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Laws of the Republic of Korea |
681 (Supp. 39)
DEBTOR REHABILITATION AND
BANKRUPTCY ACT
Act No. 7428, Mar. 31, 2005
Amended by Act No. 7892, Mar. 24, 2006
Act No. 7894, Mar. 24, 2006
Act No. 7895, Mar. 24, 2006
Act No. 8138, Dec. 30, 2006
Act No. 8635, Aug. 3, 2007
Act No. 8814, Dec. 27, 2007
Act No. 8829, Dec. 31, 2007
Act No. 8863, Feb. 29, 2008
PART GENERAL PROVISIONS
Article 1 (Purpose)
The purpose of this Act is to efficiently rehabilitate debtors who are faced with livelihood collapse due to financial difficulties, and their businesses through the coordination of legal relations among interested persons, including creditors, shareholders and equity holders, etc. and to liquidate the assets of debtors who are deemed difficult to rehabilitate or fairly distribute.
Article 2 (Status of Foreigners and Foreign Corporations) In the application of this Act, foreigners and foreign corporations shall have the same status as that of the people of the Republic of Korea or corporations of the Republic of Korea.
Article 3 (Jurisdiction)
(1) Every rehabilitation case and every bankruptcy case shall be placed under the exclusive jurisdiction of the collegiate division of the principal district court having jurisdiction over the location of the principal office or the debtor s place of business of (when the debtor has his/her principal office or his/her place of business in any foreign country, this refers to his/her principal office or his/her place of business in the Republic of Korea): Provided, That when the debtor is an individual without his/her principal office or place of business, he/she shall come under the exclusive DEBTOR REHABILITATION AND BANKRUPTCY ACT
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jurisdiction of the principal district court having jurisdiction over the general jurisdictional location of the debtor.
(2) Every individual rehabilitation case shall be placed under the exclusive jurisdiction of the principal district court having jurisdiction over the general jurisdictional location of the debtor.
(3) In case where no competent court referred to in the provisions of paragraphs (1) and (2) exists, the individual rehabilitation case shall be placed under the exclusive jurisdiction of the principal court of the district court having jurisdiction over the location of the debtor s property (in the case of any credit, a place in which a claim can be filed for a trial shall be deemed such location).
(4) Notwithstanding the provisions of paragraph (1), when the rehabilitation case or the bankruptcy case involving any affiliate provided for in the provisions of subparagraph 3 of Article 2 of the Monopoly Regulation and Fair Trade Act is pending, an application for commencing the rehabilitation procedures or an application for declaring bankruptcy for another company among affiliates may also be filed with the principal court of the district court in which the rehabilitation case or the bankruptcy case involving the affiliate is pending.
(5) Notwithstanding the provisions of paragraph (1), when a rehabilitation case or a bankruptcy case involving any corporation is pending, an application for commencing the rehabilitation procedures or an application for declaring the bankruptcy of the representative of such corporation may also be filed with the principal court of the district court in which the rehabilitation case or the bankruptcy case of such corporation is pending. (6) Notwithstanding the provisions of paragraph (1), an application for the rehabilitation case and the bankruptcy case may be field with the principal court of the district court that is located in the high court having jurisdiction over the location of the debtor s principal office or place of business.
(7) Notwithstanding the provisions of paragraphs (1) and (2), when a rehabilitation case, bankruptcy case or individual rehabilitation case involving anyone falling under any of the following subparagraphs is pending, an application for commencing the rehabilitation procedures, an application for a declaration of bankruptcy or an application for commencing individual rehabilitation procedures for any other person 10
683 (Supp. 39)
provided for in the matter may be filed with the principal court of the district court in which the rehabilitation case, the bankruptcy case or the individual rehabilitation case is pending:
1. The principal debtor and his/her guarantor;
2. The debtor and the person who bears the same obligations together with the former; and
3. The husband and his/her wife. (8) The bankruptcy case involving any inherited property shall be placed under the exclusive jurisdiction of the principal court of the district court having jurisdiction over the place where the inheritance of such property commences.
(9) Every case that is placed under the jurisdiction of the Seoul Eastern District Court, the Seoul Southern District Court, the Seoul Northern District Court or the Seoul Western District Court shall be placed under the exclusive jurisdiction of the Seoul Central District Court. Article 4 (Transfer Aimed at Avoiding Damage or Delay) When it is deemed necessary to avoid any substantial damage or delay, the court may exercise, its inherent jurisdiction to transfer any rehabilitation case, any bankruptcy case or any individual rehabilitation case to the principal court of the district court that falls under any of the following subparagraphs:
1. The principal court of the district court having jurisdiction over the debtor s other place of business or other office of the location of the debtor s property;
2. The principal court of the district court having jurisdiction over the domicile or the residence of the debtor;
3. The principal court of the district court provided for in the provisions of Article 3 (4) through (7); and
4. When the rehabilitation case, the bankruptcy case or the individual rehabilitation case is pending in the relevant district court pursuant to the provisions of Article 3 (4) through (7), the principal court of the district court provided for in the provisions of Article 3 (1) through (3).
Article 5 (Cooperation Among Courts)
In the procedures provided for in this Act, courts may seek legal cooperation DEBTOR REHABILITATION AND BANKRUPTCY ACT
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among themselves.
Article 6 (Declaration of Bankruptcy Following Discontinuation of Rehabilitation Procedures, etc.)
(1) Where a decision to discontinue rehabilitation procedures is confirmed after the rehabilitation plan is authorized for a debtor who is not declared bankrupt, the court shall, when it is recognized that the fact of causing the bankruptcy of such debtor exists, declare him/her bankrupt by its authority.
(2) Where the decision falling under any of the following subapragraphs is confirmed on the debtor who is not declared bankrupt, the court may, when it is recognized that a cause for the bankruptcy of the debtor exists, declare him/her bankrupt by its authority or upon receiving an application filed by the debtor or any custodian:
1. The decision to dismiss an application filed for commencing the rehabilitation procedures;
2. The decision to discontinue the rehabilitation procedures before the rehabilitation plan is authorized; and
3. The decision not to authorize the rehabilitation plan. (3) Where the bankruptcy is declared pursuant to the provisions of paragraphs (1) and (2), the commission of the register or the registration falling under any of the following subparagraphs shall be made together with the commission of the register or the registration of any bankruptcy:
1. The commission of the register provided for in the provisions of Articles 23 (1), and 24 (4) and (5); and
2. The commission of the registration provided for in the provisions of Article 24 (4) and (5) that are applied mutatis mutandis under the provisions of Article 27.
(4) Where the bankruptcy is declared pursuant to the provisions of paragraph (1) or (2), when no application is filed for the suspension of any payment or any bankruptcy prior to the declaration of such bankruptcy in the application of the provisions of Part , an act falling under any of the following subparagraphs shall be deemed the suspension of such payment and the application filed for bankruptcy and public-interest claims shall be deemed foundation claims:
1. An application filed for commencing the restoration procedures; and
2. An act that is peformed by a director (including any executive officer 10
685 (Supp. 39)
and any other person corresponding thereto; hereinafter the same shall apply) of a corporate debtor that constitutes an offense of fraudulent bankruptcy as provided for in the provisions of Article 650. (5) Where the bankruptcy provided for in the provisions of paragraph (2) is declared before it is decided to authorize the rehabilitation plan, in the application of the provisions of Part , the report on rehabilitation claims and the inspection or the confirmation of the objection provided for in Part shall be deemed the report on the bankruptcy claims and the inspection or the confirmation of the objection that are all performed under the bankruptcy procedures: Provided, That the same shall not apply to the objection raised to any claim, the inspection or the confirmation provided for in the provisions of Articles 134 through 138. (6) When the declaration of bankruptcy referred to in the provisions of paragraph (1) or (2) is made, the litigation procedures that are taken by any custodian and any preservative custodian shall be suspended. In this case, any trustee in bankruptcy and any other party may subrogate such litigation procedures.
(7) The bankruptcy is declared pursuant to the provisions of paragraph (1) or (2), any disposition, act, etc. that is taken and performed by any person falling under any of the following subparagraphs in the rehabilitation procedures pursuant to the provisions of Part shall be deemed valid under the bankruptcy procedures in so far as they are not contrary to their nature. In this case, when it is deemed necessary, the court may prescribe the scope of the disposition, act, etc. that are deemed valid by its decision at the time that it makes a declaration of bankruptcy:
1. The court;
2. The custodian, the protective custodian, an inspection commissioner, the Custodial Committee, a member of the Custodial Committee and the creditors consultative council;
3. The creditor, the secured creditor, a shareholder and an equity right holder (referring to employees of a company that is not a stock company and any other person who holds the position similar to that of the former; hereinafter the same shall apply); and
4. An interested person. (8) When a decision to discontinue the rehabilitation procedures provided for in the provisions of Article 288 is confirmed after the bankruptcy DEBTOR REHABILITATION AND BANKRUPTCY ACT
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procedures for a debtor who is declared bankrupt lose their effect on the grounds of a decision to authorize the rehabilitation plan, the court shall declare such debtor bankrupt by its authority.
(9) In the case of paragraph (8), in the application of the provisions of Part , it shall be deemed that a petition is filed for bankruptcy at the time that a petition is filed for bankruptcy under the bankruptcy procedures that lose their effect by a decision to authorize the rehabilitation plan and public-interest claims shall be deemed foundation claims. (10) The provisions of paragraphs (3), (6) and (7) shall apply mutatis mutandis to the case of paragraph (8).
Article 7 (Public-Interest Claims, etc. Where Bankruptcy Procedures Continue)
(1) When a decision falling under any of the following subparagraphs is confirmed on a debtor who is declared bankrupt and the bankruptcy procedures continue, public-interest claims shall be deemed foundation claims:
1. A decision to dismiss an application filed for commencing rehabilitation procedures;
2. A decision to discontinue a rehabilitation procedures before an authorization is granted for a rehabilitation plan; and
3. A decision not to grant an authorization for a rehabilitation plan. (2) The provisions of Articles 6 (5) through (7) shall apply mutatis mutandis to a case where the decision falling under any of each subparagraph of paragraph (1) is confirmed on a debtor who is declared bankrupt and that the bankruptcy procedures continue.
Article 8 (Delivery)
(1) Every judgment that is given pursuant to the provisions of this Act shall be delivered ex officio.
(2) Documents may be delivered by standard post to the domiciles of the debenture holders, shareholders or equity right holders of a corporate debtor, when they report such domiciles pursuant to this Act and to the domiciles that are contained on the debenture register, the shareholders roll, the employees roll or the register book or to the domiciles of which they notify the corporate debtor.
(3) Documents may be delivered by standard post to the domiciles of secured creditors who hold registered security rights when they report 10
687 (Supp. 39)
such domiciles pursuant to the provisions of this Act or to the domiciles that are contained on the register book when they fail to report such domiciles.
(4) When the documents are delivered by standard post pursuant to the provisions of paragraphs (2) and (3), such documents shall be deemed delivered at the time when postal items can be routinely delivered. (5) In the case of paragraphs (2) and (3), every senior clerk of the court, every clerk of the court, every junior clerk of the court and every assistant clerk of the court (hereinafter referred to as the clerk, etc. of the court ) shall each prepare a written statement and enter the matters falling under each of the following subparagraphs in such written statement and shall each ascribe his/her name and affix his/her seal to such written statement:
1. The names and domiciles of persons who are eligible to accept the service of documents; and
2. The date on which such documents are posted. (6) The provisions of paragraphs (1) through (5) shall not apply when this Act expressly prescribes otherwise.
Article 9 (Publication)
(1) The publication provided for in the provisions of this Act shall be by way of the Official Gazette or according to methods that are prescribed by the rules of the Supreme Court.
(2) The effect of the publication referred to in the provisions of paragraph (1) shall accrue on the day following the day on which it is published in the Official Gazette or on the day following the day on which it is made according to the methods that are prescribed by the rules of the Supreme Court. (3) When any judgment is published pursuant to the provisions of paragraph (1), all persons concerned shall be deemed notified of such judgment: Provided, That the same shall not apply when this Act expressly prescribes otherwise.
Article 10 (Publication in Lieu of Service)
(1) Where the provisons of this Act require service, when it is difficult to identify the place at which such service has to be made and the grounds that are prescribed by the rules of the Supreme Court exist, publication thereof may substitute such service.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
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(2) The provisions of paragraph (1) shall not apply when this Act expressly prescribes otherwise.
Article 11 (Cases Where Both Publication and Service are Required) (1) Where both publication and service are posting required pursuant to the provisions of this Act, such service may be made by posting documents. (2) The publication referred to in the provisions of paragraph (1) shall have the effect of service such documents upon all of the persons concerned. Article 12 (Optional Argument and Ex Officio Inspection) (1) Any trial provided for in the provisions of this Act may be held without any oral submissions.
(2) The court may conduct the necessary inspection of any rehabilitation case, bankruptcy case, individual rehabilitation case and international bankruptcy case.
Article 13 (Immediate Appeal)
(1) Anyone who is interested in any judgment provided for in the provisions of this Act may immediately file an appeal against such judgment only when the provisions of this Act so prescribe.
(2) The immediate appeal referred to in the provisions of paragraph (1) shall be filed within 14 days from the date on which the judgment is published, when the judgment has been published.
(3) The immediate appeal referred to in the provisions of paragraph (1) shall have the effect of suspending any enforcement: Provided, That the same shall not apply to a case where this Act expressly prescribes otherwise. Article 14 (Methods of Raising Objection)
Every objection to a judgment made pursuant to the provisions of this Act shall be raised in writing.
Article 15 (Establishment of Custodial Committee) The Custodial Committee mandated to perform properly and speedily the proceedings of the procedures provided for in the provisions of this Act shall be set up in district courts that each is prescribed by the rules of the Supreme Court.
Article 16 (Composition, etc. of Custodial Committee) (1) The Custodial Committee shall be composed of, from 3 members to not more than 15 members, including one chairman. (2) The term of office for each member of the Custodial Committee shall be 3 years.
(3) The members of the Custodial Committee shall be commissioned by 10
689 (Supp. 39)
the head of the district court from among the persons falling under any of the following subparagraphs:
1. An attorney-at-law or certified public accountant;
2. Anyone who has worked for a financial institution provided for in the Banking Act and a corporation prescribed by the Presidential Decree for not less than 15 years;
3. Anyone who has worked as officers for a listed company;
4. Anyone who has worked in a related field for not less than 7 years after acquiring a master s degree or higher in law, business administration or economics; and
5. Anyone of profound learning and experience, who is corresponding to the persons referred to in the provisions of subparagraphs 1 through
4. (4) Anyone who falls under any of the following subparagraphs shall be prohibited from being commissioned as a member of the Custodial Committee:
1. Anyone who is incompetent, quasi-incompetent or who is yet to be reinstated after he/she has been declared bankrupt;
2. Anyone who has been sentenced to imprisonment without prison labor or a heavier punishment and for whom 5 years have yet to ellapse from the date on which the execution of the sentence is terminated (including a case where the execution of the sentence is deemed terminated) or the execution of the sentenced is exempted;
3. Anyone who has been sentenced to a stay of execution of imprisonment without prison labor or a heavier punishment and for whom 2 years have yet to ellapse from the date on which the stay period expires;
4. Anyone who is in a stay period after having been sentenced to a stay of execution of imprisonment without prison labor or a heavier punishment; and
5. Anyone whose qualifications are suspended or relinquished according to other Acts or court judgment.
(5) The Custodial Committee s meeting shall pass resolutions with the attendance of a majority of the total members on the register roll and with the concurrent vote of a majority of those present. (6) The establishment, organization and operation of the Custodial Committee, the required qualifications of members of the Custodial DEBTOR REHABILITATION AND BANKRUPTCY ACT
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Committee, the guarantee of their status and the disciplinary action against them, etc. shall be prescribed by the rules of the Supreme Court. (7) Members of the Custodial Committee shall be deemed public officials in the application of the penal provisions of the Criminal Act and other Acts.
