Seoul Rehabilitation Court Lowers Corporate Bankruptcy Threshold by Easing Advance Payment Requirements

Prepayment Under 10 Billion KRW Reduced from 5 to 15 Million KRW to 5 Million KRW

The Seoul Rehabilitation Court is significantly lowering the threshold for corporate bankruptcy by easing the advance payment standards that insolvent companies must pay to the court when undergoing bankruptcy procedures.

Seoul Rehabilitation Court in Seocho-gu, Seoul. [Image source=Yonhap News]

On the 14th, the Seoul Rehabilitation Court announced that it will partially revise and implement the advance payment standards for corporate bankruptcy. The advance payment is the money that companies undergoing bankruptcy procedures must pay to the court.

According to the previous advance payment standards of the Seoul Rehabilitation Court for corporate bankruptcy, for cases with total debt less than 500 million KRW, the advance payment required by the court was 5 million KRW, and for cases with total debt between 500 million KRW and less than 10 billion KRW, the advance payment was set between 7 million KRW and 15 million KRW depending on the debt scale.

As a result, insolvent companies with large debt but almost no actual assets were unable to use the bankruptcy procedures due to the burden of the advance payment, or the bankruptcy process was delayed due to delayed payment of the advance fee, raising the need to ease the advance payment standards.

According to the revised payment standards, cases with total debt less than 10 billion KRW will have the advance payment set at 5 million KRW, significantly easing the corporate bankruptcy advance payment standards. For companies with total debt of 10 billion KRW or more, the advance payment was also lowered from the previous 20 million KRW to between 10 million KRW and 15 million KRW.

A representative of the Seoul Rehabilitation Court said, “We expect that easing the advance payment standards for corporate bankruptcy will further activate the use of bankruptcy procedures by corporations in financial distress.”

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