Most Read Contributor in South Korea, February 2017
Seoul Bankruptcy Court will be established and replace the
Bankruptcy Division of the Seoul Central District Court as of March
The Seoul Bankruptcy Court will be the first and the only
bankruptcy court in Korea until other bankruptcy courts are
established in areas other than Seoul. Until then, local district
courts will continue to oversee bankruptcy cases in areas other
There have been increasingly more bankruptcy and rehabilitation
cases in Korea in recent years. The number of corporate bankruptcy
cases filed in the Bankruptcy Division of the Seoul Central
District Court (which will be replaced by Seoul Bankruptcy Court on
March 1, 2017) increased from 222 in 2013 to 307 in 2015. The
number of corporate rehabilitation cases filed in the aforesaid
Bankruptcy Division increased from 296 in 2013 to 404 in 2015.
The existing Debtor Rehabilitation and Bankruptcy Act provides
that a company with debt of KRW 50 billion or more, and 300 or more
creditors may file for bankruptcy / rehabilitation with the
Bankruptcy Division of the Seoul Central District even if the
company is not located in the Seoul area. From March 1, 2017, Seoul
Bankruptcy Court will take over such major bankruptcy /
rehabilitation cases, and is likely to provide more effective,
specialized and consistent guidance in bankruptcy proceedings.
We do not expect a radical change in the bankruptcy practice in
Korea, but there will be incremental changes, some notable, in
bankruptcy proceedings in response to the introduction of Seoul
Bankruptcy Court for now, and eventually bankruptcy courts in areas
other than Seoul.
The Korean financial authorities are currently discussing the
introduction of a prepackaged bankruptcy plan ("PPP")
that combines the strengths of workout and rehabilitation
procedures. Once the details and introduction schedule of PPP
crystallizes, bankruptcy courts are expected to play a more
prominent role through indirectly taking part in workout
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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