1. Exactly How Much Did Kwon Hyuk-bin Have to Pay in Divorce Asset Division?

On September 9, Family Division 3 of the Seoul Family Court ordered Smilegate founder and Chief Vision Officer (CVO) Kwon Hyuk-bin to divorce his spouse, Lee, and divide their assets. The ruling comes roughly four years after Lee filed for divorce in November 2022.

The scale of the asset division stands at approximately 2.55 trillion won, consisting of 35% of Smilegate shares held by Kwon and 65 billion won in cash. The court appraised the total value of Smilegate shares subject to division at approximately 7.1049 trillion won; 35% of this equals about 2.4867 trillion won, which, combined with the 65 billion won in cash, totals roughly 2.5517 trillion won.

This is the largest property division ruling among disclosed divorce lawsuits in South Korea. However, this is still a first-instance ruling. Should appeals and Supreme Court reviews follow, the amount and method of division could still change.

Another notable aspect is the alimony. While granting the divorce petition, the court rejected Lee's claim for alimony. The panel found that while prolonged marital conflict had led to an irretrievable breakdown of the marriage, the blame could not be attributed to either party alone, and both shared comparable responsibility.

Property division and alimony are fundamentally different in legal terms. Property division divides assets jointly accumulated and maintained during the marriage, whereas alimony represents compensatory damages paid by the spouse responsible for the marital breakdown to the other. In this ruling, the former was granted, but the latter was rejected.

2. Why Did Smilegate Stock Become Subject to Property Division?

CVO Kwon Hyuk-bin and his spouse, Lee, married in 2001. Kwon founded the predecessor company of Smilegate the following year. Lee held a 30% stake during the startup's early days, served as CEO for a period in 2002, and was later listed as a director.

Over time, Kwon became the core of corporate management, and since 2012, he has held 100% of Smilegate Holdings. Throughout the litigation, Kwon's side emphasized that his personal leadership and managerial competence were decisive to the company's growth.

The court, however, did not view the company's growth in isolation. It took into account Lee's early equity holdings and her roles as CEO and director, economic support provided by Lee's family in the early years of the marriage, and her long-term role in managing the household and raising their children. At the same time, the court substantially acknowledged Kwon's role in the company's growth. The panel recognized that Kwon's business acumen and managerial decisions were pivotal to Smilegate's development, assigning greater weight to his contribution. Circumstances such as Kwon receiving large dividend payouts from the company after the lawsuit was filed were also factored into the evaluation.

Weighing these circumstances, the court determined the contribution ratios for forming and preserving the assets to be 65% for Kwon and 35% for Lee. In short, the court did not treat the company's shares as Kwon's sole separate property merely because they were registered in his name, while simultaneously giving substantial credit to the founder's direct managerial contributions.

3. How Did the Court Calculate the Value of Unlisted Smilegate?

Smilegate is an unlisted company, unlike Samsung Electronics or SK Hynix, whose stock prices are set daily on the public exchange. Nor can it be easily appraised by comparing nearby market transactions, as is done with apartments.

Furthermore, Smilegate is a gaming company. A substantial portion of its enterprise value relies on gaming intellectual property such as 'Crossfire' and 'Lost Ark' along with future revenue potential, rather than tangible assets like factories or land. How much, then, is a 35% stake in such a company worth?

During the appraisal process, Kwon's total assets were estimated at up to roughly 8.016 trillion won. In its final ruling, the court recognized Kwon's net assets at approximately 7.3375 trillion won, with Smilegate-related shares accounting for about 7.1049 trillion won.

The discounted cash flow (DCF) method was used to appraise the stock value. This approach considered that for a gaming enterprise, future growth potential and intangible assets that cannot be instantly converted to cash are critical. The DCF method evaluates enterprise value by estimating projected cash flows and discounting them to their present value.

This is the salient point of the ruling: the court evaluated the shares of an unlisted gaming company without a market price by factoring in intangible value and future profitability—rather than simple book value—and adopted that valuation as the benchmark for actual property division.

4. Why Did the Court Divide 2.5 Trillion Won in Stock Rather Than Cash?

Why did the court not order the 2.5 trillion won to be paid in cash? The answer lies in Kwon's asset composition. The court recognized Kwon's net assets at approximately 7.3375 trillion won, with Smilegate stock making up about 7.1049 trillion won—or 96.8% of the total. In essence, nearly all of his wealth exists as unlisted shares rather than cash or real estate.

If the court had mandated an all-cash payment of 2.5 trillion won, Kwon would have been forced to offload immense blocks of unlisted equity or scramble to raise liquidity through other channels. Unlisted shares, however, cannot be readily liquidated on the open market like publicly traded stocks. A massive selloff could also incur heavy taxes and transaction expenses.

Taking these constraints into account, the court opted for an in-kind share division instead of an all-cash settlement. It ordered a 35% stake in Smilegate to be transferred in kind, with the remaining gap covered by 65 billion won in cash. Ordering the division of actual shares in a multi-trillion-won unlisted company makes this an exceptional precedent.

5. What Happens to Management Control Once 35% of Shares Are Transferred?

If this decision is finalized, Smilegate's ownership structure will shift dramatically. Kwon currently owns 100% of Smilegate Holdings. If 35% is transferred to Lee, Kwon will retain 65% while Lee will hold 35%.