Article 17 (Work and Authority of Custodial Committee) (1) The Custodial Committee shall perform the work falling under each of the following subparagraphs under the direction of the court:
1. The presentation of its opinions on the selection and appointment of custodians, protective custodians, inspection commissioners, trustees in bankruptcy, rehabilitation commissioners and international bankruptcy custodians;
2. The supervision and evaluation of the appropriateness of the work performed by custodians, protective custodians, inspection commissioners, trustees in bankruptcy and rehabilitation commissioners;
3. The examination of any draft rehabilitation plan and any draft repayment plan;
4. The composition of the creditors consultative council and the furnishing of information pertaining to creditors;
5. The assessment of the progress in the procedures provided for in this Act;
6. The work of the meeting of persons concerned and the meeting of creditors; and
7. Other work that is prescribed by the rules of the Supreme Court or other courts.
(2) The Custodial Committee may commission part of its work to its members in order to efficiently perform the work provided for in each subparagraph of paragraph (1).
(3) When the court recognizes that the work performed by any member of the Custodial Committee is inappropriate, the court may ask the Custodial Committee to commission other member to perform such work. (4) When the Custodial Committee is not constituted, the matters falling under each of the following subparagraphs shall not apply:
1. Matters concerning the members of the Custodial Committee in Articles 6 (7), 18, 19 and 30 (1); and
2. Matters concerning the Custodial Committee in Articles 6 (7), 42, 43 10
691 (Supp. 39)
(1), (3) and (4), 50 (1), 62 (2), 87 (1). 92, 114 (4), 132 (3), 257 (3) and (4), 287 (3), 288 (2) and 355 (1).
Article 18 (Commission of Clerical Services Involving Permission to Members of Custodial Committee)
The court may commission the clerical services involving the permission and the clerical services involving the permission for bankruptcy procedures, both of which belong to its ordinary work, from among acts provided for in each subparagraph of Article 61 (1), to members of the Custodial Committee. In this case, necessary matters concerning the scope of the commission of the clerical services and the procedures for commissioning the clerical services shall be prescribed by the rules of the Supreme Court. Article 19 (Raising of Objection to Acts by Members of Custodial Committee) (1) Anyone who is dissatisfied with a decision or disposition made or taken by any member of the Custodial Committee after being commissioned pursuant to the provisions of Article 18 shall raise an objection to such member of the Custodial Committee.
(2) When the relevant member of the Custodial Committee considers that the objection raised according to the provisions of paragraph (1) has the justifiable grounds, he/she shall promptly take an appropriate disposition therefor and then notify the court thereof.
(3) When the relevant member of the Custodial Committee recognizes that the objection raised according to the provisions of paragraph (1) has no justifiable grounds, he/she shall refer the objection to the court within 3 days from the date on which he/she receives such objection. (4) The objection that is raised according to the provisions of paragraph (1) shall not have the effect of suspending any execution. (5) The court shall, upon receiving the objection raised pursuant to the provisions of paragraph (3), determine based on the justifiable grounds and if the court considers that the objection has the justifiable grounds, it shall order the relevant member of the Custodial Committee to take an appropriate disposition to address such objection and then notify the person who raises the objection of the gist of such appropriate disposition. Article 20 (Composition of Creditors Consultative Council) (1) The Custodial Committee (referring to the court when the Custodial Committee is not constituted; hereafter the same in this Article shall apply) shall establish a creditors consultative council composed of major creditors of the debtor after an application is filed for commencing rehabilitation DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 692
procedures or a petition of bankruptcy is filed: Provided, That when the debtor is an individual or a smalland medium-sized businessman, the Custodial Committee may not set up such creditors consultative council. (2) The creditors consultative council shall be composed of not more than 10 persons.
(3) When it is deemed necessary, the Custodial Committee may cause any minority creditor to participate in the creditors consultative council as its member.
Article 21 (Function, etc. of Creditors Consultative Council) (1) The creditors consultative council may perform any of the following acts through the coordination of creditors opinions:
1. The presentation of opinions with respect to rehabilitation procedures and bankruptcy procedures;
2. The presentation of opinions with respect to the selection, appointment or dismissal of custodians, trustees in bankruptcy and protective custodians;
3. The presentation of opinions with respect to the selection and appointment of the auditor (including any member of the audit committee provided for in the provisions of Article 415-2 of the Commercial Act) of a debtor who is a corporation;
4. A claim brought for the physical inspection of the actual governance of any company after an authorization is granted for its rehabilitation plan;
5. Other matters concerning the rehabilitation procedures and the bankruptcy procedures that are demanded by the court; and
6. Other acts that are prescribed by the Presidential Decree. (2) The agenda of the creditors consultative council shall be decided with the concurrent vote of a majority of the total members present. (3) The court may determine that the debtor bear expenses necessary for the creditors consultative council to carry out its activities. (4) Necessary matters concerning the composition and operation of the creditors consultative council shall be prescribed by the rules of the Supreme Court.
(5) When the creditors consultative council is not constituted, matters concerning the creditors consultative council in the provisions of Articles 50 (1), 62 (2), 132 (3), 203 (4), 259, 287 (3) and 288 (2) shall not apply. 10
693 (Supp. 39)
Article 22 (Provision of Materials to Creditors Consultative Council) (1) The court shall provide the creditors consultative council with copies of documents concerning rehabilitation procedures or bankruptcy procedures, written decisions, audit reports and other major materials that are prescribed by the rules of the Supreme Court. (2) Custodians or trustees in bankruptcy shall submit major documents quarterly that are designated by the court to the creditors consultative council from among the documents that they submit to the court. (3) The creditors consultative council may ask any custodian or any trustee in bankruptcy to provide necessary materials to it under the conditions prescribed by the rules of the Supreme Court.
(4) Anyone who is requested to provide the necessary materials under the provisions of paragraph (3) shall provide such necessary materials under the conditions prescribed by the rules of the Supreme Court. (5) When any creditor who is not affiliated with the creditors consultative council requests materials, the creditors consultative council shall provide him/her with such materials that it has received pursuant to the provisions of paragraphs (1) through (3).
Article 23 (Commission of Registers of Corporations) (1) In a case falling under any of the following subparagraphs, which involves a corporate debtor, the clerk, etc. of the court shall promptly commission by their authority the registry office in the seat of the office and place of business place (when his/her principal office or place of business is located in any foreign country, refers to his/her office or place of business located in the Republic of Korea) of such debtor to register the case by providing such registry office with a written commission accompanied by related documents including a certified copy or an abstract of the written decision:
1. Where it is decided to commence rehabilitation procedures or declare bankruptcy;
2. Where a decision to revoke the decision to commence rehabilitation procedures, a decision to discontinue rehabilitation procedures or a decision not to grant an authorization for a rehabilitation plan is confirmed, variously;
3. Where it is decided to grant an authorization for a rehabilitation plan or to complete rehabilitation procedures;
4. Where new shares are issued pursuant to the provisions of Article 266, DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 694
bonds are issued pursuant to the provisions of Article 268, an all- inclusive exchange of shares is performed pursuant to the provisions of Article 269, an all-inclusive transfer of shares is performed pursuant to the provisions of Article 270, companies are merged pursuant to the provisions of Article 271, any company is split or companies are merged after split pursuant to the provisions of Article 272 or a new company is incorporated pursuant to the provisions of Articles 273 and Article 274; and
5. Where it is decided to revoke a bankruptcy, to discontinue a bankruptcy or to terminate a bankruptcy.
(2) When a disposition provided for in the provisions of Article 43 (3), 74 (1), 355 or 636 (1) 4 is taken to a corporate debtor, the clerk, etc. of the court shall use their authority to promptly commission the registry office in the seat of the office and place of business of such debtor to register such disposition by providing such registry office with a written commission accompanied by related documents including a certified copy or abstract of such disposition. The same shall apply to a case where any registered disposition is changed or revoked.
(3) The names, titles, domiciles and offices of the custodian, the protective custodian, the trustee in bankruptcy or the international bankruptcy custodian shall be entered in the register of the disposition referred to in the provisions of paragraph (2). In this case, when any entered matter is changed, the clerk, etc. of the court shall commission the registry office in the seat of the office and the place of business the debtor to register such change.
Article 24 (Commission of Register, etc. of Registered Rights) (1) In a case falling under any of the following subparagraphs, the clerk, etc. of the court shall use their authority to promptly commission the registry office to register the commencement of rehabilitation procedures or protective disposition by providing such registry office with a written commission accompanied by a certified copy or abstract of the written decision. The same shall apply where the protective disposition referred to in subparagraph 2 or 3 is changed or revoked or loses its effect:
1. Where it is decided to commence the rehabilitation procedures for a non-corporate debtor when any right that belongs to the debtor s property is registered;
10
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2. The protective disposition provided for in the provisions of Article 43 (1) is taken over any registered right that belongs to the debtor s property to be disposed of; and
3. The protective disposition provided for in the provisions of Article 114 (1) or (3) is taken over the registered right.
(2) Where the registered right is acquired, lost or changed before the implementation of a rehabilitation plan is carried out or a rehabilitation procedures provided for in this Act are completed, the court shall use its authority to promptly commission the registry office to register the acquisition, loss or change of such registered right: Provided, That the same shall not apply to a case where anyone other than the debtor, any creditor, any secured creditors, any shareholder, any equity right holder or any newly incorporated company is registered as a rightful claimant. (3) The clerk, etc. of the court shall, when they learn of the register of a non-corporate debtor who has been declared bankrupt, use their authority to commission without delay the registry office to register his/her bankruptcy by providing the registry office with a written commission accompanied by the certified copy of the written bankruptcy decision. The same shall apply to a case where the clerk, etc. of the court learn of any registered right that belongs to the bankrupt organization.
(4) Where any trustee in bankruptcy renounces his/her right over which his/her bankruptcy is registered from the bankrupt organization and files an application for commissioning the register therof, the clerk, etc. of the court shall commission the registry office to register the waiver of such right by providing the registry office with a written commission accompanied by a certified copy of the written permission for the waiver of the right. (5) The provisions of paragraphs (1) and (3) shall apply mutatis mutandis to the case of Article 23 (1) 1 through 3 and 5.
(6) When a protective disposition is taken, canceled or changed with respect to a registered right that belongs to a debtor s property under individual rehabilitation procedures, the clerk, etc. of the court shall use their authority to promptly commission the registry office to register such protective disposition by providing the registry office with a written commission accompanied by a certified copy or abstract of the written decision. (7) Where a disposition provided for in the provisions of Article 636 (1) 3 or 4 is taken, when the clerk, etc. of the court learn of the registered DEBTOR REHABILITATION AND BANKRUPTCY ACT
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right that belongs to the debtor s property, they shall use their authority to commission without delay by their authority the registry office to register such disposition by providing the registry office with a written commission accompanied by a certified copy or abstract of the written decision. The same shall apply to a case where the disposition provided for in the provisions of Article 636 (1) 3 is taken before it is decided to approve the foreign bankruptcy procedures provided for in the provisions of Article 635 (1). Article 25 (Duties of Registry Offices and Exemption of Registration Tax) (1) Every registry office shall, when it is commissioned to perform the registration pursuant to the provisions of Article 23 or 24, perform without delay the commissioned registration.
(2) Every registry office shall, where the bankruptcy of any debtor is registered, when it intends to register the authorization of a rehabilitation plan, use its authority to cancel the registration of the bankruptcy of such debtor.
(3) Every registry office shall, where it intends to register the revocation of any rehabilitation plan authorization, if it finds a register that is cancelled pursuant to the provisions of paragraph (2), use its authority to restore such register.
(4) Registration tax shall not be levied on the registers referred to in the provisions of paragraphs (1) through (3).
Article 26 (Register of Negation)
(1) When the act of causing registration is negated, any custodian, any trustee in bankruptcy or any holder of the right to negate in the individual rehabilitation procedures shall each file an application for the registration of such negation. The same shall apply to a case where the register is negated.
(2) Registration tax shall not be levied on the register referred to in the provisions of paragraph (1).
(3) The provisions of Article 23 (1) 1 through 3 and 5 shall apply mutatis mutandis to the case of paragraph (1).
(4) Where any custodian or any trustee in bankruptcy voluntarily sells the property on which the negation referred to in the provisions of paragraph (1) is registered and the cause of voluntarily selling such property is registered, the court shall, upon receiving an application filed by interested persons, commission the registry office to cancel the registration of the 10
697 (Supp. 39)
negation under pargraph (1), the register that is effected by the act of the negation, the negated registration and other registrations that are effected subsequent to such registers, which cannot counter any rehabilitative creditor or any bankrupting creditor. Article 27 (Application Mutatis Muntandis of Registered Rights) The provisions of Articles 24 through 26 shall apply mutatis mutandis only to registered right over the property of a debtor, a bankrupt organization or an individual organization undergoing rehabilitation. Article 28 (Perusal, etc. of Case Records)
(1) Interested persons may claim the inspection and delivery of copies of case records (including documents and other items), written judgments, original or certified copies and abstracts of investigation records and certificates concerning cases.
(2) The provisions of paragraph (1) shall not apply to audiotapes or videotapes (including goods in which certain matters are recorded in a manner that audiotapes and videotapes are recorded; hereafter the same in this Article shall apply) among case records: Provided, That upon receiving an application filed by any interested person, the court may permit reproduction of them for him/her.
(3) Notwithstanding the provisions of paragraphs (1) and (2), anyone falling under any of the following subparagraphs shall be prohibited from filing the application referred to in the provisions of paragraphs (1) and (2) until a judgment that is prescribed in any item of the relevant subparagraph is given: Provided, that the same shall not apply to a case where the person is an applicant for the commencement of rehabilitation procedures:
1. An interested person other than the debtor: (a) A preservation disposition provided for in the provisions of Article 43 (1);
(b) A preservation and management order provided for in the provisions of Article 43 (3);
(c) A discontinuation order provided for in the provisions of Article 44 (1);
(d) A general prohibition order provided for in the provisions of Article 45 (1); and
(e) A determination of a the application filed for commencing DEBTOR REHABILITATION AND BANKRUPTCY ACT
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rehabilitation procedures; and
2. The debtor; (a) A judgment provided for in any item of subparagraph 1; (b) The designation of the date on which submissions are made with respect to an application for commencing rehabilitation procedures; and
(c) The designation of the date on which the debtor is summoned to answer questions.
(4) When it is feared to greatly obstruct the maintainance and rehabilitation of the debtor s business and to cause severe damage to the debtor s property, the court may not refuse to permit the inspection, copying, delivery of the original, certified copies and abstracts or the reproduction of audiotapes and videotapes.
(5) An immediate appeal may be filed against the decision made not to grant the permission provided for in the provisions of paragraph (4). Article 29 (Inquiry about Property, etc. of Debtor) (1) The court may, if it is deemed necessary, upon receiving an application filed by any custodian, any trustee in bankruptcy, or any interested person or by its inherent jurisdiction, inquire with any public institution, any financial institution and any organization, etc. that are each operating the computer network that holds information on the property and credit status of the debtor about the property that is held in the name of such debtor. (2) When any interested person who is entitled to immunity files an application referred to in the provisions of paragraph (1), he/she shall specifically designate any public institution, any financial institution or any organization to which inquiries are made. In this case, the court shall order such person to prepay expenses involved in making such inquiries. (3) The provisions of Article 74 (3) and (4) and Article 75 (1) of the Civil Execution Act shall apply mutatis mutandis to the inquires referred to in the provisions of paragraph (1).
(4) Matters concerning the scope of public institutions, financial institutions and organizations, etc. to which the inquires are made, procedures for making inquires, expenses that have to be prepaid by interested persons, the management of the results of the inquiries etc. shall be prescribed by the rules of the Supreme Court.
Article 30 (Remunerations of Custodians, etc.)
(1) The persons falling under any of the following subparagraphs are eligible 10
699 (Supp. 39)
for prepaid expenses, remuneration or special compensation. In this case, the court shall determine the amount of such remuneration and such special compensation:
1. Custodians, proxy custodians, protective custodians, trustees in bankruptcy and proxy trustees in bankruptcy;
2. Inspection commissioners, rehabilitation commissioners and advisors; and
3. Members of the Custodial Committee who perform the duties of the aforementioned persons.
(2) The remuneration and the special compensation referred to in the provisions of paragraph (1) shall be the amount commensurate with their duties and responsibilities.
(3) An immediate appeal may be filed against the determination referred to in the provisions of paragraph (1).
