[Exclusive] LF terminates contract after fund request for stock purchase is rejected

[Anchor]

The children's clothing of the well-known domestic fashion company LF is produced by a company run by the brother of the LF chairman.

However, it has been claimed that LF demanded funds from this children's clothing company to secure shares for the major shareholder's family, and when the company refused, the contract was terminated.

This is an exclusive report by legal affairs reporter Baek In-seong.

[Report]

Company A has been producing children's clothing under a license from LF for over ten years.

The CEO is Mr. Koo Bon-jin, the brother of LF Chairman Koo Bon-Keul, and the two brands account for about 80% of the company's sales.

However, LF notified Company A last May that it would terminate the licensing agreement early.

Company A stated, "LF demanded financial support to secure shares for the major shareholder's family, and when we refused, they terminated the contract," and released a recording of the call with LF at that time.

[Major stakeholder side/Voice Altered: "This year, we need you to buy shares worth 14 billion won. If you buy one-third of OOO's shares by the end of next year over three years, we will extend the (license) contract for five years."]

Company A claims that it took out a bank loan to pay LF over 14 billion won, and LF's public disclosures confirm that shares were purchased in November last year under the name of Koo Bon-Keul's wife.

Company A stated that demands for funds continued afterward, and when they refused due to a lack of financial capacity, the licensing contract was ultimately terminated last April.

[Koo Bon-soon/Director of Company A: "Production was completed, but we are left with inventory, and there is no way to support the employees anymore. Nearly 400 people are currently in an unstable situation."]

The Fair Trade Act prohibits unfair trading that improperly uses one's position, and violations can lead to criminal penalties.

LF countered, stating, "The management of Company A had damaged the brand value due to allegations of verbal abuse and power harassment," and "The termination of the contract was a result of business considerations such as quality control issues."

They also explained that "the social demand to reduce transactions with related parties, such as the major shareholder's brother, was also a background for the contract termination."

KBS inquired whether LF Chairman Koo Bon-Keul actually made the financial demands, but did not receive a response.

This is KBS News, Baek In-seong.