SOMA Law Group represented a leading Korean venture capital firm specializing in biotech and healthcare investments in a dispute against the former CEO of a portfolio company, achieving full recovery of the share purchase price through an early settlement before the first court hearing was scheduled.
The dispute arose from multiple material breaches of the investment agreements by the former CEO, including resignation without investor consent, conflicts of interest, diversion of corporate opportunities, unauthorized use of investment funds, and breaches of representations and warranties relating to the company’s business. The VC client determined that these actions went beyond poor management decisions and amounted to a fundamental breach of trust warranting immediate enforcement of investor rights.
The matter presented significant legal complexity, as the defendant sought to characterize the conduct as legitimate business judgment.
Several provisions of the investment agreement were open to interpretation, raising the risk that clear factual misconduct could be reframed as permissible discretion. The case therefore turned on how the conduct should be legally assessed under Korean law, rather than on disputed facts.
SOMA developed a strategy focused on structuring fragmented acts of misconduct into a single, coherent narrative demonstrating systematic contractual breaches. The team conducted a detailed, timeline-based analysis linking the misuse of corporate funds to the diversion of business opportunities, and demonstrated that no genuine or effective decision had been made to discontinue the relevant business. This analysis was supported by both direct and circumstantial evidence and presented clearly in the statement of claim.
In parallel with the civil action seeking enforcement of the share purchase rights and contractual penalties, SOMA initiated a criminal complaint for breach of fiduciary duty, significantly increasing settlement pressure and limiting the defendant’s ability to rely on the defense of managerial discretion.
Following review of SOMA’s pleadings, the defendant elected to pursue an early settlement rather than proceed with full litigation. The parties reached a settlement agreement prior to the first hearing, and the client secured full payment of the share purchase price, bringing the dispute to a swift and commercially effective conclusion.
This case demonstrates SOMA’s ability to protect venture capital investors in Korea through rigorous evidence analysis, disciplined legal framing, and strategic use of parallel proceedings. It highlights how investor rights under Korean investment agreements can be effectively enforced - even in cases where breaches are embedded within complex startup management and operational decisions - without resorting to prolonged and costly court proceedings.
The dispute arose from multiple material breaches of the investment agreements by the former CEO, including resignation without investor consent, conflicts of interest, diversion of corporate opportunities, unauthorized use of investment funds, and breaches of representations and warranties relating to the company’s business. The VC client determined that these actions went beyond poor management decisions and amounted to a fundamental breach of trust warranting immediate enforcement of investor rights.
Several provisions of the investment agreement were open to interpretation, raising the risk that clear factual misconduct could be reframed as permissible discretion. The case therefore turned on how the conduct should be legally assessed under Korean law, rather than on disputed facts.
SOMA developed a strategy focused on structuring fragmented acts of misconduct into a single, coherent narrative demonstrating systematic contractual breaches. The team conducted a detailed, timeline-based analysis linking the misuse of corporate funds to the diversion of business opportunities, and demonstrated that no genuine or effective decision had been made to discontinue the relevant business. This analysis was supported by both direct and circumstantial evidence and presented clearly in the statement of claim.
In parallel with the civil action seeking enforcement of the share purchase rights and contractual penalties, SOMA initiated a criminal complaint for breach of fiduciary duty, significantly increasing settlement pressure and limiting the defendant’s ability to rely on the defense of managerial discretion.
Following review of SOMA’s pleadings, the defendant elected to pursue an early settlement rather than proceed with full litigation. The parties reached a settlement agreement prior to the first hearing, and the client secured full payment of the share purchase price, bringing the dispute to a swift and commercially effective conclusion.
This case demonstrates SOMA’s ability to protect venture capital investors in Korea through rigorous evidence analysis, disciplined legal framing, and strategic use of parallel proceedings. It highlights how investor rights under Korean investment agreements can be effectively enforced - even in cases where breaches are embedded within complex startup management and operational decisions - without resorting to prolonged and costly court proceedings.