"Regret Over the Sunset of the Loan Activation Act... Financial Sector Launches Voluntary Agreement"

The financial authorities plan to pursue re-legislation of the Corporate Restructuring Promotion Act (Gichokbeop), which is set to expire, while simultaneously activating voluntary agreements within the financial sector.

Financial Services Commission Chairman Kim Ju-hyun is responding to lawmakers' questions at the National Assembly's Political Affairs Committee audit held on the 11th. Photo by Kim Hyun-min kimhyun81@

On the 15th, Kim Joo-hyun, Chairman of the Financial Services Commission, stated, "It is regrettable that the Gichokbeop, which has contributed to the normalization of companies facing difficulties amid challenging economic conditions, is expiring. We will thoroughly inspect any corporate difficulties that may arise as a result and take immediate action on necessary matters."

Accordingly, Chairman Kim urged the active use of the current creditor bank operation agreement to promptly respond to restructuring demands that may arise during the lapse of the Gichokbeop, ensuring smooth normalization through the joint management procedures of creditor banks.

He also requested the active participation of each financial company so that the 'Creditor Financial Institution Restructuring Agreement (draft),' prepared through consultations within the financial sector to expand the scope of the banking sector agreement to the entire financial sector, can be enacted within this month.

Furthermore, Chairman Kim said, "We will cooperate more closely with the National Assembly for the re-legislation of the Gichokbeop so that companies can utilize more diverse and effective normalization measures," and instructed that the Financial Services Commission Secretariat regularly monitor corporate restructuring and legislative status under its director.

Originally enacted as a temporary law in 2001, the Gichokbeop has served as the basic law for workouts, contributing to the normalization of major companies such as Hynix and Hyundai Construction. Although it has expired several times, it has been maintained through six enactments and amendments, recognized as a useful system for early corporate normalization.

Amid consensus on the necessity of this workout system, two extension bills for the Gichokbeop, including improvements related to workout systems (such as revisions to third-party credit provision and discharge regulations), have been proposed and are currently pending in the Legislation Subcommittee of the Political Affairs Committee.

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