Negotiations with Creditors Before Corporate Rehabilitation Application... Workout and Rehabilitation Simultaneously
Seoul Rehabilitation Court to Introduce 'Pre-ARS (Autonomous Restructuring Support)' System in May
Aims to Prevent Stigma and Other Negative Effects
'Hybrid Restructuring' to Allow Simultaneous Workout and Rehabilitation Procedures for Companies
The Seoul Rehabilitation Court (Chief Judge Jeong Jun-young) announced on the 16th that it will introduce the 'pre-ARS (Autonomous Restructuring Support)' system starting in May, which supports companies facing financial difficulties to negotiate autonomously with creditors before filing for rehabilitation.
The purpose is for the court to actively support companies and creditors in seeking solutions on their own while avoiding the legal issues arising from rehabilitation filings and the stigma caused by the negative perception of the filing itself.
The Rehabilitation Court explained the background for the introduction, stating, "Although the ARS system is practically utilized, it operates on the premise of a rehabilitation filing, so it cannot avoid the legal effects and stigma associated with the filing itself. Therefore, a system is needed to support autonomous negotiations with stakeholders even without a rehabilitation filing."
When an application is received, the case is assigned to the mediation division, and the mediation process is conducted confidentially.
The Rehabilitation Court also plans to implement the 'Hybrid Restructuring System,' which combines workout (joint management procedures) and rehabilitation procedures, starting next month.
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For companies requiring restructuring, the court explained that they often struggle to choose between workout and rehabilitation filing, but this system allows them to complement the weaknesses of each and enjoy the advantages of both.
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