Article 31 (Compensation, etc. for Proxy Members of Custodial Committee) (1) The court may permit the refunding of expenses or payment of compensation to the persons falling under any of the following subparagraphs within the scope of appropriateness. In this case, the court shall determine the amount of the expenses and the compensation:
1. Creditors, secured creditors, shareholders, equity right holders, proxy members of the Custodial Committee or agents who are credited with having achieved restoration under bankruptcy procedures; and
2. Persons who are credited with having managed a bankrupt organization or liquidation.
(2) An immediate appeal may be filed against a determination made pursuant to the provisions of paragraph (1).
Article 32 (Suspension of Prescription)
In a case falling under any of the following subparagraphs, the effect of the suspension of a prescription accrues:
1. Submission of the list provided for in the provisions of Article 147 and the participation in rehabilitation procedures: Provided, That the same shall not apply to a case where any rehabilitation creditor or any rehabilitation secured creditor who is not entered on the list withdraws his/her report or his/her report is rejected;
2. Participation in the bankruptcy procedures: Provided, That the same shall not apply to a case where any bankruptcy creditor withdraws DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 700
his/her report or his/her report is rejected; and
3. Submission of the list of the individual rehabilitation creditors provided for in the provisions of Article 589 (2) and participation in the individual rehabilitation procedures: Provided, That the same shall not apply to a case where any individual rehabilitation creditor who is not entered on the list withdraws his/her application for the final inspection judgment or his/her application is turned down.
Article 32-2 (Prohibition of Discriminative Treatment) No person shall be given any unfavorable treatment such as the restriction of employment or dismissal, without any justifiable reason, on account of the rehabilitation procedures, bankruptcy procedures or individual rehabilitation procedures in progress under this Act. [This Article Newly Inserted by Act No. 7892, Mar. 24, 2006] Article 33 (Mutatis Mutantis Application of Civil Procedures Act and Civil Execution Act)
When rehabilitation procedures, bankruptcy procedures, individual rehabilitation procedures and international bankruptcy procedures are not prescribed in this Act, the Civil Procedures Act and the Civil Execution Act shall apply mutatis mutandis to them.
PART REHABILITATION PROCEDURES
CHAPTER COMMENCEMENT OF
REHABILITATION
PROCEDURES
SECTION 1 Application for Commencement of
Rehabilitation Procedures
Article 34 (Application Filed for Commencing Rehabilitation Procedures) (1) In a case falling under any of the following subparagraphs, the debtor may file an application with the court for commencing the rehabilitation procedures:
1. Where the debtor finds it impossible to repay his/her obligations in the repayment period without any serious hinderance to the continuation of his/her business; and
10
701 (Supp. 39)
2. Where it is feared that bankruptcy may accrue to the debtor. (2) In the case of paragraph (1) 2, the person prescribed in each item of the relevant subparagraph may also file an application for commencement of rehabilitation procedures according to the classification of each of the following subparagraphs:
1. When the debtor is a stock company or a limited-liability company: (a) A creditor who holds a claim equivalent to not less than 1/10 of the capital; and
(b) A shareholder or the equity right holder who holds the share or the equity share equivalent to not less than 1/10 of the capital; and
2. When the debtor is not a stock company or a limited-liability company: (a) A creditor who holds a claim equivalent to not less than 50 million won; and
(b) An equity right-holder who holds an equity share of not less than 1/10 of the total amount of investment of any general partnership, any joint venture, any corporation or anyone corresponding thereto. (3) The court may, when any creditor, any shareholder or any equity right holder files an application for commencement of rehabilitation procedures pursuant to the provisions of paragraph (2), order the debtor to submit materials concerning the management of his/her business and the current state of his/her property.
Article 35 (Obligation to File Bankruptcy Petition and Application for Commencement of Rehabilitation Procedures)
(1) The liquidator of any debtor may file an application for commencement of rehabilitation procedures even when he/she files a petition of the bankruptcy of such debtor pursuant to another Act. (2) When a corporate debtor, who is under liquidation or is declared bankrupt files an application for commencement of rehabilitation procedures, the provisions of Article 229 (1), 285 (2), 519 or 610 of the Commercial Act shall apply mutatis mutandis thereto.
Article 36 (Written Application)
An application for commencement of rehabilitation procedures shall be filed in the form of a written application in which the matters falling under each of the following subparagraphs are entered:
1. The names and domiciles of the applicant and the legal representative; DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 702
2. Where the debtor is an individual, the name, the resident registration number (referring to the foreigner registration number or the domestic residence number in the case of anyone who has no resident registration number; hereinafter the same shall apply) and the domicile of such debtor;
3. Where the debtor is not an individual, the firm name, the location of the principal office or place of business (when the principal office or place of business is located overseas, refers to the principal office or place of business that is located in the Republic of Korea) and the name of the representative of the debtor (when the principal office or place of business is located overseas, this refers to the representative who resides in the Republic of Korea; hereinafter the same shall apply);
4. The purposes of the application;
5. The cause of commencing rehabilitation procedures;
6. The business objectives and the current business of the debtor;
7. The total number of shares or the total number of equity shares issued by the debtor, the amount of his/her capital, assets, obligations and current property;
8. Other procedures or any disposition involving the debtor s property, which is known to the applicant;
9. When the applicant holds an opinion on the rehabilitation plan, his/ her opinion;
10. When any creditor files an application for commencement of rehabilitation procedures, the amount and the basis of the claim that he/ she holds; and
11. When any shareholder or any equity right holder files an application for commencement of rehabilitation procedures, the number or the amount of the shares or the equity shares that is held by him/her. Article 37 (Keeping of Documents)
Documents concerning the application for commencement of rehabilitation procedures shall be kept in the court for perusal by interested persons. Article 38 (Explanations)
(1) Anyone who files an application for commencement of rehabilitation procedures shall vindicate the fact that is the basis for the commencement of such rehabilitation procedures. In this case, when the foreign bankruptcy procedures provided for in the provisions of subparagraph 1 of Article 628 10
703 (Supp. 39)
are in process on any debtor, such debtor shall be presumed to be subject to the the fact that is the basis for such bankruptcy. (2) When any creditor, any shareholder or any equity right holder files an application for commencement of rehabilitation procedures, he/she shall substantiate the amount of the claim or the number and the amount of shares or equity shares that he/she holds.
Article 39 (Prepayment, etc. of Expenses)
(1) When anyone files an application for commencement of rehabilitation procedures, the applicant shall prepay expenses involved in taking the rehabilitation procedures.
(2) The expenses referred to in the provisions of paragraph (1) shall be determined by the court taking into account the scale of the case, etc. In this case, when anyone other than the debtor files an application for commencement of rehabilitation procedures, the amount of expenses that are payable out of the debtor s property shall be taken into consideration after the rehabilitation procedures commence.
(3) When it is decided to commence the rehabilitation procedures after anyone other than the debtor files an application for commencement of such rehabilitation procedures, the applicant may have his/her expenses payed out of the debtor s property pursuant to the provisons of paragraph (1).
(4) The applicant s right to claim the payment of his/her expenses pursuant
to the provisions of paragraph (3) shall be made a public-interest
claim.
Article 40 (Notifications, etc. to Supervisory Administrative Agencies)
(1) When an application is filed for commencement
of rehabilitation
procedures for a debtor who is a stock company, the court shall notify
the persons falling under each of the
following subparagraphs of the gist
of such application: 1. The administrative agency in charge of supervising the debtor s
business;
2. The Financial Services Commission; and
3. The head of the tax office having jurisdiction over the location of the
principal office or place of business of the debtor (when
the principal
office or place of business is located overseas, this refers to the principal
office or place of business located
in the Republic of Korea).
(2) The court may, when it is deemed necessary, request the person falling
DEBTOR REHABILITATION AND
BANKRUPTCY ACT
(Supp. 39) 704
under each of the following subparagraphs to state his/her opinion on
the rehabilitation procedures: 1. The administrative agency in charge of supervising the debtor s
business;
2. The Financial Services Commission; and
3. The person who holds the authority to collect claims (referring to
claims that may be collectable according to the example of
collecting
the national tax and the example of the disposition taken to collect
the national tax or the local tax in arrears and
their preferential collection
order takes priority over that of general rehabilitation claims) that are
collectable pursuant to
the National Tax Collection Act and the Local
Tax Act.
(3) Anyone who falls under any of the subparagraphs of paragraph (2)
may state his/her opinion on the rehabilitation procedures
in the court.
Article 41 (Questioning)
(1) When an application is filed for commencement of rehabilitation
procedures, the court shall question the debtor or the representative
of
such debtor.
(2) Notwithstanding the provisions of paragraph (1), the court may omit
such questioning in cases falling under any of the following
subparagraphs:
1. Where such questioning of the debtor is feared to greatly delay the
rehabilitation procedures on the grounds that the debtor or
his/her
representative resides overseas; and
2. Where it is impossible to locate the whereabouts of the debtor or his/
her representative.
Article 42 (Grounds for Turning Down Application Filed for Commencing
Rehabilitation Procedures)
In cases falling under any of the following subparagraphs, the court shall
turn down any application for commencement of rehabilitation
procedures.
In this case, the court shall hear the opinion of the Custodial Committee:
1. Where expenses necessary for rehabilitation procedures are not prepaid;
2. Where the application for rehabilitation procedures is not bona fide;
and
3. Where rehabilitation procedures are incompatible with the general
interests of creditors.
Article 43 (Provisional Seizure, Provisional Disposition and Preservation
Disposition)
10
705 (Supp. 39)
(1) When an application is filed for commencing rehabilitation procedures,
the court may grant an order of, through its inherent
jurisdiction or upon
receiving an application filed by interested persons, provisional seizure
and provisional disposition on the
debtor`s business and assets or other
disposition necessary to preserve the debtor s business and assets until
a decision is made
on the application for commencement of rehabilitation
procedures. In this case, the court shall hear the opinion of the Custodial
Committee.
(2) When any interested person files an application for the preservation
disposition referred to in the provisions of paragraph
(1), the court shall
determine whether to grant the preservation disposition within 7 days
from the date on which the application
therefor is filed.
(3) When it is deemed necessary in addition to the preservation disposition
referred to in the provisions of
paragraph (1), the court may order any
preservative custodian to manage the debtor s business and assets after
hearing the opinion
of the Custodial Committee. In this case, the court
shall select and appoint one or multiple preservative custodians.
(4) The court
may alter or rescind the preservative disposition referred
to in the provisions of paragraph (1) or the preservation and management
order referred to in the provisions of paragraph (3) after hearing the opinion
of the Custodial Committee.
(5) The judgment as well as the judgment on the dismissal of the application
therefor provided for in the provisions of paragraphs
(1) (3) and (4) shall
be made by determination.
(6) An immediate appeal may be filed against the determination that is
made pursuant to the provisions of paragraph (5).
(7) The
immediate appeal referred to in the provisions of paragraph (6)
shall not have the effect of suspending any execution.
(8) When
the court issues the preservation and management orders referred
to in the provisions of paragraph (3) or changes or rescinds such
order,
it shall publish such measures.
Article 44 (Order Given to Suspend Other Procedures, etc.)
(1) When it is deemed necessary upon receiving an application for
commencing
the rehabilitation procedures, the court may order the
discontinuation of the procedures falling under any of the following
subparagraphs
by the time a decision is made on the application for
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 706
commencing the rehabilitation procedures by its inherent jurisdiction or
by an application filed by interested persons: Provided,
That in the case
of the procedures referred to in the provisions of subparagraph 2, the same
shall not apply to a case where it
is feared to inflict undue damage on
any rehabilitation creditor or any rehabilitation secured creditor who is
the applicant for
the procedures:
1. The bankruptcy procedures for the debtor;
2. The auction procedures (hereinafter referred to as compulsory execution
based on the rehabilitation claim or the rehabilitation
security right )
that are already in progress on the debtor s assets for the compulsory
execution, the provisional seizure, the
provisional disposition or the
exercise of the security right based on the rehabilitation claim or the
rehabilitation security
right;
3. Litigation procedures for the debtor s assets;
4. Procedures for the debtor s assets that are pending in an administrative
agency; and
5. Any disposition taken to collect taxes in arrears, the disposition taken
to collect taxes in arrears according to the example
of the disposition
taken to collect national taxs in arrears (including the example of the
disposition taken to collect national
taxes and local taxes in arrears;
hereinafter the same shall apply) or the disposal of goods that are offered
as security for a
tax obligation, as provided for in the National Tax
Collection Act and the Local Tax Act. In this case, the opinion of the
person
who holds the authority to collect taxes shall be heard.
(2) The prescription shall not proceed during the suspension period of
the disposition provided for in the provisions of paragraph (1) 5.
(3) The court may alter or recind the discontinuation order
referred to
in the provisions of paragraph (1).
(4) When it is deemed especially necessary to rehabilitate the debtor,
the court may order, upon receiving an application filed
by the debtor
(referring to the preservation custodian if he/she is selected and
appointed) or by its inherent jurisdiction, the
cancellation of the compulsory
execution, etc. based on any suspended rehabilitation claim or any
suspended rehabilitation security
right. In that case, the court may require
security to be furnished.
Article 45 (General Order Given to Prohibit Compulsory Execution, etc.
10
707 (Supp. 39)
Based on Rehabilitation Claims and Rehabilitation Security Rights)
(1) When it is recognized that special circumstances are feared
to prevent
the full realization of the purposes of the rehabilitation procedures by
the discontinuation order provided for in the
provisions of Article 44 (1)
after receiving an application for commencement of rehabilitation
procedures, the court may order
all rehabilitation creditors and
rehabilitation secured creditors, by an application filed by interested persons
or by its inherent
jurisdiction, to bar the compulsory execution, etc. based
on their rehabilitation claims or their rehabilitation security rights
by the
time a determination is made on the application filed for commencing
rehabilitation procedures.
(2) The prohibition order (hereinafter referred to as a general prohibition
order ) referred to in the provisions of paragraph (1)
shall be limited to
cases where the disposition or the order falling under either of the following
subparagraphs is already taken
or given with respect to the debtor s major
assets or the general prohibition order, the disposition or the order falling
under
either of the following subparagraphs is given, taken or given:
1. The preservation disposition provided for in the provisions of Article
43 (1); and
2. The preservation and management order provided for in the provisions
of Article 43 (3).
(3) When any general prohibition order is given, the compulsory execution,
etc. based on any rehabilitation claim or any rehabilitation
security right
that has already been enforced against the debtor s property shall be
suspended.
(4) The court may alter or rescind the general prohibition order.
(5) When it is deemed particularly necessary to continue the debtor
s
business, the court may order the rescission of the compulsory execution
based on any rehabilitation claim or any rehabilitation
security right that
has been suspended pursuant to the provisions of paragraph (3) upon
receiving an application filed by the debtor
(referring to the preservative
custodian when he/she is selected and appointed). In this case, the court
may require security to
be furnished.
(6) An appeal may be immediately filed against the general prohibition
order, the decision referred to in the provisions of paragraph
(4) and the
cancellation order referred to in the provisions of paragraph (5).
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 708
(7) The immediate appeal referred to in paragraph (6) shall not have
the effect of suspending any execution.
(8) When the general prohibition order is given, the prescription of the
rehabilitation claim and the rehabilitation security right
shall not expire
until the day on which 2 months have lapsed from the day following the
day on which the effect of such order ceases.
Article 46 (Publication and Service, etc. of General Prohibition Order)
(1) When a general prohibition order is granted or a decision
to alter or
rescind such order, the court shall publish such decision and serve a
written decision on the relevant debtor (referring
to the preservative
custodian if such preservative custodian is selected and appointed) and
the relevant applicant, respectively
and also serve on the rehabilitation
creditor, the rehabilitation secured creditor and the debtor (referring to
the preservative
custodian when he/she is selected and appointed) a written
statement setting out the main passage of the decision as far as they
are
all known to the court.
(2) The general prohibition order and a decision to change or revoke the
general prohibition order shall take effect from the time
when a written
decision is delivered to the debtor (referring to the preservative custodian
when he/she is selected and appointed).
(3) When a judgment (excluding any decision to alter or rescind the general
prohibition order) is granted against the cancellation
order provided for
in the provisions of Article 45 (5) and the immediate appeal provided
for in the provisions of paragraph (6)
of the same Article, the court shall
serve a written judgment on each of the parties thereto. In this case, the
provisions of Articles
10 and 11 shall not apply thereto.
