weighing financial support from her family in the early years of the marriage, her contribution to housework and child-rearing, and large dividend payments made before the litigation.
The court put Kwon's net assets at about 7.3335 trillion won, of which Smilegate shares account for about 7.1049 trillion won, or 96.8%. Converted into cash, Lee's portion comes to about 2.55 trillion won. The share value was assessed on a cash-flow basis, taking into account the weight of intangible assets at game companies and future growth potential, and also reflected Smilegate's merger of four subsidiaries before the appraisal reference date.
The court considered that paying the full amount in cash would require Kwon to dispose of a substantial volume of shares, and that a sale would not be easy because the stock is unlisted. Judging that handing over part of the stake posed little risk of losing control, it ordered the 35% stake divided in kind along with the 65 billion won cash payment. The arrangement avoids the burden of selling shares to raise trillions of won in cash while recognizing Lee's contribution as an actual equity stake.
Smilegate said it had no separate position to state on the personal affairs of a major shareholder and that it would carry out its core business as before. With Kwon holding 65% and retaining his position as largest shareholder and management control, the immediate impact on management is expected to be limited. But if the ruling is finalized, Lee would become the second-largest shareholder with 35%, giving her considerable influence over key matters requiring a special resolution at a shareholders' meeting, such as amendments to the articles of incorporation or mergers and spinoffs.
