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The Role of the Court Officer in Insolvency Proceedings

The Role of the Court Officer in Insolvency Proceedings. International Association of Korean Lawyers Conference. September 21, 2019 Seoul , Korea. Debtor Rehabilitation And Bankruptcy Act(DRBA).

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The Role of the Court Officer in Insolvency Proceedings

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  1. The Role of the Court Officer in Insolvency Proceedings International Association of Korean Lawyers Conference September 21, 2019 Seoul, Korea

  2. Debtor Rehabilitation And Bankruptcy Act(DRBA) The insolvency proceedings are stipulated in the following articles of the Act: • General provisions: Articles 1-33 • Rehabilitation procedures: Articles 34-293 • Bankruptcy procedures: Articles 294-578 • Personal rehabilitation procedures: Articles 579-627 • International bankruptcy: Articles 628-642 • Penal provisions: Articles 643-660

  3. Overview • Rehabilitation process • Custodial Committee • Custodian, DIP, CRO • Creditors’ Consultative Council • Inspectors • Bankruptcy process • Trustees in Bankruptcy • Meeting of creditors • Audit Committee • Individual Rehabilitation • Rehabilitation Commissioner

  4. Rehabilitation Process Officers Custodial Committee: • 3-15 people belong to the court(DRBA §15) The members are appointed by the head of a rehabilitation court • Qualifications(DRBA §16-3) 1. Attorneys-at-law or certified public accountants 2. At least 15 years of experience in a bank and a corporation 3. Experience as executive officers 4. Master's or higher degree in law, business etc.

  5. Rehabilitation Process Officers Custodial Committee: • Authority(DRBA §17) 1. Suggest opinions on the appointment of other court officers 2. Supervise and evaluate of other court officers’ performance 3. Examine of the draft rehabilitation plan and repayment plan 4. Compose of the creditors' consultative council 5. Assemble related persons and the meeting of creditors

  6. Rehabilitation Process Officers Custodian: • Perform as the debtor • Manage and dispose the property exclusively • After approval of the rehabilitation plan, the custodian appoints the CEO asthe custodian under the court’s approval(in practice) DIP (Debtor In Possession):(DRBA §74-2) The court shall appoint representatives as custodians unless there is a particular problem.

  7. Rehabilitation Process Officers DIP(Debtor In Possession):(DRBA §74-2) • Supervision System Court Custodial Committee CRO*Auditor DIP CRO(Chief Restructuring Officer): • Custodians can appoint legal and corporate governance experts • Creditors’ Consultative Council presents opinion about appointment procedure • Difficulty in selecting competent CRO

  8. Rehabilitation Process Officers Creditors’ Consultative Council: • Composition(DRBA §20) shall be composed of not more than 10 persons composed of major creditors of the debtor after an application for commencement of rehabilitation procedures or a petition for bankruptcy is filed (waiver: the debtor is an individual or a small and medium business entrepreneur).

  9. Rehabilitation Process Officers Creditors’ Consultative Council: • Function(DRBA §21) 1. Present opinions about rehabilitation procedures and bankruptcy procedures 2. Present opinions with respect to the selection, appointment or dismissal of custodians, trustees in bankruptcy and protective custodians 3. Present opinions with respect to the appointment of the auditor of a debtor who is a corporation 4. Claim the physical inspection of the actual governance of any company

  10. Rehabilitation Process Officers Inspectors(DRBA §87-2): The inspectors shall be appointed among persons who have knowledge and experience necessary to perform inspection but there should not be conflict of interest. • Accountants are appointed mostly when the court makes a decision on commencement of rehabilitation procedures • At the 1st meeting for interested persons, inspector’s report should be announced. Going concern value should be greater than the liquidation value.

  11. Bankruptcy Process Officers Trustees in Bankruptcy: • Authority of managing and disposing of a bankruptcy estate • Become a party to lawsuit involving the bankruptcy estate • Submit the accounting report for the meeting of creditors • Distribute dividends

  12. Bankruptcy Process Officers Meeting of Creditors: • Court decides the date of the first meeting of creditors when bankruptcy is declared • Court shall call the meeting of creditors, ex officio or upon the request of the trustee in bankruptcy or any member of the audit committee • Creditors can request explanation to debtor • Request the dismissal of trustee in bankruptcyand audit committee

  13. Bankruptcy Process Officers Audit Committee: • The members of the audit committee shall be appointed at an meeting of creditors • Experts in law and corporate governance who are disinterested with respect to the bankruptcy procedures • Oversee the performance of the duties of the trustees in bankruptcy • Inspect the current state of the bankruptcy estate at any time

  14. Individual Rehabilitation Process Officers Rehabilitation Commissioner(DRBA §601) : • Court appoints the rehabilitation commissioner • Responsibilities • Inspecting the debtor’s properties and income • Exercising the avoidance power and participating in the procedure • Holding assemblies of individual rehabilitation creditors

  15. Bio. • Tae yeon Kim • Partner at K&partners • Trustee in Bankruptcy at Seoul Bankruptcy Court • 02.558.2221 • tyk@kpartnerslaw.com

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