Kwon would still be the majority shareholder with more than 50% of the voting rights. He would likely maintain solid control over everyday governance, such as ordinary general meeting resolutions and board appointments. However, matters requiring special resolutions—such as amendments to the articles of incorporation, corporate mergers, spin-offs, and transfers of significant business operations—would be a different story. Under South Korea's Commercial Act, special resolutions generally require approval from at least two-thirds of the voting rights of attending shareholders and at least one-third of total issued shares. Thus, if both Kwon and Lee attend a meeting and Lee casts a dissenting vote, Kwon's 65% would fall short of the required two-thirds majority of attending votes.

Still, concluding that Lee possesses a blanket legal "veto" over all special resolutions is not entirely accurate. Outcomes can differ depending on actual attendance at meetings, the specifics of the agenda, and company bylaws. More accurately, if the ruling is upheld and the 35% stake is transferred, a formidable new major shareholder will take a seat in Smilegate's key decision-making processes.

6. How Does This Differ from the Chey Tae-won and Roh Soh-yeong Divorce Case?

The ruling inevitably draws comparisons to the divorce battle between SK Group Chairman Chey Tae-won and Art Center Nabi Director Roh Soh-yeong.

In Chey's case, an appellate court ordered him in 2024 to pay roughly 1.3808 trillion won in property division. The Supreme Court later remanded the case, and in a remand trial in July 2026, the division amount was reduced to 944 billion won. With Chey filing an appeal to the Supreme Court again, that property division remains pending.

The first-instance division amount of approximately 2.55 trillion won in Kwon's case is about 2.7 times the figure set in the Chey remand ruling.

Yet the two disputes cannot be judged by numbers alone. In the SK case, the primary dispute centered on how much Roh contributed to the creation and appreciation of SK shares held by Chey. Crucial questions before the Supreme Court included the nature of inherited assets from earlier generations and the role of financial support tied to former President Roh Tae-woo. In contrast, Kwon's case involves a company established right after marriage that a single founder expanded into a multi-trillion-won unlisted gaming enterprise. The core issues were assessing how much the spouse contributed to that enterprise value and figuring out how to distribute unlisted shares that lack a market price.

While both involve "tycoon/founder divorces," the processes behind asset accumulation and evaluation are starkly different.

7. Will This Also Apply to Other Gaming, Platform, and AI Founders?

Asset division ratios vary depending on the length of the marriage, the timeline of asset formation, and the degree of direct and indirect contributions made by the spouse. Courts weigh each case individually, looking at whether the firm was founded before marriage, how much its value expanded after marriage, whether the spouse injected initial capital or took part in management, and their contribution to child-rearing and domestic work.

In this case, Lee was not granted 35% simply for being the founder's spouse. Her early equity stake, her service as CEO and director, and her extended devotion to home and family were all evaluated collectively.

Nevertheless, the precedent sends an unmistakable signal to startups across gaming, platforms, and artificial intelligence. Unlisted shares make up an overwhelming proportion of founder wealth today, and enterprise value is increasingly derived from IP, software, platforms, and future earnings potential rather than physical factories or land.

In future disputes of this kind, the focal point may go beyond who holds the legal title to the shares. How that equity value was built during the marriage, and the nature of the spouse's contribution to that growth, will carry far greater weight.


Deep Dive Q&A
Q1. Can CVO Kwon Hyuk-bin maintain management control of Smilegate after the asset division?

A. If the ruling is upheld, Kwon will retain 65%, maintaining his status as the largest and majority shareholder. He should experience little disruption in exercising ordinary management control. However, if Lee holds 35% and attends a shareholders' meeting to oppose, critical measures requiring special resolutions—such as amendments to the articles of incorporation or corporate mergers—could fail to pass with Kwon's 65% alone. As a result, the governance dynamic may differ considerably from the previous 100% sole-ownership structure.

Q2. Why wasn't the Smilegate stock liquidated into cash for payment?

A. Because roughly 96.8% of Kwon's net worth is concentrated in unlisted Smilegate equity. Mandating a cash payment exceeding 2 trillion won would inevitably require a large-scale sale of stock, but unlisted shares cannot be immediately sold on an exchange, and such transactions entail taxes and fees. Recognizing this, the court ordered 35% of Smilegate stock to be transferred in kind and the remaining shortfall to be covered with 65 billion won in cash.

Q3. How was unlisted Smilegate stock appraised at over 7 trillion won?

A. Because unlisted companies do not trade on public markets, specialized valuation models are required. In this litigation, techniques such as discounted cash flow (DCF)—which translates anticipated future cash flows into present value—were used to capture the value of gaming IP and future earnings potential. The value of Kwon's shares applied to the asset division calculation was determined to be approximately 7.1049 trillion won.

Q4. The divorce petition was approved, so why was no alimony awarded?

A. Property division and alimony serve different legal purposes. Property division redistributes wealth jointly built or preserved during marriage, whereas alimony compensates a spouse for the fault of the other in causing the marital breakdown. In this case, although the court granted the divorce after finding the marriage had broken down, it dismissed the alimony claim after determining both parties shared comparable responsibility for the collapse.

Q5. Will this ruling apply equally to founders of other startups or gaming companies?

A. Not necessarily. This is only a first-instance ruling, and asset division depends heavily on individual facts such as marriage duration, when the company was founded, the spouse's direct involvement in founding and management, and homemaking and child-care contributions. Nonetheless, this case could serve as an important benchmark for future litigation, as the court directly valued a founder's multi-trillion-won unlisted stake and ordered it divided in kind.