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Special Treatment of Derivatives in Korean Insolvency Proceedings: Comparison with the United States and Japan

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Authors
Park, Joon
Issue Date
2007
Publisher
BK 21 law
Citation
Journal of Korean Law, Vol.7 No.2, pp. 349-384
Keywords
InsolvencyDerivativesDebtor Rehabilitation and Bankruptcy LawUS Bankruptcy CodeJapanese insolvency lawsclose-out nettingcollateral
Abstract
In April 2005, Korea enacted the Debtor Rehabilitation and Bankruptcy Law (“DRBL”)

which took effect in April 2006. Article 120, Paragraph 3 and Article 336 of the DRBL contain

special provisions (referred to herein as the “Korean Netting Provision”) for certain “Qualified

Financial Transactions” such as derivatives as well as repo and securities lending transactions.

The Korean Netting Provision eliminates most of the legal uncertainty arising from the lack of

express provisions under Korean insolvency and other statutes relating to close-out netting and

credit support arrangements and thus, should further stimulate the expansion of domestic and

cross-border derivatives transactions in Korea. This paper briefly reviews the legal issues that

may arise when a party to a derivatives transaction becomes the subject of proceedings under the

insolvency laws of Korea, the United States and Japan and examines the major provisions of the

Korean Netting Provision and compares then with similar provisions in the United States and

Japan.
ISSN
1598-1681
Language
English
URI
http://hdl.handle.net/10371/85135
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College of Law/Law School (법과대학/대학원)The Law Research Institute (법학연구소) Journal of Korean LawJournal of Korean Law Volume 07 Number 1/2 (2007)
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