Article 47 (Exclusion of Application of General Prohibition Order)
(1) Where a general prohibition
order is given and when it is recognized
that the general prohibition order is feared to inflict undue damage on
the rehabilitation
creditor or the rehabilitation secured creditor who is
the applicant for the compulsory execution, etc. based on the rehabilitation
claim or the rehabilitation security right, the court may exclude the
application of the general prohibition order on the rehabilitation
creditor
or the rehabilitation secured creditor by its inherent jurisdiction or upon
receiving an application filed by the rehabilitation
creditor or the
rehabilitation secured creditor. In this case, the rehabilitation creditor
10
709 (Supp. 39)
or the rehabilitation secured creditor may enforce the compulsory execution,
etc. against the debtor s assets based on the rehabilitation
claim or the
rehabilitation security right, and the procedures for compulsory execution
based on the rehabilitation claim or the
rehabilitation security right that
is exercised by the rehabilitation creditor or the rehabilitation secured
creditor before the
general prohibition order is given may continue.
(2) When the provisions of Article 45 (8) apply to anyone who is subject
to the
decision referred to in the provisions of paragraph (1), the date
on which the effect of the order ceases in Article 45 (8) shall
be deemed
the date on which the decision provided for in the provisions of Article
47 (1) is made.
(3) An immediate appeal may be filed against the judgment that is issued
on the application filed pursuant to the provisions of
paragraph (1).
(4) The immediate appeal referred to in paragraph (3) shall not have
the effect of suspending any execution.
(5) When a judgment is issued on the application referred to in paragraph
(1) and a judgment is issued on the immediate appeal referred
to in paragraph
(3), the court shall serve its written decision on each of the parties. In
this case, the provisions of Article
10 shall not apply thereto.
Article 48 (Restrictions on Withdrawal of Application for Commencing
Rehabilitation Procedures, etc.)
(1) Anyone who files an application for commencing rehabilitation
procedures may withdraw his/her application only up until a decision
is
made to commence the rehabilitation procedures.
(2) No one shall withdraw his/her application for commencing rehabilitation
procedures and his/her application for the preservation
disposition without
obtaining permission therefor from the court after the decision falling under
any of the following subparagraphs
is made:
1. A decision on the preservation disposition provided for in the provisions
of Article 43 (1);
2. A decision on the preservation and management order provided for
in the provisions of Article 43 (3);
3. A decision on the suspension order provided for in the provisions of
Article 44 (1); or
4. A decision on the general prohibition order provided for in the provisions
of Article 45 (1).
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 710
SECTION2 Decision on Commencement of Rehabilitation
Procedures
Article 49 (Decision on Commencement of Rehabilitation Procedures)
(1) When the debtor files an application for commencement of
rehabilitation
procedures, the court shall determine whether to commence such
rehabilitation procedures within one month from the
date such application
is filed for commencement of rehabilitation procedures.
(2) The date and the time of the decision shall be
setout in a written
decision on the commencement of rehabilitation procedures.
(3) The effect of the decision on the commencement
of rehabilitation
procedures shall arise from the time such decision is made.
Article 50 (Matters that Must Be Prescribed When
Decision Made on
Commencement of Rehabilitation Procedures)
(1) When it is decided that rehabilitation procedures shall commence, the
court shall select and appoint one or multiple custodians
after hearing
the opinions of the Custodial Committee and the Creditors Consultative
Council and prescribe matters falling under
each of the following
subparagraphs:
1. The date on which the first meeting of interested persons is held; in
this case, the date shall be set within 4 months from the
date on
which a decision is made on the commencement of rehabilitation
procedures;
2. The period during which custodians have to prepare and submit the
list provided for in the provisions of Article 147 (1); in this
case, the
period shall be between at least 2 weeks to not more than 2 months
from the date on which a decision is made on the commencement
of
rehabilitation procedures;
3. The reporting period for rehabilitation claims, rehabilitation security
rights, shares or equity shares (hereinafter referred
to as the reporting
period in this Part); in this case, the reporting period shall be between
at least one week to not more than
one month from the last day of
the submission period that is set pursuant to the provisions of
subparagraph 2; and
4. The inspection period for rehabilitation claims and rehabilitation
10
711 (Supp. 39)
security rights that are entered in the list or reported (hereinafter
referred to as the inspection period in this Part); in this
case, the
inspection period shall be between at least one week to not more than
one month from the last day of the reporting period.
(2) The court may extend or shorten the period referred to in each
subparagraph of paragraph (1) on the grounds of special circumstances.
Article 51 (Publication and Service of Commencement of Rehabilitation
Procedures)
(1) When the court decides to commence the rehabilitation procedures,
it shall publish without delay matters falling under each
of the following
subparagraphs:
1. The main sentence of the decision on the commencement of rehabilitation
procedures;
2. The name or trading name of the custodian;
3. The period and the date that are set pursuant to the provisions of
Article 50; and
4. For anyone who holds the debtor s assets for which the rehabilitation
procedures commence or bears the debtor`s obligations, a
provision
that he/she shall not transfer the assets to the debtor for whom the
rehabilitation procedures commence. a provision
that he/she shall not
repay the debtor s obligations and an order providing that, within a
certain period of time he/she must report
to any custodian the fact
that he/she holds the property of the debtor for whom the rehabilitation
procedures commence or bears
the debtor s obligations.
(2) The court shall serve a written statement that contains the matters
referred to in each subparagraph
of paragraph (1) upon the person or persons
falling under each of the following subparagraphs:
1. The custodian;
2. The debtor;
3. Rehabilitation creditors, rehabilitation secured creditors, shareholders
and equity right holders who are known to the court;
and
4. Persons who hold the debtor s assets for which rehabilitation procedures
commence or bear the debtor s obligations.
(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis
to cases where any change accrues in the matters referred
to in paragraph
(1) 2 through 4: Provided, That a change in the inspection period may
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 712
not be published.
(4) Anyone who fails to make the report provided for in the provisions
of paragraph (1) 4 intentionally or negligently shall compensate
for any
damage incurred to the debtor s property by his/her failure.
Article 52 (Notification of Commencement of Rehabilitation
Procedures)
When it is decided to commence the rehabilitation procedures for a debtor
who is a stock company, the court shall notify
the administrative agency
in charge of supervising the debtor`s business, the Minister of Justice and
the Financial Services Commission
of the matters referred to in each
subparagraph of Article 51 (1). The same shall apply to a case where any
change accrues in the
matters referred to in Article 51 (1) 2 and 3.
Article 53 (Immediate Appeal Filed against Determination on Application
for Commencing Rehabilitation Procedures)
(1) An immediate appeal may be filed against a determination on an
application for commencing the rehabilitation procedures.
(2)
The provisions of Articles 43 through 47 shall apply mutatis mutandis
to a case where an immediate appeal referred to in the provisions
of paragraph
(1) is filed against a decision to decline an application for commencing
rehabilitation procedures.
(3) The immediate appeal referred to in the provisions of paragraph (1)
shall not have the effect of suspending any execution.
(4) When it is recognized that the procedures for the immediate appeal
are in violation of Acts and the immediate appeal lacks grounds,
the appellate
court shall declineor dismiss such immediate appeal.
(5) When any immediate appeal is recognized to have grounds,
the appellate
court shall cancel the decision made by the court of original jurisdiction
and remand the case to the court of origin.
Article 54 (Cancellation of Decision on Commencement of Rehabilitation
Procedures)
(1) When a decision to cancel a decision on the commencement of
rehabilitation procedures is confirmed, the court shall publish
without
delay the main passage of such decision.
(2) The provisions of Articles 51 (2) and 52 shall apply mutatis mutandis
to the case of paragraph (1).
(3) When a decision to cancel the decision on the commencement of
rehabilitation procedures is confirmed, the custodian shall repay
10
713 (Supp. 39)
publicinterest claims and in the case of the public-interest claims to which
an objection is raised, deposit such public-interest
claims for creditors.
Article 55 (Capital Reduction, etc. after Commencement of Rehabilitation
Procedures)
(1) The debtor shall be prohibited from performing an act falling under
any of the following subparagraphs without resorting to
rehabilitation
procedures between the time the rehabilitation procedures commence to
the time the rehabilitation procedures are
completed:
1. The act of reducing the amount of capital or investment;
2. The act of admitting equitable interest holders or issuing new shares
or bonds;
3. The act of increasing the amount of capital or investment;
4. The act of performing an all-inclusive exchange of shares or allinclusive
transfer of shares;
5. The act of performing any merger, any split, any merger by split or
any change in organization;
6. The act of dissolving any company or keeping any company in existence;
and
7. The act of distributing profits or interest.
(2) Permission therefor shall be obtained from the court, when it is intended
to
amend the articles of incorporation of a corporate debtor without resorting
to rehabilitation procedures between the time the rehabilitation
procedures
commence until the time the rehabilitation procedures are completed.
Article 56 (Management of Business and Assets after
Commencement of
Rehabilitation Procedures)
(1) When it is decided to commence rehabilitation procedures, the authority
to conduct the debtor s business, and manage and dispose
of his/ her assets
shall be exclusively vested in a custodian.
(2) The directors of a debtor who is an individual or the debtor who is
not an individual shall be prohibited from infringing on,
or interfering with
the exercise of the authority of any custodian referred to in the provisions
of paragraph (1).
Article 57 (Furnishing of Information, etc.)
A custodian shall furnish information and materials pertaining to the
debtor s business and enterprise to anyone who intends to
perform an
act falling under any of the following subparagraphs under the conditions
as prescribed by the Supreme Court: Provided,
That when any justifiable
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 714
grounds exist, the custodian may refuse to furnish such information and
materials:
1. The act of acquiring by transfer the whole or part of the debtor s business,
enterprise and major assets;
2. The act of acquiring by transfer, the debtor s shares or equity shares
with the aim of taking over the debtor s governance right;
and
3. The act of performing an all-inclusive exchange and an all-inclusive
transfer of the debtor s shares, any merger or merger by
split of the
debtor s business.
Article 58 (Suspension, etc. of Other Procedures)
(1) When it is decided to commence the rehabilitation procedures, an act
falling
under any of the following subparagraphs shall be prohibited from
being performed:
1. The act of filing a petition of bankruptcy or filing an application for
commencing the rehabilitation procedures;
2. The act of enforcing compulsory execution based on any rehabilitation
claim or any rehabilitation security right; or
3. The act of taking a disposition for the recovery of arrears based on
a claim that is recoverable according to the example of a
disposition
taken to collect national taxes in arrears and whose ranking of collection
priority is lower than that of the general
rehabilitation claim.
(2) When it is decided to commence the rehabilitation procedures, the
procedures falling under any of the
following subparagraphs shall be
suspended:
1. Bankruptcy procedures;
2. Procedures for compulsory execution, etc. that is already executed
based on a rehabilitation claim or a rehabilitation claim on
the debtor s
assets; and
3. Procedures for a disposition for the recovery of arrears based on the
claim that is collectable according to the example of collecting
national
taxes, whose ranking of collection priority is lower than that of the
general rehabilitation claim.
(3) When it is decided to commence rehabilitation procedures, the disposition
for the recovery of arrears against the debtor s assets
based on a
rehabilitation claim or a rehabilitation security right pursuant to the
National Tax Collection Act and the Local Tax
Act, the disposition for
10
715 (Supp. 39)
the recovery of arrears on the claim that is collectible according to the
example of collecting national taxes and whose rank of
collection priority
is lower than that of the general rehabilitation claim and the disposal of
goods that are offered as security
for a tax liability shall not be taken
and executed. Any disposition that has already been taken shall be
suspended during the
period whose last day first arrives among the period
falling under each of the following subparagraphs. In this case, when it
is
deemed necessary, the court may extend the period within the scope
of not more than one year by its inherent jurisdiction or upon
receiving
an application filed by any custodian:
1. The period ranging from the date on which it is decided to commence
rehabilitation procedures to the date until which the rehabilitation
plan is authorized;
2. The period ranging from the date on which it is decided to commence
rehabilitation procedures until the date on which the rehabilitation
procedures are completed; or
3. The period ranging from the date on which it is decided to commence
rehabilitation procedures until the date on which 2 years
have lapsed
thereafter.
(4) The prescription of the disposition shall not proceed during the period
in which the disposition can not be taken or is suspended
pursuant to
the provisions of paragraph (3).
(5) When it is recognized that nothing prevents the rehabilitation, the
court may order the continuation of the procedures or the
disposition
suspended pursuant to the provisions of paragraph (2) by its inherent
jurisdiction or upon receiving an application
filed by a custodian or the
person who is authorized to collect claims provided for in the provisions
of Article 140 (2). When
it is deemed necessary for the rehabilitation,
the court may order the cancellation of the procedures or the disposition
suspended
pursuant to the provisions of paragraph (2) by requiring or
not requiring any security to be furnished by its inherent jurisdiction
or upon receiving an application filed by any custodian: Provided, That
the same shall not apply to bankruptcy procedures.
(6)
Claims for expenses on the debtor for resuming the continuation of
the procedures or the disposition pursuant to the provisions
of paragraph
(5) shall be made public-interest claims.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 716
Article 59 (Suspension, etc. of Litigation Procedures)
(1) When it is decided to commence rehabilitation procedures, litigation
procedures on the debtor s assets shall be suspended.
(2) Any custodian or any other party may subrogate any litigation procedures
that are unrelated to the rehabilitation claim or the rehabilitation security
right among those litigation procedures suspended
pursuant to the provisions
of paragraph (1). In this case, the claim for litigation expenses on the
debtor shall be made public-interest
claims.
(3) When the rehabilitation procedures are completed prior to the
subrogation referred to in the provisions of paragraph (2), the
debtor shall
take subrogation of the litigation procedures as a matter of course.
(4) When the rehabilitation procedures are completed
after the subrogation
is made pursuant to the provisions of paragraph (2), the litigation procedures
shall be suspended. In this
case, the debtor shall subrogate the litigation
procedures.
(5) In the case of paragraph (4), any other party may also subrogate the
litigation procedures.
(6) The provisions of paragraphs (1) through (5) shall apply mutatis
mutandis to cases involving the debtor s property that are
pending in
the administrative agencies at the time that rehabilitation procedures
commence.
Article 60 (Transfer)
(1) The rehabilitation court (referring to the district court in which a
rehabilitation case is pending; hereinafter the same shall
apply) may,
when any lawsuit involving the debtor s assets is pending in another court
at the time that the rehabilitation procedures
commence, claim the
transfer of such lawsuit to it by its decision. The same shall apply to cases
where such lawsuit is pending
in another court after the rehabilitation
procedures commence.
(2) When the decision referred to in paragraph (1) is made, the court
shall, upon receiving the claim for the transfer of the lawsuit,
transfer
it to the rehabilitation court.
(3) The transfer referred to in paragraph (2) may be peformed even during
the interruption or the suspension of the litigation procedures.
(4) The provisions of paragraphs (1) through (3) shall not apply to any
lawsuit that is pending in an appellate court.
10
717 (Supp. 39)
Article 61 (Act Needed to Obtain Permission from Court)
(1) When any custodian intends to perform an act falling under any of
the
following subparagraphs and it is deemed necessary, the court may
require him/her to obtain its permission therefor:
1. The act of disposing of any assets;
2. The act of acquiring any assets by transfer;
3. The act of leasing assets including the borrowing of any funds;
4. The act of cancelling or terminating any contract pursuant to the
provisions of Article 119;
5. The act of filing a lawsuit;
6. The act of making a compromise or concluding any arbitration agreement;
7. The act of relinquishing any rights;
8. The act of approving public-interest claims or rights of re-acquisition;
and
9. Other acts designated by the court.
(2) Every custodian shall be prohibited from performing acts falling
under any of the following
subparagraphs without obtaining permission
therefor:
1. The act of acquiring the debtor s business or assets by transfer;
2. The act of transferring his/her business or assets to the debtor; and
3. The act of effecting any transaction with the debtor in the interest
of himself and any third person.
(3) The acts referred to in each subparagraph of paragraph (1) or (2) that
is performed without obtaining the court s permission
therefor shall be
invalidated: Provided, That such act cannot set aside with any bona fide
third person.
Article 62 (Transfer of Business, etc.)
