Seoul Rehabilitation Court: "Stock and Cryptocurrency Investment Losses Will Not Reflect 'Liquidation Value'"

Establishment of Practical Guidelines for Loss Processing... Effective from July 1

[Asia Economy Reporter Kim Daehyun] As the number of young people suffering after recklessly jumping into stock and cryptocurrency investments rapidly increases, the Seoul Rehabilitation Court has decided not to treat investment losses as repayment amounts in personal rehabilitation procedures.

In rehabilitation cases, there must be repayments exceeding the liquidation value by converting owned assets into money, but the court intends not to consider stock and cryptocurrency investment losses as repayment amounts.

On the 28th, the Seoul Rehabilitation Court announced that it will implement the "Practical Guidelines on Handling Investment Losses" starting July 1 to support debtors who have experienced failures in stock or cryptocurrency investments.

This guideline was issued amid a trend of increasing personal rehabilitation applications, mainly from young people in their 20s and 30s who suffered investment failures swept up in the stock and cryptocurrency boom after COVID-19.

The Seoul Rehabilitation Court, through the "Personal Rehabilitation Practice Improvement TF," identified issues with the current practice of directly reflecting stock and cryptocurrency investment losses in the liquidation value during personal rehabilitation procedures. Although investment losses are not an economic benefit currently held by the debtor, the logic has been applied that the total amount the debtor must repay in personal rehabilitation must always exceed the investment loss amount, citing reasons such as moral hazard.

In fact, the number of debtors facing economic ruin and bankruptcy filings is expected to surge further. This is due to increasing economic burdens from rapid inflation and rising interest rates, as well as the possible end of various debt repayment deferral measures implemented by financial institutions as COVID-19 countermeasures in the second half of this year.

Accordingly, the Seoul Rehabilitation Court has decided that when debtors who have suffered stock or cryptocurrency investment losses apply for personal rehabilitation in the future, the amount of those losses will, in principle, not be considered when determining the total repayment amount. However, the court explained that exceptions apply if it is recognized that the debtor concealed assets by feigning investment failure.

A representative of the Seoul Rehabilitation Court stated, "By fundamentally excluding investment losses from repayment amounts in personal rehabilitation procedures, it is expected that the existing practice, which demanded excessive repayments, will be improved," and added, "the time for many debtors in their 20s and 30s suffering economic hardship due to investment failures to return to economic activity will be significantly shortened."

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