Restructuring and insolvency—South Korea—Q&A guide
Restructuring and insolvency—South Korea—Q&A guide

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Restructuring and insolvency—South Korea—Q&A guide
  • 1. What main legislation is applicable to insolvencies and reorganisations?
  • 2. What entities are excluded from customary insolvency or reorganisation proceedings and what legislation applies to them? What assets are excluded or exempt from claims of creditors?
  • 3. What procedures are followed in the insolvency of a government-owned enterprise? What remedies do creditors of insolvent public enterprises have?
  • 4. Has your country enacted legislation to deal with the financial difficulties of institutions that are considered ‘too big to fail’?
  • 5. What courts are involved? What are the rights of appeal from court orders? Does an appellant have an automatic right of appeal or must it obtain permission? Is there a requirement to post security to proceed with an appeal?
  • 6. What are the requirements for a debtor commencing a voluntary liquidation case and what are the effects?
  • 7. What are the requirements for a debtor commencing a voluntary reorganisation and what are the effects?
  • 8. How are creditors classified for purposes of a reorganisation plan and how is the plan approved? Can a reorganisation plan release non-debtor parties from liability and, if so, in what circumstances?
  • 9. What are the requirements for creditors placing a debtor into involuntary liquidation and what are the effects? Once the proceeding is opened, are there material differences to proceedings opened voluntarily?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to restructuring and insolvency in South Korea published as part of the Lexology Getting the Deal Through series by Law Business Research (published: February 2021).

Authors: DR & AJU International Law Group—Daehyun Kwon; Sangbong Lee; Sohyun Ki

1. What main legislation is applicable to insolvencies and reorganisations?

The Debtor Rehabilitation and Bankruptcy Act (DRBA) governs reorganisation and bankruptcy proceedings in Korea. As a law with an expiry date, the Corporate Restructuring Promotion Act (CRPA), which was enacted to facilitate constant corporate restructuring, is in effect as from 16 October 2018 until 15 October 2023.

2. What entities are excluded from customary insolvency or reorganisation proceedings and what legislation applies to them? What assets are excluded or exempt from claims of creditors?

All legal entities are eligible for reorganisation or bankruptcy proceedings, which include legal entities established pursuant to the Civil Act, Commercial Act or other special laws. Organisations that do not have legal personality may apply for reorganisation or bankruptcy proceedings.

Assets that are prohibited from being seized under articles 195 and 246 of the Civil Execution Act are generally excluded from insolvency proceedings. In bankruptcy proceedings, the holders of right to foreclose outside bankruptcy, usually the secured creditors, may exercise their right on the assets without resorting to bankruptcy proceedings.

3. What procedures are followed in the insolvency of a

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