Corporate Rehabilitation Accelerates: Initiation Now Within a Month

From an Average of 49 Days to 34 Days in One Year
Suwon Sets Record at 16.8 Days in July
Busan Shows Strong 'Jurisdiction Absorption Effect'

The average time it takes for the Seoul and Suwon Rehabilitation Courts to initiate corporate rehabilitation proceedings is less than one month. Over the past year (from August 2024 to July 2025), the national average was 46.3 days, but Seoul averaged 30.3 days and Suwon 26.2 days, meaning these two courts begin proceedings more than 15 days faster than the national average. Considering that more than half of all corporate rehabilitation cases nationwide are concentrated in these two courts, the majority of cases nationwide receive initiation decisions within a month. During the same period, the national monthly average number of cases filed was 103.5, increasing from 83 in August 2024 to 133 in July 2025.

Looking at the monthly trends, the national average time to initiate proceedings rose from 49.4 days in August 2024 to 57.1 days in November, but remained below 50 days in 2025, and was reduced to 34.6 days in July. In Seoul, the period increased from 27.7 days in August 2024 to 40 days in November, then dropped to 25.4 days in July 2025. In Suwon, the period rose from 23.2 days in August 2024 to 37.1 days in March 2025, but remained in the 20-day range thereafter, reaching a nationwide record low of 16.8 days in July. The Seoul Rehabilitation Court's 'actual average initiation days,' excluding ARS (Autonomous Restructuring Support) cases or repeated cases, shortened each year, from 28.7 days in 2023 to 27.3 days in 2024 and 24.1 days in 2025, consistently remaining under 30 days.

The Suwon and Busan Rehabilitation Courts, which opened in March 2023, have driven this expedited processing. According to court statistics, when comparing the two years before and after their opening, the number of filings increased significantly across all types-including corporate rehabilitation, corporate bankruptcy, individual rehabilitation, individual bankruptcy, and discharge-but processing times generally decreased. With the Daejeon, Daegu, and Gwangju Rehabilitation Courts scheduled to open in March 2026, these positive effects are expected to spread nationwide.

At the Suwon Rehabilitation Court, the number of corporate rehabilitation filings increased from 123 in the year before opening to 214 in the first year (up 73.9%), and to 234 in the second year (up 9.3%). Individual rehabilitation filings rose from 14,508 before opening to 19,840 in the first year (up 36.7%), and to 22,864 in the second year (up 15.2%), far exceeding the national average growth rate.

The Busan Rehabilitation Court also saw corporate rehabilitation filings increase from 25 in the year before opening to 108 in the first year and 147 in the second year. Notably, with cases from Ulsan and Changwon being transferred in, the 'jurisdiction absorption effect' was pronounced, accounting for 51.9% of Busan's total filings.

Despite the increase in cases, the Suwon Rehabilitation Court significantly improved processing delays. The time to initiate corporate rehabilitation was reduced from 64.4 days to 24.1 days, the time to declare corporate bankruptcy from 60.0 days to 20.5 days, and the time to initiate individual rehabilitation from 202.9 days to 155.1 days, with most indicators faster than the national average.

The Busan Rehabilitation Court also showed clear results in corporate cases, with the time to initiate corporate rehabilitation nearly halved from 106.5 days in the year before opening to 45.7 days in the second year. The time to declare corporate bankruptcy also dropped sharply from 120.6 days to 34.7 days. However, as the number of individual rehabilitation filings increased significantly, the time to initiation rose to 217.6 days. Efforts are being made to address these bottlenecks, such as simplifying documentation and easing requirements for approval of repayment plans.

The improvement in rehabilitation and bankruptcy indicators is attributed to independently allocated organization and budget, which has effectively created a 'dedicated judge system,' enhancing both the expertise and accountability of judges. Insolvency law experts commented, "In rehabilitation proceedings, time is directly linked to a company's survival," and evaluated that "initiation decisions within a month help protect the 'golden time for economic recovery' for businesses."

However, there are also calls to strengthen not only 'speed' but also 'substance.' One attorney specializing in rehabilitation said, "While I agree with the intent of debtor rehabilitation, a balanced approach is needed because small creditors may be marginalized." A chief judge at a rehabilitation court also stated, "Alongside the efficiency of rehabilitation proceedings, it is important to ensure the rights of creditors. This depends on the 'transparency of information provision.' Administrators and representatives must be careful to ensure that creditors are not deprived of sufficient information during the process of amending rehabilitation plans."

An Jaemyung, Legal Times Reporter

※This article is based on content supplied by Law Times.

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