(1) If it is deemed necessary to rehabilitate a debtor, any custodian may
transfer the whole or the main part of the business or
the enterprise of
such debtor after obtaining the court s permission therefor after the
rehabilitation procedures commence even
before the rehabilitation plan
is authorized.
(2) When the count grants the permission referred to in the provisions
of paragraph (1), it shall hear the opinion of each person
falling under
the following subparagraphs:
1. The Custodial Committee;
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 718
2. The Creditors Consultative Council;
3. The union that is organized by a majority of the debtor s workers;
and
4. When the union referred to in subparagraph 3 is not organized, the
person who represents a majority of the debtor s workers.
(3) In case where the permission referred to in the provisions of paragraph
(1) is granted, the court shall determine ways to spend
the transfer price.
(4) Where the permission referred to in paragraph (1) is granted, when
the total amount of all obligations
of the corporate debtor exceed his/her
total amount of assets, the court may substitute such permission for a
resolution passed
at the general meeting of shareholders provided for in
the provisions of Article 374 (1) of the Commercial Act by its inherent
jurisdiction or upon receiving an application filed by the custodian. In
this case, the provisions of Articles 374 (2) and 374-2
of the Commercial
Act and the provisions of Article 191 of the Securities and Exchange Act
shall not apply thereto.
(5) The provisions of Article 61 (3) shall apply mutatis mutandis to any
act that is performed without obtaining the permission
referred to in the
provisions of paragraph (1).
Article 63 (Service, etc. of Decision on Permission to Transfer Business,
etc. of Stock Company)
(1) The court shall, when it makes the decision provided for in the provisions
of Article 62 (4), serve a written decision on any
custodian and also serve
a written statement containing summary of such decision on each of
shareholders.
(2) The effect of a decision made pursuant to the provisions of Article
62 (4) shall accrue when it is served on the custodian.
(3) Any shareholder may immediately file an appeal against a decision
that is made pursuant to the provisions of Article 62 (4).
Article 64 (Act of Debtor after Commencement of Rehabilitation
Procedures)
(1) When the debtor performs any legal act in relation to his/her assets
after the rehabilitation procedures commence, he/she shall
be prohibited
from claiming any effects that accrue from the rehabilitation procedures.
(2) In applying the provisions of paragraph
(1), the legal act that is
performed by the debtor on the date on which the rehabilitation procedures
10
719 (Supp. 39)
commence shall be presumed as having been performed after the
rehabilitation procedures have commenced.
Article 65 (Acquisition of Right after Commencement of Rehabilitation
Procedures)
(1) Notwithstanding anyone acquiring rights in the debtor s assets based
on his/her rehabilitation claim or his/her rehabilitation
security right
without resorting to the debtor s act after the rehabilitation procedures
commence, he/she shall not claim the effect
of his/her acquisition thereof
in relation to the rehabilitation procedures.
(2) The provisions of Article 64 (2) shall apply mutatis mutandis to the
acquisition referred to in the provisions of paragraph
(1).
Article 66 (Recording and Registration after Commencement of
Rehabilitation Procedures)
(1) Any recording and any provisional recording that are effected after
the commencement of rehabilitation procedures on the grounds
of the
reason for recording that arises before the rehabilitation procedures
commence for any real estate or any ship shall not
claim their effects in
relation to the rehabilitation procedures: Provided, That the same shall
not apply to a case where the register
authority effects the principal recording
without knowledge of the fact that the rehabilitation procedures have
commenced.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to the
registration and the provisional registration of the establishment,
transfer
or change of rights.
Article 67 (Repayment Made to Debtor after Commencement of
Rehabilitation Procedures)
(1) Any repayment made to the debtor without knowledge of the fact that
rehabilitation procedures have commenced may claim its effect
in relation
to the rehabilitation procedures.
(2) Any repayment made to the debtor with knowledge of the fact that
the rehabilitation procedures have commenced after such rehabilitation
procedures commence may claim its effect only within the limit of the
profits that accrue to the debtor s assets in relation to
the rehabilitation
procedures.
Article 68 (Presumption of Good Faith or Bad Faith)
In applying the provisions of Articles 66 and 67, it shall be presumed that
the fact of the commencement of rehabilitation procedures is not known
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 720
before the rehabilitation procedures are published and it shall be presumed
that the fact thereof is known after the rehabilitation
procedures are
published.
Article 69 (Co-Ownership Relationship)
(1) Where the debtor jointly holds any property rights with any other person,
notwithstanding they have an agreement that prohibits
them from dividing
such property right, any custodian may claim the division of such property
rights at the time that rehabilitation
procedures commence.
(2) In the case of paragraph (1), any co-owner may acquire the debtor s
share after paying a fair price therefor.
Article 70 (Reacquisition Rights)
The commencement of rehabilitation procedures shall not affect the right
to reacquire any assets that do not belong to the debtor
from such debtor,
Article 71 (Reacquisition of Sold Goods in Transit)
(1) When any seller ships out his/her goods that is the object
of the sale
and purchase and rehabilitation procedures commence for the purchaser
who fails to take over such goods at the destination
of the goods after
paying the price therefor in full, the seller may reacquire such goods. In
this case, any custodian may require
the delivery of such goods after paying
the price therefor in full after obtaining permission therefor from the
court.
(2) The provisions of paragraph (1) shall not exclude the application of
the provisions of Article 119.
Article 72 (Right to Reacquire by Commission Agents)
The provisions of Article 71 (1) shall apply mutatis mutandis to a case
where
any commission agent who is entrusted with the purchase of goods
ships out such goods to anyone who entrusts such commission agent.
Article 73 (General Reacquisition Rights)
(1) When the debtor transfers his/her assets that are subject to reacquisition
rights before rehabilitation procedures commence,
the reacquisition right
holder may claim the transfer of the rights to claim the performance of
the benefit in return. The same
shall apply to a case where any custodian
transfers any assets that are subject to reacquisition rights.
(2) In the case of paragraph
(1), any custodian receives the performance
of the benefit in return, the reacquisition right holder may claim the return
of the
assets that the custodian receives as the benefit in return.
10
721 (Supp. 39)
CHAPTER INSTITUTIONS IN CHARGE
OF REHABILITATION
PROCEDURES
SECTION 1 Custodians
Article 74 (Selection and Appointment of Custodians)
(1) The court shall select and appoint persons who are fully qualified to
perform duties as custodians after hearing the opinions of the Custodial
Committee and the creditors consultative council.
(2)
The court shall select and appoint individual debtors and debtors
non-individual representatives as custodians with the exception
of instances
falling under each of the following subparagraphs:
1. When the debtor s bankruptcy is caused by the property s diversion,
or concealment of assets or poor corporate governance by a
person falling
under any of the following subparagraphs, for which the latter is wholly
responsible:
(a) An individual debtor;
(b) The director of a non-individual debtor; and
(c) The manager of the debtor;
2. When the request from the Creditors Consultative Council has any
justifiable grounds; and
3. When the debtor s rehabilitation is necessary.
(3) Notwithstanding the provisions of paragraph (1), where the debtor
is an individual,
a smalland medium-sized businessman and any person
who is prescribed by the rules of the Supreme Court, any custodian may
not be
selected or appointed: Provided, That in case where it is recognized
that the grounds referred to in any subparagraph of paragraph
(2)
exist at the time that the rehabilitation procedures are in progress, a
custodian may be selected and appointed.
(4) Where no custodian is selected and appointed, the debtor (referring
to the debtor s representative where the debtor is not an
individual) shall
be deemed the custodian provided for in the provisions of this Part.
(5) Where any custodian is selected and
appointed, the court shall question
the debtor or the debtor s representative, with the exception where acute
DEBTOR REHABILITATION
AND BANKRUPTCY ACT
(Supp. 39) 722
circumstances exist.
(6) Any corporation may become a custodian. In this case, such corporation
shall nominate a person from among its directors to perform
the duties
of the custodian and make a report thereon to the court.
Article 75 (Performance of Duties by Multiple Custodians)
(1) When multiple custodians are involved, they shall perform their duties
jointly. In this case, they may share their duties after
obtaining permission
therefor from the court.
(2) When multiple custodians are involved, the wishes of third persons
may be expressed to one custodian.
Article 76 (Acting Custodians)
(1) When it is deemed necessary, each custodian may select and appoint
one or multiple acting custodians at his/her own risk to
perform his/her
duties.
(2) The selection and appointment of acting custodians as referred to
in the provisions of paragraph (1) shall obtain permission
therefor from
the court.
(3) When the court grants the permission pursuant to the provisions of
paragraph (2), it shall publish such permission. The same
shall apply to
a case where the court alters or rescinds its permission to select and appoint
acting custodians.
(4) Where the debtor is a corporation, when the permission provided for
in the provisions of paragraph (2) is granted, the clerk,
etc. of the court
shall promptly commission by their inherent jurisdiction the registry office
to register the selections and appointments
of acting custodians by providing
such registry office with a written commission accompanied by a certified
copy of the written
decision. The same shall apply to a case where the
permission to select and appoint acting custodians is altered or rescinded.
(5) Acting custodians may perform any act on behalf of custodians, with
the exception of any act involving any trial or related
to any trial.
Article 77 (Advisers)
Custodians may, when it is deemed necessary, select and appoint legal
and corporate governance experts as their advisers after obtaining
permission therefor from the court.
Article 78 (Standing to Sue)
Every custodian shall be a party in the lawsuit involving the debtor s assets.
10
723 (Supp. 39)
Article 79 (Inspection, etc. by Custodians)
(1) Every custodian may ask anyone falling under any of the following
subparagraphs to report on the current state of the debtor
s business and
assets, and may inspect the debtor s books, documents, cash and goods:
1. An individual debtor or his/her legal representative;
2. The director, auditor, liquidator and any other person corresponding
thereto of a debtor who is not an individual; and
3. The debtor s manager or employee.
(2) If it is deemed necessary, any custodian may select and appoint any
appraiser to perform
the appraisal after obtaining permission therefor
from the court.
(3) Every custodian may, when he/she performs the inspection referred
to in the provisions of paragraph (1), ask for the assistance
of any executor
after obtaining permission therefor from the court.
Article 80 (Management of Postal Items and Ceasation of their
Management)
(1) The court may commission any postal service agency, any transporter
and any other person to deliver postal items, telegraphs
and cargoes, any
of which are sent to the debtor or to any custodian.
(2) The custodian may open the postal items, telegraphs and
cargo that
are delivered to him/her pursuant to the provisions of paragraph (1).
(3) The debtor may ask for the inspection of the
postal items, telegrams
and cargo provided for in the provisions of paragraph (2) and ask for the
delivery of any of them to him/her
that is unrelated to his/her property.
(4) The court may alter or rescind the commission referred to in the provisions
of paragraph
(1) upon receiving a claim filed by the debtor or by its inherent
jurisdiction after hearing the opinion of the relevant custodian.
(5) When the rehabilitation procedures are completed, the court shall
rescind the commission referred to in the provisions of paragraph
(1).
Article 81 (Supervision of Custodians)
(1) Custodians shall be placed under the supervision of the court.
(2) The court shall deliver a written statement attesting the
selection
and appointment to each custodians.
(3) Every custodian shall, when he/she performs his/her duties, at the
request of any interested person, produce his/her written
statement referred
to in the provisions of paragraph (2) to the latter.
Article 82 (Obligations, etc. of Custodians)
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(Supp. 39) 724
(1) Every custodian shall perform his/her duties with the due care of a
good manager.
(2) When any custodian neglects to take the due care referred to in the
provisions of paragraph (1), he/she shall be liable to indemnify
any
interested person for damage incurred by his/her negligence. In this case,
when more than one custodian neglects to take such
due care, they shall
be jointly liable to indemnify him/her for such damage.
Article 83 (Resignation and Dismissal of Custodians)
(1) Every custodian may, when he/she has any justifiable grounds, resign
as a custodian after obtaining permission therefor from
the court.
(2) Upon receiving an application filed by any interested person, the court
may dismiss any custodian by its inherent
jurisdiction, on the grounds
that fall under each of the following subparagraphs. In this case, the court
shall question such custodian:
1. When the grounds provided for in the provisions of Article 74 (2) 1
are found in relation to the custodian after he/she is selected
and
appointed as a custodian;
2. When the custodian violates the duties provided for in the provisions
of Article 82 (1);
3. When the custodian is found to lack management ability; or
4. When other extenuating grounds exist.
(3) An immediate appeal may be filed against a decision to dismiss any
custodian under
the provisions of paragraph (2).
(4) The immediate appeal referred to in the provisions of paragraph (3)
shall not have the effect of suspending any execution.
(5) When the court selects and appoints a new custodian after dismissing
a custodian pursuant to the provisions of paragraph (2),
the provisions
of Article 74 (2) shall not apply thereto.
Article 84 (Obligation to Report Upon Completion of Duties)
(1) When any custodian completes his/her duties, such custodian or his/
her successor shall promptly make an accounting report to the court.
(2) Where pressing circumstances arise when any custodian
completes
his/her duties, such custodian or his/her successor shall take a necessary
steps to manage the assets until the time
his/her successor or the debtor
is able to manage such assets.
10
725 (Supp. 39)
SECTION 2 Preservative Custodians
Article 85 (Authority of Preservative Custodians)
When the preservation and the management orders provided for in the
provisions
of Article 43 (3) are given, the debtor s authority to run his/
her business, manage his/her assets and take any disposition shall
be
exclusively vested in the preservative custodian until the time it is decided
to commence the rehabilitation procedures.
Article 86 (Mutatis Mutandis Application of Provisions Governing
Custodians)
(1) The provisions of Articles 61, 74, 75, 78 through 84, and 89 shall
apply mutatis mutandis to preservative custodians.
(2) The
provisions of Article 59 (1) and (2) shall apply mutatis mutandis
to a case where the preservation and the management orders are
given
and the provisions of Article 59 (3) through (5) shall apply mutatis mutandis
to a case where the effect of the preservation
and the management orders
respectively lose.
(3) The provisions of Articles 59 (1) through (5) shall apply mutatis mutandis
to cases involving the debtor s assets that are pending
in any administrative
agencies at the time that the preservation and the management orders
are given. In this case, the time the
rehabilitation procedures are
completed in the provisions of Article 59 (3) and (4) shall be deemed
the time the preservation and
the management order ceases to have effect .
SECTION 3 Inspectors
Article 87 (Inspectors)
(1) When it is deemed necessary, the court may select and appoint one
or multiple inspectors after hearing the opinion of the Custodial
Committee.
(2) The inspectors shall be selected and appointed from among persons
of profound learning and experience in inspection,
who have no interests
in the rehabilitation procedures.
(3) When the court selects and appoints inspectors, it may requuire such
inspectors to inspect the matters provided for in the provisions
of Articles
90 through 92 for a fixed period and ask them to put forward their opinions
as to whether it is appropriate to continue
the rehabilitation procedures.
(4) When it is deemed necessary, the court may require the inspectors
DEBTOR REHABILITATION AND
BANKRUPTCY ACT
(Supp. 39) 726
to inspect other matters than the matters referred to in the provisions
of paragraph (3) and to report the result of such inspection.
(5) When reasonable grounds exist, the court may dismiss any inspector
by its inherent jurisdiction or upon receiving an application
filed by any
interested person. In this case, the court shall question the relevant
inspector.
Article 88 (Mutatis Mutandis Application of Provisions Governing
Inspectors)
The provisions of Articles 79, and 81 through 83 (1) shall apply mutatis
mutandis to the inspectors.
CHAPTER INSPECTION AND SECURING
OF DEBTOR S ASSETS
SECTION 1 Inspection of Debtor s Assets
Article 89 (Management of Debtor s Business and Property)
Every custodian shall attend to the tasks of managing the debtor s business
and assets immediately after he/she assumes his/her post.
Article 90 (Appraisal of Asset Value)
Every custodian shall appraise without delay the value of all of the assets
that belong to the debtor at the time that rehabilitation
procedures
commence after he/she takes up his/her post. In this case, the relevant
custodian shall allow the debtor to participate
in the appraisal thereof,
save when his/her participation is feared to delay the appraisal of such
value.
Article 91 (Preparation of Assets Inventory and Balance Sheet)
Every custodian shall prepare an inventory of the debtor s assets
and
balance sheet at the time that the rehabilitation procedures commence
and then submit them to the court immediately after assuming
their posts.
