As the ruling on the high-profile asset division case between Taewon Choi, chairman of SK Group, and Noh So-young, director of Art Center Nabi, approaches on July 24 at the Seoul High Court, there is growing interest in whether Choi's stake in SK Holdings will be included in the asset division and, if so, the extent of its valuation. In particular, questions have arisen about the appropriateness of including the increase in stock value that occurred after their divorce.
◆ Should an ex-spouse receive increased assets post-divorce?
Reuters reported on July 10 that Choi is involved in a lawsuit concerning a potential asset division worth hundreds of millions of dollars, noting that the case could impact the governance structure of SK Group, the second-largest conglomerate in South Korea.
With SK Hynix securing 40 trillion won in future investment funds through its listing on the U.S. stock market, concerns have emerged about the sustainability of corporate management, especially as Choi unveiled plans for expanding SK Group's future in artificial intelligence (AI) and semiconductor businesses.
The backdrop includes a rapid increase in the stock price of SK Holdings over the past two years. Whether Choi's shares will be included in the division and the valuation date could significantly affect the governance of SK Group.
Noh's side reportedly claims that the asset division should be based on the stock price as of June 26, the date the arguments concluded in the current retrial (81,500 won per share), which is 5.45 times higher than the price of 14,950 won per share that Choi's side argues should be used, based on the end of the second trial arguments on April 16, 2024.
This raises the question of whether it is fair to award an ex-spouse the increase in asset value that occurred after their separation.
Currently, SK Holdings' stock price is about three times higher than in 2024, following a surge driven by AI advancements and the booming demand for high-bandwidth memory (HBM) from SK Hynix. Choi has focused on driving AI growth across SK Group subsidiaries in recent years.
Choi applied for divorce mediation in 2017, but it fell through, leading to no agreement. In 2019, Noh agreed to the divorce and filed a counterclaim for asset division, initiating the legal proceedings. The divorce was finalized by the Supreme Court in October last year, following a first trial in December 2022 and a second trial in May 2024. The asset division is currently under retrial at the Seoul High Court.
According to previous Supreme Court rulings, the valuation date for asset division has typically been set at the conclusion of the second trial arguments to minimize fluctuations in asset value and ensure stability in rulings. In this case, since the divorce has been confirmed, the relevant date is April 16, 2024.
◆ Choi claims marriage breakdown began in 2006; Noh states they separated in 2011
Choi has consistently stated that his marriage to Noh effectively broke down in 2006, leading to their separation at the end of 2009 and his announcement of the decision to divorce to his family in 2011.
The couple married in 1988, and as of the Supreme Court's ruling last year, their legal marriage lasted 37 years. However, based on Choi's previous statements, the period of marital breakdown extends to 19 years from 2006. They have been involved in legal proceedings since 2017.
Regardless of the legal status of their divorce, both parties acknowledge that they have not lived together as a couple for about 15 years. Noh's side has stated that they have been living separately since 2009 and officially separated in 2011.
This raises questions about whether the growth of SK Group's AI and semiconductor businesses, reflected in the stock prices of its subsidiaries, should be divided as assets with Noh, especially since their three children have pursued studies abroad since their teenage years, which differs from typical family dynamics.
◆ U.S. and Japan also do not account for asset changes post-divorce
Legally, many jurisdictions abroad do not include asset value changes after the breakdown of marriage in divorce settlements, even before the legal divorce is finalized.
In the U.S., a 1986 ruling by the New York Court of Appeals established that increases in value post-separation, attributed to external factors like inflation or market trends, or due to one spouse's special skills, should not allow the other spouse to benefit without contribution.
Similarly, Japanese courts view the dissolution of the marital economic community as beginning at the start of separation, meaning that if one spouse's abilities lead to an increase in asset value post-separation, the other cannot claim a share.
A business insider remarked, "If SK Group's management had faltered in the past two years and SK Holdings' stock price had plummeted, one might question at what point Noh's side would have claimed asset division," adding that the outcome of this case is being closely watched for its potential impact on the broader business community.
* This article has been translated by AI.
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