Setting Insolvency Rules
- a course of understanding and persuasion
Forum for Asian Insolvency Law Reform III
Seoul, Nov. 10-11, 2003
Prof. Soogeun OH
Ewha Womans University
Statutory Structure
of the Korean Insolvency Regime
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Corporate Rehabilitation Act(1962)
Composition Act(1962)
Bankruptcy Act(1962)
Corporate Restructuring Promotion
Act(2001)
Insolvency Law Reforms
• 1998 : Economic Test
• 1999 : Almost automatic
commencement
• 2001 : Workout supplements
• 2000-2004 : Consolidation and
overall renewal
Policy Issues
• Single track or multiple tracks?
• DIP or trustee?
• Automatic stay or decision at
commencement?
• Balance among tracks?
• Automatic discharge or fidelity test?
Formation of the Draft Bill
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General provisions
Rehabilitation procedure
Bankruptcy procedure
Personal rehabilitation procedure
Cross-border insolvency procedure
Penalties
Major Actors in Reforms
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Drafters
Econocrats
Judges and practicing lawyers
International financial institutions
Interest groups
Econocrats
• Positive aspects
– Strong support for the reform
– Aggressive attitude toward goals
• Negative aspects
– Preference for a mechanical process to
limit discretionary decisions by judges
and creditors
– Preference for rapid enactment rather
than near flawless drafting
Judges and Attorneys
• Positive aspects
– Committed to cooperation in drafting
– Effort to narrow the gap between letters
on statutes and practices
• Negative aspects
– Less sensitive to the demand of the
society
– Demand for comparative legislative
examples rather than own persuasive
logics
International Financial Institutions
• Positive aspects
– Strong inducement to law reform
– Providing information
• Negative aspects
– Misunderstanding of true reason for the
inefficient insolvency regime
– Hardware-oriented approach
Interested Groups
• Positive aspects
– Participation in consensus-building
– Telling real story in business practice
• Negative aspects
– Misunderstanding about insolvency
mechanisms
– Unbalanced voice among interested
groups
Political and Technical Process
• Political process
– Consensus-building on unfamiliar
concepts
– New power structure
• Technical process
– Procedural completeness
– Compatibility with other judicial process
Understanding and Persuasion
• Understanding
– Interests of related parties
– Possible options
• Persuasion
– Continuous teaching sessions on
insolvency mechanisms
– Negotiations with interested groups
Thank you very much.