Corporate Restructuring Promotion Act Extended Until 2026... Passed in Plenary Session

The amendment to the "Corporate Restructuring Promotion Act (GiChokBeop)," which enables early detection of signs of corporate insolvency before bankruptcy and supports swift normalization through voluntary consultations among creditors, passed the National Assembly plenary session on the 8th.

GiChokBeop is the legal basis for corporate "workouts." It was enacted as a temporary law in 2001 and has been operated six times through re-enactments since then. However, it lost its effect after the sunset clause expired on October 15th last year. In response, companies facing difficulties due to high interest rates and prolonged low growth urged the National Assembly to pass GiChokBeop, and it passed the relevant standing committee, the National Assembly's Political Affairs Committee, on the 28th of last month. The amendment includes provisions to extend the effect of GiChokBeop for three years until 2026.

The bill includes the basis for the workout system, which allows creditors holding more than 75% consent to extend maturities and provide financial support to companies experiencing temporary liquidity crises.

Additionally, a supplementary opinion was attached, stating that the Financial Services Commission must consult with courts and related agencies by the 31st of this month to review the current status of the corporate restructuring system and, based on this, prepare a developmental reform plan that includes expanding the role of courts in approvals and authorizations, and report it to the relevant standing committee of the National Assembly. The bill will take effect from the date of promulgation.

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