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Efficiency of Korean New Rehabilitation Proceeding
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Park, Yong-Seok | - |
dc.date.accessioned | 2014-01-06T07:09:23Z | - |
dc.date.available | 2014-01-06T07:09:23Z | - |
dc.date.issued | 2007 | - |
dc.identifier.citation | Journal of Korean Law, Vol.7 No.2, pp. 251-282 | - |
dc.identifier.issn | 1598-1681 | - |
dc.identifier.uri | https://hdl.handle.net/10371/85132 | - |
dc.description.abstract | The rehabilitation proceeding under the reformed Debtor Rehabilitation and Bankruptcy Law
(DRBL), effective as of April 1, 2006, unified two old rehabilitation procedures used for the recovery of financially distressed firms for more than forty years in Korea. However, two key elements of the previous procedures survived in the unified rehabilitation scheme with some modifications to achieve efficiency of the new rehabilitation proceeding, i.e., receiver instead of debtor-in-possession and relative priority rule (RPR) for distribution of corporate value according to a rehabilitation plan. Under the new rehabilitation proceeding, the representative of the debtor company can be appointed as receiver of the debtor company unless it is liable for the commission of material mismanagement causing insolvency thereof. In some special cases, the representative can operate the debtor company without an appointed receiver. The RPR is revised in a way to guarantee secured and unsecured creditors at least the liquidation value of their collaterals and the corporate value. Do those modifications maximize the ex post revenue and reduce the ex ante costs, such as overinvestment effects and delay effects, of financially distressed firms? Generally speaking, the ownership and management are not separated even in large and publicly-held corporations in Korea. In such economic and legal environments, the overinvestment effects and the delay effects to experiment overinvestment become great before filing for bankruptcy. It is very important to reduce such ax ante inefficiency so as to ensure that more value of the debtor company can be distributed to its creditors. To minimize the ex ante costs, the rehabilitation proceeding should be more lenient to shareholders of the debtor company. Based on the foregoing considerations, the legislators were set to grant the shareholders incentives to file for rehabilitation proceedings at the right time through the 2006 reform, but the reform still leaves much uncertainty as to the efficiency of the united scheme to debtors and creditors. | - |
dc.language.iso | en | - |
dc.publisher | BK 21 law | - |
dc.subject | Ex ante efficiency | - |
dc.subject | ex post efficiency | - |
dc.subject | receiver | - |
dc.subject | debtor-in-possession | - |
dc.subject | absolute priority rule | - |
dc.subject | relative priority rule | - |
dc.subject | new rehabilitation proceeding | - |
dc.title | Efficiency of Korean New Rehabilitation Proceeding | - |
dc.type | SNU Journal | - |
dc.citation.journaltitle | Journal of Korean Law | - |
dc.citation.endpage | 282 | - |
dc.citation.number | 2 | - |
dc.citation.pages | 251-282 | - |
dc.citation.startpage | 251 | - |
dc.citation.volume | 7 | - |
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