The period of court receivership for bankrupt companies is to be reduced from several years to a minimum of six months, according to officials Monday.
The Seoul District Court’s bankruptcy division will implement a “fast track” policy to reduce unnecessary downtime, allowing companies to return to the market sooner.
Through the policy, the court hopes to put previously insolvent corporations into the market as soon as their restructuring plan is approved, to reduce the amount of damage to corporate value.
According to the court, for companies that file a petition that includes debt repayment plans with creditors, the court will grant leadership to a creditor’s council allowing for a swift reorganization.
To shorten cases that can take up to 10 years, the court plans to close them once the company begins repayment, after obtaining an approved restructuring plan.
As a trial run, the policy will only be available to companies that wish to partake in the fast track program, and have been credited with over 50 billion won ($44 million).
“The biggest complaint by creditors towards reorganization cases is the significant amount of time that the cases take,” said a court official.
“The goal of the policy is to return companies to the market as soon as possible, enabling them to raise their own competitiveness,” he said.
By Robert Lee (email@example.com