A South Korean court is set to implement a novel system wherein external experts will play a mediating role in the autonomous restructuring of companies. (Image courtesy of Yonhap)
SEOUL, Nov. 28 (Korea Bizwire) – A South Korean court is set to implement a novel system wherein external experts will play a mediating role in the autonomous restructuring of companies.
As per information from legal circles, the Seoul Bankruptcy Court is gearing up to unveil an enhanced ‘Autonomous Restructuring Support’ (ARS) program next month following a comprehensive court decision.
Unlike the current ARS program, which temporarily halts the initiation of mandatory rehabilitation proceedings but allows companies to continue operations and engage in negotiations with creditors, the upcoming system will empower a third-party expert to facilitate the company’s normalization.
In the ARS application, the company designates its preferred procedural facilitator. Subsequently, the creditors’ committee deliberates and decides whether to endorse this choice. The procedural facilitator can be the protective custodian, the executive overseeing restructuring, a mediator, a lawyer/law firm, or an accountant/accounting firm.
This marks a departure from the previous absence of a provision for a procedural facilitator, which often resulted in a creditor-centric dialogue, perceived as disadvantageous to businesses.
To streamline the utilization of ARS, the court has simplified the application process and eliminated the requirement for substantial upfront payments running into tens of millions of won.
Pending approval of the new system, its implementation is anticipated by the end of this year or early next year at the latest.
M. H. Lee (mhlee@koreabizwire.com)
