[2020 National Audit] Companies Choosing Death Over Life... Bankruptcies Surpass Recoveries Under Moon Administration

[Asia Economy Reporter Lee Ji-eun] It has been revealed that the number of companies filing for bankruptcy has sharply increased compared to those filing for rehabilitation under the Moon Jae-in administration.

According to the office of Kim Do-eup, a member of the National Assembly's Judiciary Committee from the People Power Party, a 'dead cross' phenomenon occurred from January this year, where more companies filed for bankruptcy than for rehabilitation.

This is the first time in 12 years since the enactment of the Integrated Insolvency Act, which began to establish the corporate rehabilitation system in 2007.

Even right after the global financial crisis in 2009, corporate rehabilitation filings numbered 669, about three times higher than bankruptcies (266). Since then, rehabilitation filings generally remained about twice the number of bankruptcies. However, under the Moon Jae-in administration, bankruptcies rapidly increased, leading to the unprecedented situation where bankruptcies surpassed rehabilitations.

According to the data on corporate rehabilitation and bankruptcy filings by courts at all levels from 2017 to August 2020, disclosed by Kim's office, the number of rehabilitation and bankruptcy cases were 936 and 740 respectively in 2016, then 878 and 699 in 2017, increasing to 980 and 806 in 2018, and last year recorded 1003 and 931. This year, as of August, rehabilitation cases stand at 582, while bankruptcies are at 711.

[Image source=Yonhap News]

Kim also pointed out that auctions have increased since the Moon administration took office. Looking at the number of auctions by courts at all levels from 2017 to the present, the number rose from 117,361 in 2017 to 148,477 last year, an increase of 26.5 percentage points over three years. Meanwhile, the sales rate decreased by 5 percentage points during the same period, from 35.2% to 32%.

This content was produced with the assistance of AI translation services.