Summary of Key Points
The divorce settlement case between Choi Tae-won, the chairman of South Korea's SK Group, and his ex-wife Lu Su-yeong is on the verge of becoming final, with the second-instance judgment requiring him to pay 944 billion Korean won (approximately 4.5 billion yuan). On the last day of the appeal period (August 14th), Choi Tae-won filed an appeal with the Supreme Court. This nearly decade-long "most expensive divorce case" has entered another legal battle, reflecting not only Choi Tae-won's practical need to gain time to manage his finances but also the potential risks associated with the ownership structure of South Korean chaebols (large family-owned businesses). SK Group is currently in a golden period for its semiconductor business, and the outcome of this divorce could impact both its short-term funding and long-term control.
I. The Last-Ditch Appeal: Is It Really About Disagreeing with the Judgment?
Choi Tae-won submitted his appeal before the deadline, officially citing "legal errors in the property distribution ratio and amount specified in the second-instance judgment." However, industry insiders believe this is more of a delaying tactic:
- Avoiding Late Fees: If the judgment takes effect, Choi Tae-won would have to pay late fees at an annual interest rate of 5% from the following day (which amounts to 225 million yuan for 4.5 billion yuan). With the Supreme Court's review taking several months, this gives him time to move funds around, such as by selling some assets or adjusting the group's cash flow.
- A Small Chance of Winning, but Worth a Try: The Korean legal community generally agrees that the second-instance judgment is in line with previous directives from the Supreme Court to exclude any contributions from illicit funds. Nevertheless, Choi Tae-won is appealing in hopes of a minor error in the application of the law and to buy more time—each day he delays payment reduces the interest he has to pay.
II. The Wild Ride of Judgment Amounts: From 300 Million to 6.6 Billion, Then to 4.5 Billion
The property settlement amount in this divorce case has changed significantly three times (in yuan for clarity):
- First Instance (2016): Only 66.5 billion Korean won (about 317 million yuan) was awarded, prompting Lu Su-yeong to appeal.
- Second Instance (2021): The judgment was 1.38 trillion Korean won (about 6.57 billion yuan), leading Choi Tae-won to file for a retrial.
- Second-Instance Retrial (July 2024): 944 billion Korean won (about 4.5 billion yuan), which is higher than the previous two amounts but lower due to the Supreme Court's requirement to exclude contributions from illicit funds (e.g., stocks purchased with non-marital assets).
III. The Dual Impact on SK Group
This divorce case has both immediate and long-term consequences for SK Group:
- Short-Term Financial Pressure: 4.5 billion yuan in cash is no small amount. Although SK Hynix reported a net profit of 640 billion yuan in the first half of this year (a 788% increase), the group needs funds to expand its semiconductor business, such as by building a factory in the United States. Raising such a large sum suddenly could disrupt its investment plans.
- Long-Term Equity Risks: The court has ruled that SK Group's stocks are considered marital property. This sets a precedent for chaebols, as their equity was traditionally viewed as personal assets. If other chaebol owners go through divorces and their stocks are divided, it could lead to a dispersion of control, affecting the stability of the companies.
IV. SK Group in a Golden Period for Its Semiconductor Business
The divorce case occurs during a boom for SK Group's semiconductor business:
- Record-Breaking Performance: SK Hynix reported revenue of 629.3 billion yuan (a 231% increase) and a net profit of 640 billion yuan (a 788% increase) in the first half of this year, driven by the surge in demand for storage chips used in AI applications.
- Global Expansion: In July, SK Hynix raised $26.5 billion through an IPO in the U.S., setting a record for overseas companies. The group also plans to build a factory there to gain a foothold in the global semiconductor market.
- Future Prospects: Choi Tae-won predicts a significant shortage of storage chip supply in 2027 and is concerned about "chip inflation" (rapid price increases) affecting end-users. SK Group is at the forefront of this industry, but the financial strain from the divorce could disrupt its expansion plans.
V. The Lesson from This Divorce Case
The implications of this case go beyond the personal lives of the involved parties:
- Chaebol Family Disputes Affect the Market: Family disputes among South Korean chaebols have always had a significant impact on the market. This divorce not only sets a new record for the highest divorce settlement in Korea but also challenges the notion that chaebol equity is indivisible.
- Implications for Investors and the Public: Even for the wealthy, divorces can result in massive asset divisions, demonstrating equality before the law (at least in terms of property distribution). Chaebol-related issues can affect company stock prices, investment plans, and industry trends. Legal delays are common but ultimately, reality must be faced—Choi Tae-won will likely have to pay the amount, though it may just take longer.
This "most expensive divorce case" is far from over, but it provides a window into South Korea's chaebol system and legal framework.