Article 92 (Inspection and Report by Custodians)
Every custodian shall promptly inspect the matters falling under each of
the following subpargraphs and then report the result of
the inspection
to the court and the Custodial Committee on or before the date on which
the first meeting of persons concerned is
held:
1. Circumstances in which the debtor has to face the commencement of
rehabilitation procedures;
10
727 (Supp. 39)
2. Matters concerning the debtor s business and assets;
3. Whether circumstances exist that require the preservation disposition
provided for in the provisions of Article 114 (1) or the
final inspection
judgment provided for in the provisions of Article 115 (1); and
4. Other matters that are necessary for the debtor s rehabilitation.
Article 93 (Other Reports, etc.)
Every custodian shall report the current state of the management of the
debtor s business and assets in addition to the matters
provided for in
the provisions of Articles 90 through 92 and other matters that are ordered
by the court under the conditions as
prescribed by the court and prepare
the debtor s asset inventory and balance sheet as of the date on which
the rehabilitation plan
is authorized and as of the time that is set by the
court, and submit a certified copy of the debtor s asset inventory and balance
sheet to the court.
Article 94 (Appraisal of Fixed Assets Used for Business)
(1) Every custodian shall, when he/she prepares the debtor s asset inventory
and balance sheet, prepare them according to accounting practices that are
generally recognized as being fair and appropriate.
(2) The provisions of subparagraph 2 of Article 31 of the Commercial Act
shall not apply to the case of paragraph (1).
Article 95 (Keeping of Documents)
The documents that are submitted to the court pursuant to the provisions
of Articles 87, and 91 through 93 shall be retained by
the court for the
purpose of offering them for inspection by interested persons.
Article 96 (Suspension of Business)
Where the continuation of the debtor s business is recognized as being
inappropriate on the grounds of special circumstances, any
custodian may
suspend the debtor s business after obtaining permission therefor from
the court.
Article 97 (Means, etc. to Keep Assets)
The court may prescribe means to keep money and other assets and necessary
matters concerning cash revenues and expenditure.
Article
98 (First Meeting of Persons Concerned)
Every custodian shall make a summary report of the matters provided
for in the provisions of each subparagraph of Article 92 at
the first meeting
of persons concerned.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 728
Article 99 (Court s Hearing of Opinions)
At the first meeting of persons concerned, the court shall hear the opinions
of persons falling under each of the following subparagraphs
with respect
to the selection and appointment of custodians and inspectors, the
management of the debtor s business and assets,
and whether the
continuation of rehabilitation procedures is appropriate:
1. Custodians and inspectors;
2. The Debtor; and
3. Rehabilitation creditors, rehabilitation secured creditors, shareholders
and equity right holders who are entered in the list
provided for in
the provisions of Article 147 (1) or reported.
SECTION 2 Negation Right
Article 100 (Negational Act)
(1) Any custodian may set aside acts falling under any of the following
subparagraphs for the debtor s assets after rehabilitation
procedures
commence:
1. An act performed by the debtor with knowledge that such act damages
any rehabilitation creditor or any rehabilitation secured
creditor:
Provided, That the same shall not apply to a case where anyone who
receives any benefit from the act without the knowledge
that the act
causes damage to such rehabilitation creditor or such rehabilitation
secured creditor at the time that such act is
performed;
2. An act that causes damage to any rehabilitation creditor or any
rehabilitation secured creditor, furnishing any security or extinguishing
any obligation, which is performed by the debtor after the payment
is suspended, an application is filed for commencement of rehabilitation
procedures or a petition is filed for bankruptcy; Provided, That it is
limited to the time anyone who receives any benefit from
the act is
aware of the fact that the payment, etc. is suspended and the act causes
damage to any rehabilitation creditor or any
rehabilitation secured
creditor at the time that such act is performed;
3. The act of furnishing any security or extinguishing any obligation, which
is performed by the debtor within 60 days before or
after the date on
which the debtor suspends his/her payment, etc. and such act does
10
729 (Supp. 39)
not pertain to the debtor s obligations and the method and the time
of such act do not belong to the debtor s obligation: Provided,
That
the same shall not apply to a case where the debtor learns of the fact
that the debtor s act undermines the equality with
other rehabilitation
creditor or other rehabilitation secured creditor at the time that he/she
performs such act (when the act
is performed after the payment is
suspended, limited to a case where the debtor learns that such payment
is suspended); and
4. Any gratuitous act or act for valuable consideration that may be deemed
identical to the former, which is performed by the debtor
before or
after 6 months from the date on which the debtor suspends his/her
payment.
(2) The provisions of paragraph (1) shall not apply to the debtor s act
of furnishing any security or extinguishing any obligation
for anyone who
holds the authority to collect claims provided for in the provisions of Article
140 (1) and (2).
Article 101 (Special Rules Governing Act Performed for Specially Related
Persons as Other Parties)
(1) In the application of the provisions of the proviso to Article 100 (1)
2, when any person who receives any benefit is in a special
relationship
with the debtor, the scope of which is prescribed by the Presidential Decree,
(hereafter in this Article, refers to
the specially related person ), the
specially related person shall be presumed to be aware of the fact that
the payment, etc. are
suspended and he/she causes damage to any
rehabilitation creditor or any rehabilitation secured creditor at the time
that he/she
performs such act.
(2) In applying the provisions of Article 100 (1) 3, when any act is performed
in relation to the specially related person as another
party, 60 days
provided for in the provisions of the main sentence of the same subparagraph
shall be deemed one year and in applying
the proviso to the same
subparagraph, it is presumed that the specially related person is aware
of the fact that the debtor undermines
equality with other rehabilitation
creditors or other rehabilitation secured creditor at the time that the debtor
performs the
act that undermines such equality.
(3) In applying the provisions of Article 100 (1) 4, any act is performed
in relation to the specially related person as another
party, 60 days
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 730
provided for in the same subparagraph shall be deemed one year.
Article 102 (Exception of Payment of Obligations of Bill)
(1) The
provisions of Article 100 (1) shall not apply to a case where anyone
who is entitled to claim payment of any bill by the debtor,
if he/she fails
to be paid such bill, loses his/her right on bills to be paid by one or multiple
debtors.
(2) In the case of paragraph (1), when any final obligor for compensation
or anyone who commissions the issuance of bills learns
of the payment
suspension, etc. or fails to become aware due to negligence, any custodian
may cause him/her to refund the amount
paid by the debtor.
Article 103 (Negation of Requirements for Establishing Alteration of
Right and Requirements for Counteraction)
(1) Where any necessary act is performed to establish, transfer or alter
rights with the aim of countering any third person after
payment, etc.
is suspended, when such necessary act is performed with the knowledge
that the payment, etc. is suspended after the
lapse of 15 days from the
date on which such necessary act is performed to establish, transfer or
alter the rights, such necessary
act may be set aside: Provided, That the
same shall not apply to a case where any principal registration or any
principal recording
is effected based on any provisional registration or
any provisional recording after such provisional registration or such
provisional
registration is effected.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to any
registration or any recording that effects the acquisition
of rights.
Article 104 (Negation of Execution Act)
The right to set aside may be exercised when the source of the execution
right that holds the authority to execute the act subject
to be set aside,
or the act is performed by the act of execution.
Article 105 (Methods of Exercising Right to Set Aside)
(1) Every custodian shall exercise the right to set aside by means of lawsuit,
a claim filed for avoidance or defence.
(2) The court may order any custodian to exercise the right to set aside
by its inherent jurisdiction or upon receiving an application
filed by any
rehabilitation creditor, any rehabilitation secured creditor, any shareholder
and any equity right holder.
(3) The lawsuit and the case of claim for avoidance shall be placed under
10
731 (Supp. 39)
the exclusive jurisdiction of the rehabilitation court.
Article 106 (Claims Filed for Avoidance)
(1) Every custodian shall, when he/she files a claim for avoidance,
substantiate the factual basis for such avoidance.
(2) Any
judgment that cites a claim for avoidance or declines a claim for
negation shall be made based on a decision that is accompanied
by reasons
therefor.
(3) When the court makes the decision referred to in paragraph (2), it
shall examine other parties.
(4) When the court decides to cite a claim for avoidance, it shall deliver
a written decision thereon to each of the parties.
Article
107 (Lawsuit Filed against Decision to Cite Claim for Avoidance)
(1) Anyone who is dissatisfied with any decision to cite a claim
for avoidance
may file a lawsuit against such decision within one month from the date
on which he/she takes the delivery of such
decision.
(2) The period referred to in the provisions of paragraph (1) shall be
invariable.
(3) The lawsuit referred to in the provisions of paragraph (1) shall be
placed under the exclusive jurisdiction of the rehabilitation
court.
(4) The judgment on the lawsuit filed pursuant to the provisions of paragraph
(1) shall authorize, alter or revoke the decision
to cite the claim for avoidance:
Provided, That the same shall not apply to a case where the lawsuit is
declined on the grounds
of being unlawful.
(5) When a judgment that authorizes the whole or part of the decision
(limited to the part of the decision that is authorized in
the judgment)
to cite the claim for avoidance is confirmed, the decision shall have the
same effect as the effect of the final
decision. The same shall apply to
the decision to cite the claim for avoidance in case where the lawsuit referred
to in the provisions
of paragraph (1) is not filed, is withdrawn or is declined
within the period that is set pursuant to the provisions of the same
paragraph.
Article 108 (Effect, etc. of Exercise of Negation Right)
(1) The exercise of the right to set aside shall restore the debtor s assets
to their original status.
(2) Where the act provided for in the provisions of Article 100 (1) 4 is
set aside, when the other party is not aware of the payment
suspension,
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 732
etc. at the time that such act is performed, a refund may be made within
the limit of the existing benefits.
(3) Where the debtor s act is set aside, any other party may exercise his/
her right according to the classification falling under
any of the following
subparagraphs:
1. When the benefit in return that is paid to the debtor does not exist
among the debtor s assets, the right to claim the refund
of such benefit
in return;
2. When all of the profits that accrue from the benefit in return paid to
the debtor exist among the debtor s assets, the right to
claim the refund
of the existing profits in the capacity of a public-interest creditor;
3. When the profits that accrue from the benefit in return paid to the
debtor does not exist among the debtor s assets, the right
to claim
the refund of the value of the benefit in return in the capacity of a
rehabilitation creditor; and
4. When part of the profits that accrue from the benefit in return paid
to the debtor exist among the debtor s assets, the right
to claim the
refund of the existing profits in the capacity of a public-interest creditor
and the right to claim the refund of
the difference between the benefit
in return and the existing profits in the capacity of a rehabilitation
creditor.
Article 109 (Restoration of Claims of Other Parties)
(1) Where an act of the debtor is set aside, when the other party refunds
any payment that is made to him/her or refunds the value of such payment,
the claim of the other party shall be restored to its
original status.
(2) When an act of the debtor is set aside after the meeting of persons
concerned that is called to deliberate
on a draft rehabilitation plan or it
is decided to propose a written resolution provided for in the provisions
of Article 240 in
the agenda of such meeting, notwithstanding the provisions
of 152 (3), the other party may subsequently supplement his/her report
within one month from the date on which the act of the debtor is set aside.
Article 110 (Right to Set Aside against Subsequent
Purchasers)
(1) In cases falling under any of the following subparagraphs, the right
to set aside may also be exercised against
any subsequent purchaser:
1. Where the subsequent purchaser becomes aware of the fact forming
the grounds for setting aside exists for the former at the time
that
10
733 (Supp. 39)
the subsequent purchase is effected;
2. Where the subsequent purchaser is a specially related person provided
for in the provisions of Article 101: Provided, That the
same shall not
apply to a case where the subsequent purchaser does not become aware
of the fact that the grounds for setting aside
exists for the former at
the time that the subsequent purchase is effected; and
3. Where the subsequent purchaser effects the subsequent purchase on
the grounds of a gratuitous act or an act for valuable consideration
that may be deemed identical to a gratuitous act, when the grounds
for setting aside exists for the former.
(2) The provisions of Article 108 (2) shall apply mutatis mutandis to a
case where the right to set aside is exercised pursuant
to the provisions
of paragraph (1) 3.
Article 111 (Restrictions on Setting Aside Effected on Grounds of Knowledge
of Payment Suspension)
Any act that is performed one year prior to the date on which an application
is filed for commencement of rehabilitation procedures
shall not be set
aside on the grounds of knowledge of the fact that the payment is suspended.
Article 112 (Period for Exercise
of Right to Set Aside)
The right to set aside shall not be exercised when 2 years lapse from the
date on which rehabilitation procedures
commence. The same shall apply
to a case where 10 years lapse from the date on which an act provided
for in any subparagraph of
Article 100 (1) is performed.
Article 113 (Stay of Proceedings Filed by Creditors for Revocation)
(1) When a lawsuit that is filed
by any rehabilitation creditor pursuant
to the provisions of Article 406 (1) of the Civil Act and a lawsuit for avoidance
filed
according to bankruptcy procedures are pending at the time that
rehabilitation procedures commence, the proceedings thereof shall
be
stayed.
(2) The provisions of Article 59 (2) through (5) shall apply mutatis mutandis
to the case of paragraph (1). In this case, debtor
in paragraphs (2) and
(3) of the same Article shall be deemed rehabilitation creditor or trustee
in bankruptcy.
SECTION 3 Responsibilities of Directors, etc. of
Corporations
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 734
Article 114 (Disposition Taken to Preserve Properties of Corporate
Directors, etc.)
(1) When it is deemed necessary after a decision is made to commence
the rehabilitation procedures for a corporate debtor, the court
may take
a disposition to preserve the assets of directors, etc. by its inherent
jurisdiction or upon receiving an application
filed by any custodian in order
to preserve the right to claim investments and to claim compensation for
damage based on the responsibilities
of directors, etc. to the debtor s
promoters, directors (including a deemed director under the provisions
of Article 401-2 (1)
of the Commercial Act), auditors, inspectors or
liquidators (hereafter, in this Article through Article 116 referred to as
directors,
etc. ).
(2) When a custodian does not become aware of the fact that the claim
referred to in the provisions of paragraph (1) exists, he
shall file an
application with the court for a disposition taken to preserve such claim
pursuant to the provisions of paragraph
(1).
(3) When it is deemed expedient, the court may take the preservation
disposition referred to in the provisions of paragraph (1)
by its inherent
jurisdiction or upon receiving an application filed by the debtor (when any
preservative custodian is selected
and appointed, this refers to such
preservative custodian) even before a decision is made to commence
rehabilitation procedures.
(4) The court may alter or rescind the preservation disposition referred
to in the provisions of paragraph (1) or (3) after hearing
the opinion of
the Custodial Committee.
(5) An immediate appeal may be filed against the preservation disposition
referred to in the provisions of paragraph (1) or (3)
and the decision referred
to in the provisions of paragraph (4).
(6) The immediate appeal referred to in the provisions of paragraph (5)
shall not have the effect of staying any execution.
(7)
When a judgment is given on the preservation disposition referred to
in the provisions of paragraph (1) or (3) or on the decision
referred to
in the provisions of paragraph (4) and on the immediate appeal filed
against such decision, a written decision shall
be delivered to each of
the parties.
Article 115 (Final Inspection Judgment on Right to Claim Compensation
10
735 (Supp. 39)
for Damage, etc.)
(1) When it is deemed necessary after a decision is made to commence
the rehabilitation procedures for a corporate debtor, the court
may give
a final and conclusive judgment by its inherent jurisdiction or upon receiving
an application filed by any custodian,
which calls for inspecting whether
the right to claim investments by the directors, etc. or the right to claim
compensation for
damage based on the responsibility of directors exists and
their contents.
(2) When a custodian becomes aware of the fact that the right of claim
referred to in the provisions of paragraph (1) exists, he/she
shall file an
application with the court for the judgment referred to in the provisions
of paragraph (1).
(3) When a custodian files the application referred to in the provisions
of paragraph (1), he/she shall substantiate the factual
grounds for such
application.
(4) When the court commences the inspection and confirmation procedures
by its inherent jurisdiction, it shall decide on the purposes
thereof.
(5) When the application referred to in the provisions of paragraph (1)
is filed and a decision is made to commence the
inspection and confirmation
procedures referred to in the provisions of paragraph (4), the stay of
prescription shall give rise
to the presumption that a claim has been filed
for a judgment.
