Hyundai Group, a shipping and inter-Korean travel conglomerate, filed a 325.5 billion won (US$282.7 million) lawsuit against creditor banks for losses incurred during its failed attempt to buy a local builder earlier this year.

   The business group said it submitted the suit to the Seoul Central District Court claiming that creditors reneged on a pact to sell Hyundai Engineering and Construction Co. (Hyundai E&C).

   The construction company was an affiliate of Hyundai Group before it was turned over to banks in a debt for equity swap in 2001.

   "The money being asked for covers the return of the 275.5 billion guarantee deposit that the group submitted to ensure it followed through on the pact, and 50.0 billion won in damages," a lawyer representing the group said.

   He claimed that asking for damages is justified because the banks that sold the builder engaged in unlawful business practices.

   Such claims are rejected by creditors, who have countered that Hyundai Group was disqualified because it did not provide a detailed plan on where it would get the money to buy the builder.

   Initially, creditors led by Korea Exchange Bank, tapped Hyundai as the preferred bidder last year, but they backtracked on their decision and handed Hyundai H&C over to Hyundai Motor Co., the country's largest automaker early this year.

   The acquisition of the builder solidified Hyundai Motor's position as the country's second largest family-owned conglomerate.

   The 4.96 billion won sale was completed in April with the builder becoming an affiliate of the carmaker.

   Related to the lawsuit, creditors said they will hold talks to determine how best to address the legal challenge. (Yonhap News)