Corporate Restructuring Promotion Act
The Corporate Restructuring Promotion Act was enacted in 1997 in response to the Asian financial crisis to provide a streamlined mechanism for the restructuring of distressed companies. The Act facilitates corporate restructuring through agreements between debtors and creditors, court-supervised workouts, and asset sales. It aims to preserve going-concern value while protecting creditor rights.
Legal area: Law governing the resolution of debtor insolvency and business restructuring.
Year enacted: 1997
Full text: https://elaw.klri.re.kr/eng_service/law_view.do?hseq=south-korea-corporate-restructuring-act
Key Provisions
- Part I: General provisions (definitions, jurisdiction)
- Part II: Debtor-creditor agreements (out-of-court restructuring)
- Part III: Court-supervised restructuring (workout proceedings)
- Part IV: Rehabilitation plans (proposal, confirmation)
- Part V: Creditors’ committees and voting
- Part VI: Enforcement and supervision
Significance
The Corporate Restructuring Promotion Act was a key response to the 1997 Asian financial crisis. The Act facilitated the restructuring of major conglomerates (chaebols) and helped stabilise the financial system. The workout procedure has been used extensively, providing a faster alternative to formal bankruptcy. The Act has been amended to improve creditor protections and streamline procedures. The restructuring process has contributed to improved corporate governance in South Korea.