(6) Any judgment that dismisses a judgment on the inspection confirmation
referred to in the provisions of paragraph (1) and an
application for
confirming the inspection shall be granted by a decision accompanying
the reasons thereof.
(7) When the court makes the decision referred to in the provisions of
paragraph (6), it shall examine interested persons in advance.
(8) The inspection confirmation procedures (excluding any inspection
confirmation procedures after a decision is made on the inspection
confirmation) shall be completed when the rehabilitation procedures
concluded.
(9) When a decision is made on the inspection confirmation, a written
decision shall be delivered to each of the parties.
Article
116 (Lawsuit Filed to Raise Objection)
(1) Anyone who is dissatisfied with a judgment on the inspection
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 736
confirmation provided for in the provisions of Article 115 (1) may file a
lawsuit against such judgement within one month from the
date on which
the judgment is delivered to him/her.
(2) The period referred to in the provisions of paragraph (1) shall be
invariable.
(3) When persons who file the lawsuit referred to in the provisions of
paragraph (1) are directors, etc., the custodians shall be
adjoined as
defendants and when custodians file the lawsuit, the directors shall be
adjoined as defendants, respectively.
(4) The lawsuit referred to in the provisions of paragraph (1) shall be
placed under the exclusive jurisdiction of the rehabilitation
court.
Arguments may be put forward only after one month lapses from the date
on which a decision is delivered on such lawsuit.
(5) When multiple lawsuits are pending simultaneously, the court shall
combine arguments.
(6) A judgment on the lawsuit referred to in the provisions of paragraph
(1) shall authorize, alter or rescind the decision of paragraph
(1): Provided,
That the same shall not apply to a case where the lawsuit is declined
on the grounds of unlawfulness.
(7) The judgment that authorizes or alters a decision on the inspection
confirmation shall have the same effect as the effect of
the confirmation
judgment that orders execution with respect to compulsory execution.
Article 117 (Effect of Final Inspection Judgment)
When the lawsuit provided for in the provisions of Article 116 (1) is not
filed within the period provided for in the provisions
of the same paragraph,
is withdrawn or is declined, the judgment on the inspection confirmation
shall have the same effect as the
effect of the confirmation judgment that
orders the execution.
CHAPTER REHABILITATION
CREDITORS,
REHABILITATION SECURED
CREDITORS,
SHAREHOLDERS AND EQUITY
RIGHT HOLDERS
10
737 (Supp. 39)
SECTION 1 Rights of Rehabilitation Creditors,
Rehabilitation Secured Creditors,
Shareholders and Equity Right Holders
Article 118 (Rehabilitation Claims)
Claims falling under any of the following subparagraphs shall be made
rehabilitation claims:
1. Asset claims based on grounds that arise before rehabilitation procedures
commence for the debtor;
2. Interest that accrues after rehabilitation procedures commence;
3. Compensatory damages and penalties incurred by non-performance
after rehabilitation procedures commence; and
4. Costs incurred from participating in rehabilitation procedures.
Article 119 (Options when Both Parties Fail to Fulfill Bilateral
Contract)
(1) When the debtor and another party have yet to complete performance
of their bilateral contract at the time rehabilitation
procedures commence,
any custodian may cancel or terminate such bilateral contract and request
the debtor to meet his/her obligations
and require the other party to fulfill
his/her obligations: Provided, That the custodian shall not cancel or
terminate the bilateral
contract after the meeting of persons concerned held
to deliberate on a draft rehabilitation plan or a decision is made to place
the case in a written resolution of the meeting of persons concerned pursuant
to the provisions of Article 240.
(2) In the case of paragraph (1), the other party may compel the custodian
to cancel or terminate the bilateral contract or to definitive
answer whether
the latter intends to implement the bilateral contract. In this case, when
the custodian fails to provide a definitive
answer within 30 days from the
date on which he/she is so compelled, the custodian shall be deemed to
have relinquished right of
the cancellation and the right of termination
right referred to in the provisions of paragraph (1).
(3) The court may extend or
shorten the period referred to in the provisions
of paragraph (2) by its inherent jurisdiction or upon receiving an application
filed by the custodian or the other party.
(4) The provisions of paragraphs (1) through (3) shall not apply to any
collective agreement.
Article 120 (Special Rules Governing Payment and Settlement System,
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 738
etc.)
(1) Where rehabilitation procedures commence for any participant in the
payment and settlement system that is designated by the
Governor of
the Bank of Korea after consulting with regard thereto with the Financial
Services Commission in order to ensure the
completedness of the payment
and settlement system (hereafter in this paragraph refers to the payment
and settlement system ),
the effects of transfer instructions or payment,
execution thereof, settlement, deductions, deposit funds, the furnishing of
security,
disposition, appropriation and settlement involving the
participant shall accrue under the conditions as prescribed by the person
who operates the payment and settlement system, not-withstanding the
provisions of this Act and they shall not be subject to cancelation,
termination, revocation or setting aside. Specific matters concerning the
payment and settlement system shall be prescribed by
the Presidential
Decree.
(2) Where the rehabilitation procedures commence for any participant
in the liquidation and settlement system that is operated by
any person
in charge of the liquidation and settlement of securities and derivative
financial transactions provided for in the
Captial Market and Financial
Investment Business Act, and persons who are prescribed by the Presidential
Decree, the effects of
the assumption of obligations, adjustment, deduction,
deposit money, the furnishing of security, disposition, appropriation and
settlement involving the participant shall occur under the conditions as
prescribed by the person who operates the liquidation
and settlement
system, notwithstanding the provisions of this Act and they shall not be
subject to such cancelation, termination,
revocation and negation.
(3) Where the rehabilitation procedures commence for either of the parties
who effects the transactions (each hereafter in this
paragraph referred
to as a qualified financial transaction ) falling under each of the following
subparagraphs based on a single
contract (hereafter in this paragraph referred
to as a base contract ) that prescribes fundamental matters concerning
certain financial
transactions, the effects of the termination and the
settlement of the qualified financial transaction shall accrue under the
conditions
as prescribed by the parties in their base contract,
notwithstanding the provisions of this Act and they shall not be subject
10
739 (Supp. 39)
to the cancellation, termination, revocation and negation, and transaction
referred to in subparagraph 4, and shall not be subject
to the suspension
order and the general prohibition order: Provided, That the same shall
not apply to a case where the debtor and
the other party conspire to effect
any financial transaction with the aim of prejudicing any rehabilitation
creditor or any rehabilitation
secured creditor:
1. Derivative financial transactions in forward deliveries, options, swaps,
etc. that are prescribed by the Presidential Decree and
are performed
on the prices and the interest rates of currencies, securities, equity
shares, general goods, credit risk, energy,
weather conditions, freights,
frequencies and environment, or the index numbers and the indicators
based thereon;
2. Exchange transactions in goods, repurchase transactions in securities,
financial transactions in securities and transactions in
security calls;
3. The combined transactions referred to in subparagraphs 1 through 2;
and
4. The furnishing, the disposition and the appropriation of security that
are all involved in transactions referred to in subparagraphs
1 through
3.
Article 121 (Cancellation and Termination of Bilateral Contracts
Unfulfilled by Both Parties)
(1) When any contract is canceled or terminated pursuant to the provisions
of Article 119, the other party may exercise his/her
right as a rehabilitation
creditor on the compensation for damage.
(2) Where any contract is cancelled or terminated pursuant to the provisions
of paragraph (1), when any benefit in return that is
paid to the debtor
exists among the debtor s assets, the other party may claim the refund
of such benefit in return and where such
benefit in return doesn t
exist among debtor s assets, the other party may exercise his/her right
as a public-interest creditor
to claim the refund of the value thereof.
Article 122 (Bilateral Contract Aimed at Continued Payments)
(1) The other party of a
bilateral contract that requires the debtor to perform
continued provision cannot not refuse to perform his/her obligations on
the grounds that the debtor fails to repay any rehabilitation claim or any
rehabilitation security right that accrues from the provision
before an
application is filed for commencing the rehabilitation procedures after such
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 740
application is filed for commencing the rehabilitation procedures.
(2) The provisions of paragraph (1) shall not apply to any collective
agreement.
Article 123 (Takeover of Bills of Exchange, etc. After Commencement)
(1) Where rehabilitation procedures commence for a debtor who
is an issuer
of bills of exchange or an endorser, when any payer or any interim payer
performs the takeover or the payment thereof
without knowledge of such
fact, the payer or the interim payer may exercise his/her right on a claim
that accrues therefrom as
a rehabilitation creditor.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to
securities that are primarily used
to pay for checks, money, goods or
securities.
(3) The provisions of Article 68 shall apply mutatis mutandis to the
application of paragraphs (1) and (2).
Article 124 (Rental Contracts, etc)
(1) When rehabilitation procedures commence for a debtor who is a renter,
a disposition taken to make the prepayment of rent or
to claim rent shall
not claim its effect in relation to the rehabilitation procedures, with the
exception of rent for the current
term and the following term at the time
that such rehabilitation procedures commence.
(2) Anyone who suffers damage on the grounds of his/her failure to claim
its effect in relation to such rehabilitation procedures
may exercise his/
her right to claim compensation for such damage in the capacity of a
rehabilitation creditor.
(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis
to surface rights.
(4) Where rehabilitation procedures commence for a debtor who is a landlord,
when the tenant falls under any of the following subparagraphs,
the
provisions of Article 119 shall not apply to the latter:
1. When he/she meets the requirements for opposition provided for in the
provisions of Article 3 (1) of the Housing Lease Protection
Act; and
2. When he/she meets the requirements for opposition provided for in
the provisions of Article 3 of the Commercial Building Lease
Protection
Act.
Article 125 (Mutual Accounts)
(1) A mutual account shall be closed, when the rehabilitation procedures
commence for either of the parties thereto. In this case,
either party may
10
741 (Supp. 39)
close the account and claim the payment of any balance.
(2) A claim that is held by the other party of the debtor under the provisions
of paragraph (1) shall be made a rehabilitation claim.
Article 126 (Debtor Liable to Entirely Fulfill Obligations Jointly with
Other Persons)
(1) In case where multiple persons are liable to entirely fulfill each individual
obligation, when the rehabilitation procedures
commence for the whole
or part of such persons, the creditors may exercise their rights on the total
amount of the claims they
hold at the time that such rehabilitation procedures
commence as rehabilitation creditors in each rehabilitation procedure.
(2)
In the case of paragraph (1), even when persons who are liable to
entirely fulfill each individual obligation complete repayment
and extinguish
their obligations to any creditor (hereafter in this Article referred to as
repayment, etc. )after the rehabilitation
procedures commence, such
creditors may exercise their rights on the total amount of the claims they
hold at the time that the
rehabilitation procedures commence, save when
the total amount of the claims are extinguished.
(3) In the case of paragraph (1), anyone who holds the right to claim
reimbursement from the debtor, which is possibly expected
to be exercised
in the future, may participate in the rehabilitation procedures for the
total amount of his/her claim for reimbursements:
Provided, That the
same shall not apply to a case where any creditor participates in the
rehabilitation procedures for the total
amount of the claim that he/she
holds at the time that the rehabilitation procedures commence.
(4) Where any creditor participates
in rehabilitation procedures pursuant
to the provisions of paragraph (1) and anyone who holds the claim for
reimbursement, who
is possibly expected to exercise his/her right to claim
such reimbursement from the debtor in future and the total amount of
his/her
claim is extinguished on the grounds of repayment, etc. to the
creditor after the rehabilitation procedures commence, the creditor
may
exercise the right that he/she holds within the scope of his/her right to
claim reimbursements.
(5) The provisions of paragraphs (2) through (4) shall apply mutatis
mutandis to a case where any third person who provides security
for the
debtor s obligations pays back such obligations to the creditors and holds
the right to claim reimbursements, which he/she
is expected to exercise
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 742
on the obligations in the future.
Article 127 (Obligations for Guarantee Borne By Debtor)
When rehabilitation procedures commence for a debtor who is a guarantor,
any creditor may exercise his/her right over the total amount of the claim
that he/she holds at the time that such rehabilitation
procedures commence
as a rehabilitation creditor.
Article 128 (Participation in Rehabilitation Procedures for Persons Who
Hold Unlimited Liabilities for Corporation s Obligations
Where
Rehabilitation Procedures Commence)
Where it is decided to commence rehabilitation procedures for persons
who hold unlimited liabilities for a corporation s obligations,
the creditors
of the relevant corporation may participate in the rehabilitation procedures
for the total amount of claims that
they hold at the time that the rehabilitation
procedures commence.
Article 129 (Participation in Rehabilitation Procedures by Persons Who
Hold Limited Liabilities for Corporation s Obligations Where
Rehabilitation Procedures Commence)
(1) Where it is decided to commence rehabilitation procedures for employees
who hold limited liabilities for a corporation s obligations,
the creditors
of the corporation shall be prohibited from participating in such rehabilitation
procedures.
(2) In case where it is decided to commence the rehabilitation procedures
for any corporation, the creditors of such corporation
shall be prohibited
from exercising their rights on employees who hold limited liabilities for
the corporation s obligations.
Article 130 (In the Case of Partial Guarantee)
Where multiple guarantors each bear part of the obligations, the provisions
of Articles 126 and 127 shall apply mutatis mutandis
to the part of the
obligations they bear.
Article 131 (Prohibition on Repayment of Rehabilitation Claims)
The act (excluding any exemption) of extinguishing rehabilitation
claims
by repaying them, receiving the repayment thereof, etc. without following
the provisions of the rehabilitation plan shall
not be performed after the
rehabilitation procedures have commenced, save when the provisions of
this Act especially prescribe
otherwise: Provided, That the same shall not
apply to a case where any custodian makes repayment after obtaining
permission therefor
from the court, and to a case that falls under the claim
10
743 (Supp. 39)
provided for in the provisons of Article 140 (2) and falls under any of
the following subparagraphs:
1. Where a disposition for the recovery of arrears is taken, the disposal
of any collateral property is performed or continuation
thereof is
permitted; and
2. Where a third party debtor arbitrarily transfers the debtor s claims
(including claims that are affected by the effect of seizure)
that are
seized according to a disposition for the recovery of arrears to the person
who holds the authority to make collections
in the period during which
the disposition for the recovery of arrears is suspended.
Article 132 (Permission to Repay Rehabilitation
Claims)
(1) When a smalland medium-sized businessman who is a transaction
partner of the debtor is feared to face hardship in the
continuation of
his/her business unless he/she receives the repayment of a small-sum
claim that he/she holds, the court may grant
permission to pay back the
whole or part of such small-sum claim to him/her upon receiving an
application filed by any custodian,
any preservative custodian or the
debtor even before it decides to authorize a confirmation of the
rehabilitation plan.
(2) When it is recognized that the debtor s rehabilitation is feared to face
considerable hardship unless the rehabilitation claims
are repaid, the
court may permit the payment of the whole or part of such rehabilitation
claims upon receiving an application filed
by any custodian, any preservative
custodian or the debtor even before it is decided to authorize a confirmation
of the rehabilitation
plan.
(3) When the court intends to grant the permission referred to in the
provisions of paragraphs (1) and (2), it shall hear the opinions
of the
Custodial Committee and the creditors consultative council and take
into account all circumstances including current transactions
between
the debtor and the creditors, the debtor s current assets and the interests,
etc. of interested persons.
Article 133 (Rights of Rehabilitation Creditors)
(1) Every rehabilitation creditor may participate in rehabilitation
procedures based on the claim that he/she holds.
(2) Every rehabilitation creditor shall hold a voting right on the claim
provided for in the provisions of Articles 134 through
138 according to
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 744
the amount that is calculated on the basis of those provisions and on
other claims according to the amount of such other claims.
Article 134 (Interest-Free Claim with Time Limit)
An interest-free claim, the deadline of which arrives after rehabilitation
procedures
commence shall be the amount obtained by deducting the interest
from the amount of the claim after the total amount of the interest,
based
on the statutory interest and the principal are calculated to be the amount
of the claim at the time that the deadline arrives
during the period ranging
from the time the rehabilitation procedures commence to the deadline.
