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Treatment of Secured Claims in Korean Rehabilitation Proceeding

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Authors
Park, Yong-Seok
Issue Date
2011
Publisher
BK 21 law
Citation
Journal of Korean Law, Vol.11 No.1, pp. 1-28
Keywords
secured claimcram-downabsolute priority ruleDIP financingevaluation of secured propertypost-commencement interestright to extinguish the secured interest
Abstract
After the Debtor Rehabilitation and Bankruptcy Law (“RBL” took effect in 2006, the pro-debtor insolvency system including DIP-type trustee has been enforced. However, the DRBL has not modified much with respect to the rights and obligations of the creditors, especially secured creditors. This article conducts an overall review on the treatment of secured creditors in the rehabilitation proceeding under the DRBL. Secured creditors have a priority to get paid when their secured property is sold or

foreclosed. The insolvent debtor has to bargain with secured creditors if it needs to continue to use the secured property. Theoretically, the debtor shall be able to utilize the secured property by making a payment to relevant secured creditor and whether or not to make such payment shall be determined in consideration of the going-concern value and the liquidation value of the secured property. However, the parties fail to reach, in many occasions, a conclusion due to the information asymmetry, hold-out of any party, etc. In such cases, the creditors’right to the secured property shall be restricted for the debtor’ revival for the benefit of all interested parties.
ISSN
1598-1681
Language
English
URI
http://hdl.handle.net/10371/85191
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College of Law/Law School (법과대학/대학원)The Law Research Institute (법학연구소) Journal of Korean LawJournal of Korean Law Volume 11 Number 1/2 (2011)
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