Article 135 (Claim For Money Payable
by Periodic Installments)
The provisions of Article 134 shall apply mutatis mutandis to any claim
for money payable by periodic
installments, the amount and the period
of which are not confirmed.
Article 136 (Interest-Free Claims of Indefinite Time Limit, etc.)
Interest-free claims, the time limits of which are indefinite
shall be the
amount that is appraised at the time that rehabilitation procedures
commence. The same shall apply to a case where
the amount of the claim
for money payable by periodic installment or the period, for which are
indefinite.
Article 137 (Non-Monetary Claims, etc.)
When the purpose of any claim is not monetary, the amount of any claim
is indefinite and any claim is set in foreign currency, such
claim shall
be the amount appraised as at the time that rehabilitation procedures
commence.
Article 138 (Conditional Claims and Future Claims)
(1) Conditional claims shall be the amount appraised as at the time
rehabilitation
procedures commence.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to future
claims that can be exercised to the debtor.
Article 139 (Calculation of Period of Priority Right)
When any priority rights are held on the amount of claim within a certain
period, such certain period shall be calculated retroactively from the time
rehabilitation procedures commence.
Article 140 (Reduction of and Exemption from Fines and Taxes, etc.)
(1) Details affecting the reduction and the exemption and the
right to
charge any fine, any fine for negligence, any criminal proceedings costs,
any additional levy and any claim for the fine
for negligence, shall not
10
745 (Supp. 39)
be prescribed in the rehabilitation plan.
(2) When details concerning claims, whose collection is deferred for not
more than 3 years (including claims that are collectible
according to the
example of a disposition taken to collect national taxes, and their collection
priority order takes precedence
over general rehabilitation claims), which
are collectable under the National Tax Collection Act or the Local Tax
Act and the deferment
liquidating assets according to a disposition for
the recovery of arrears are prescribed in the rehabilitation plan, the opinions
of persons who are authorized to collect taxes shall be heard.
(3) When details concerning the deferment of the collection of the
claims
referred to in the provisions of paragraph (2) for the period of not less
than 3 years, details concerning the deferment
of liquidating assets according
to a disposition for the recovery of arrears, or details affecting the succession
of obligations,
the reduction and the exemption of taxes and other rights
are prescribed in the rehabilitation plan, agreement shall be obtained
from
the persons who hold the authority to collect such claims.
(4) The persons who hold the authority to collect the claims referred
to
in the provisions of paragraph (2) may provide the agreement referred
to in the provisions of paragraph (3).
(5) The prescription shall not proceed during the period in which the
collection is deferred pursuant to the provisions of paragraphs
(2) and (3)
and the liquidation of assets is deferred on the grounds of the disposition
for the recovery of arrears.
Article 141 (Rights of Rehabilitation Secured Creditors)
(1) Rehabilitation claims or claims on assets of persons other than the
debtor, both of which accrue from causes before the rehabilitation procedures
commence and are secured by any lien, any pledge,
any mortgage, any
right to collateral, any right of provisional registered security, any rental
right or any preferential privilege
shall be made a rehabilitation security
right: Provided. That any interest or compensation for damage and any
claim for penalties
that are caused by the failure to fulfill obligations shall
be limited to compensation for damage and claims for the penalties caused
prior to the date on which a decision is made to commence rehabilitation
procedures.
(2) The provisions of Articles 126 through 131, and 139 shall apply mutatis
mutandis to rehabilitation security rights.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 746
(3) Any rehabilitation secured creditor may participate in the rehabilitation
procedures based on his/her interest in rehabilitation
security rights.
(4) Any rehabilitation secured creditor may participate in the rehabilitation
procedures as a rehabilitation creditor
on the portion in excess of the value
(when any priority security right exists, this refers to the amount obtained
by deducting
the amount of the claim secured as such priority security
right from the value that is the object of the security right; hereafter
in
this Article the same shall apply) that is the object of the security right
among his/her claimed amount.
(5) Each rehabilitation secured creditor shall hold voting rights in
proportion to the value of the security right s purpose: Provided,
That
when the amount of a secured claim is less than the value of the security
right s purpose, each rehabilitation secured creditor
shall hold voting
rights in proportion to the amount of the secured claim.
(6) The provisions of Articles 133 (2), and 134 through
138 shall apply
mutatis mutandis to the voting rights of every rehabilitation secured
creditor.
Article 142 (Proxy Commissioners)
(1) Rehabilitation creditors, rehabilitation secured creditors, shareholders
and equity right holders may individually or jointly
select and appoint
one or multiple proxies commissioners.
(2) The authority of every proxy shall be attested to in writing.
(3) Proxies may perform every act in rehabilitation procedures
for
rehabilitation creditors, rehabilitation secured creditors, shareholders and
equity right holders who select and appoint them.
(4) Where there are several proxies, they shall exercise their authority
jointly. However wishes as expressed by any third person
may be performed
by anyone of them.
(5) When any proxy exercises his/her authority in a manner that is deemed
grossly unfair, the court may revoke the permission referred
to in the
provisions of paragraph (1).
(6) Any rehabilitation creditor, any rehabilitation secured creditor, any
shareholder and any equity right holder shall, when they
dismiss any
proxy, report without delay such fact to the court.
Article 143 (Trustee Companies)
(1) Every trustee company provided for in the provisions of the Security
10
747 (Supp. 39)
Debentures Trust Act may perform all acts involving the report of
rehabilitation claims or rehabilitation security rights, the exercise
of its
voting right and other rehabilitation procedures for all of the debenture
holders according to a resolution passed at a
meeting of the debenture
holders.
(2) When any trustee company performs the acts referred to in the provisions
of paragraph (1) for all of the debenture holders,
it need not indicate
each of such debenture holders.
Article 144 (Right of Setoff)
(1) Where any rehabilitation creditor or any rehabilitation secured creditor
bears obligations for the debtor at the time that rehabilitation
procedures
commence, when both of the claims and the obligations can be offset against
each other prior to the expiration of the
reporting period, the relevant
rehabilitation creditor or the relevant rehabilitation secured creditor may
perform such setoff
without resorting to the rehabilitation procedures only
within such reporting period. The same shall apply to a case where the
obligations are time-fixed.
(2) The rent and the obligation of the current term and the following term
after the rehabilitation procedures of any rehabilitation
creditor and any
rehabilitation secured creditor commence may be offset against each other
pursuant to the provisions of paragraph
(1): Provided, That when there
is any security deposit, any rent and any obligation may be offset against
each other thereafter.
(3) The provisions of paragraph (2) shall apply mutatis mutandis to land
rents.
Article 145 (Prohibition on Setoff)
In cases falling under any of the following subparagraphs, the setoff
shall be prohibited from being performed:
1. Where any rehabilitation creditor or any rehabilitation secured creditor
bears obligations for the debtor after the rehabilitation
procedures
commence;
2. Where any rehabilitation creditor or any rehabilitation secured creditor
bears obligations for the debtor with knowledge of the
fact that an
application is filed for commencing rehabilitation procedures or a petition
of bankruptcy is filed: Provided, That
the same shall not apply to the
instances falling under any of the following items:
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(Supp. 39) 748
(a) When such obligations are borne on grounds prescribed by Acts;
(b) When such obligations that are borne on grounds that accrue
before
any rehabilitation creditor or any rehabilitation secured creditor
becomes aware of the fact that the payment is suspended,
an
application is filed for commencement of rehabilitation procedures
or a petition of bankruptcy is filed; and
(c) When such obligations are borne on grounds that arise not more
than one year prior to the earliest of the time when rehabilitation
procedures commence, and the time when bankruptcy is declared;
3. When debtors of the debtor, for whom rehabilitation procedures
commence acquires any rehabilitation claim or any rehabilitation
security right that is held by any other person after such rehabilitation
procedures commence; and
4. When debtors of the debtor, for whom rehabilitation procedures
commence acquires any rehabilitation claim or any rehabilitation
security right with knowledge of the fact that payment is suspended
or a petition of bankruptcy is filed: Provided, That the same
shall not
apply to the time when such act falls under any item in subparagraph
2.
Article 146 (Rights of Shareholders and Equity Right Holders)
(1) Every shareholder and every equity right holder may participate
in
rehabilitation procedures with the shares and the equity shares that he/
she holds.
(2) Every shareholder and every equity right holder shall hold voting
rights in proportion to the number or amount of shares or
equity shares
he/she holds.
(3) When the debtor s total obligations exceed his/her total assets at the
time that rehabilitation procedures commence, shareholders
and equity
right holders shall not have any voting rights: Provided, That the same
shall not apply to a case where the total amount
of the debtor s assets
is in excess of the total amount of his/her obligations at the time that
a draft plan for changing the rehabilitation
plan provided for in the provisions
of Article 282 is submitted.
(4) When the debtor s total obligations exceed his/her total assets at the
time that a draft plan for amending the rehabilitation
plan is submitted
pursuant to the provisions of Article 282, shareholders and equity right
10
749 (Supp. 39)
holders shall not have any voting rights on such draft plan for amending
the rehabilitation plan.
SECTION 2 Preparation of List of Rehabilitation
Creditors, Rehabilitation Secured Creditors,
Shareholders and Equity Right Holders and
Reporting
Article 147 (List of Rehabilitation Creditors, Rehabilitation Secured
Creditors, Shareholders and Equity Right Holders)
(1) Every
custodian shall prepare a list of rehabilitation creditors, the
list of rehabilitation secured creditors, and the list of shareholders
and
equity right holders (hereinafter referred to as the lists in this Part)
and submit them within the period provided for in
the provisions of Article
50 (1) 2.
(2) The matters falling under each of the following subparagraphs shall
be noted in the lists:
1. List of rehabilitation creditors:
(a) The names and domiciles of rehabilitation creditors;
(b) The details of and grounds for
such rehabilitation claims;
(c) The amount of voting rights; and
(d) When there are claims that have general priority rights, the gist
thereof;
2. List of rehabilitation secured creditors:
(a) The names and domiciles of rehabilitation secured creditors;
(b) The details of,
and grounds for such rehabilitation security rights,
the purposes for the security rights, their values and when anyone
other than
the debtor for whom the rehabilitation procedures
commence is a debtor, his/her name and domicile; and
(c) The amount of voting
rights; and
3. List of shareholders and equity right holders:
(a) The names and domiciles of shareholders and equity right holders;
and
(b) The kinds and the number of shares or equity shares.
(3) The court shall make it possible for interested persons to inspect
the
lists during the reporting period.
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(Supp. 39) 750
(4) Any custodian may alter or correct the matters noted on the lists
after obtaining permission therefor from the court under the
conditions
prescribed by the rules of the Supreme Court by the last day of the reporting
period.
Article 148 (Report on Rehabilitation Claims)
(1) Any rehabilitation creditor who intends to participate in the
rehabilitation procedures shall report the matters falling under
each of
the following subpragraphs to the court and submit evidential documents
thereof, or certified copies or abridged copies
of such evidential documents
to the court within the reporting period:
1. His/her name and domicile;
2. The details and grounds for his/her rehabilitation claim;
3. The amount of his/her voting rights; and
4. When his/her claim holds a general priority right, the gist thereof.
(2) Any rehabilitation creditor shall report separately the
portion of the
general priority right among his/her rehabilitation claims.
(3) When any lawsuit is pending at the time that the
rehabilitation
procedures commence for rehabilitation claims, the relevant rehabilitation
creditor shall report the court, parties,
the case name and the case number,
other than the matters that are prescribed in the provisions of paragraphs
(1) and (2).
Article 149 (Report on Rehabilitation Security Rights)
(1) Any rehabilitation secured creditor who intends to participate in
rehabilitation
procedures shall report the matters falling under each of
the following subparagraphs to the court and submit evidential documents
thereof, or certified copies or abridged copies of such documents to the
court within the report period:
1. His/her name and domicile;
2. The details of, and grounds for his/her rehabilitation security right;
3. The purpose for and value of his/her rehabilitation security right;
4. The amount of his/her voting rights; and
5. When anyone is a debtor, other than the debtor for whom the
rehabilitation procedures commence, the former s name and domicile.
(2) The provisions of Article 148 (3) shall apply mutatis mutandis to
cases under paragraph (1).
Article 150 (Report on Shares and Equity Shares)
10
751 (Supp. 39)
(1) Any shareholder or any equity right holder who intends to participate
in rehabilitation procedures shall report the matters
falling under each
of the following subparagraphs to the court and submit his/her share
certificate or his/her equity share certificate
and evidential documents or
certified copies or abridged copies thereof to the court:
1. His/her name and domicile; and
2. The kinds, the number or the amount of his/her shares or his/her
equity shares.
(2) The court may order the list of shareholders to be closed to the public
for a fixed period. In this case, the fixed period shall
not exceed 2 months.
(3) The provisions of Article 148 (3) shall apply mutatis mutandis to
cases under paragraph (1).
Article 151 (Legal Fiction of Reporting)
Rehabilitation claims, rehabilitation security rights, shares or equity
shares that are noted on the list shall be deemed to have
been reported
pursuant to the provisions of Articles 148 through 150.
Article 152 (Post-Reporting Supplementations)
(1) When any rehabilitation creditor or any rehabilitation secured creditor
fails to make the report within the reporting period
on grounds for which
he/she has no responsibility, he/she may supplement such report within
one month after such grounds cease
to be relevant.
(2) The period referred to in the provisions of paragraph (1) shall be an
invariable period.
(3) The report referred to in the provisions of paragraph (1) shall not
be made in instances falling under either of the following
subparagraphs:
1. After a meeting of persons concerned that is held to examine a draft
rehabilitation plan comes to a close; or
2. After a decision is made to refer a draft rehabilitation plan to a written
resolution provided for in the provisions of Article
240.
(4) The provisions of paragraphs (1) through (3) shall apply mutatis
mutandis to cases where any rehabilitation creditor or
any rehabilitation
secured creditor alters reported matters so as to cease loses of profits to
any other rehabilitation creditor
or any other rehabilitation secured
creditor on the grounds for which the rehabilitation creditor or the
rehabilitation secured
creditor has no responsibility.
Article 153 (Report on Rehabilitation Claims, etc. after Lapse of Reporting
DEBTOR REHABILITATION
AND BANKRUPTCY ACT
(Supp. 39) 752
Period)
(1) With respect to any rehabilitation claim and any rehabilitation security
right that accrue after the lapse of the reporting
period, a report thereon
shall be made within one month from the date on which such claim and
such right accrue.
(2) The provisions of Article 152 (2) through (4) shall apply mutatis
mutandis to the report referred to in the provisions of paragraph
(1).
Article 154 (Change of Names)
(1) Anyone who has acquired any rehabilitation claim or any rehabilitation
security right that is entered in the list or is reported
may change his/her
reported name even after the lapse of the reporting period.
(2) Anyone who intends to change his/her name pursuant
to the provisions
of paragraph (1) shall report the matters falling under both of the following
subparagraphs to the court or submit
an evidential document or a certified
copy or an abridged copy thereof to the court:
1. The name and domicile; and
2. The right that he/she acquires, the date on which he/she acquires it
and the cause for acquiring it.
Article 155 (Additional Report on Shares and Equity Shares)
(1) When it is deemed appropriate, the court may reset a reporting period
after the lapse of a reporting period in order to allow for additional reports
on shares or equity shares. In this case, the court
shall publish the gist
thereof and then deliver a written statement in which such gist is entered
to the person falling under each
of the following subparagraphs:
1. The custodian;
2. The debtor; and
3. Any person who fails to make a report as a shareholder or an equity
right holder with the knowledge of such report.
(2) The provisions of Articles 162 through 165 shall apply mutatis mutandis
to cases under paragraph (1).
Article 156 (Report on Fines and Taxes, etc.)
(1) Anyone who holds claims provided for in the provisions of Article 140 (1)
and (2) shall promptly report to the court the amount
of such claims, the
cause for his/her holding such claim and the details of his/her security
rights.
(2) The provisions of Article 167 (1) shall apply mutatis mutandis to
10
753 (Supp. 39)
claims reported pursuant to the provisions of paragraph (1).
Article 157 (Dissatisfaction with Fine, etc. Prior to Commencement
of
Rehabilitation Procedures)
(1) When the cause of any claim that is reported pursuant to the provisions
of paragraph (1) is a disposition for which an administrative
trial, a lawsuit
or an appeal is permitted, any custodian may file an application for appeal
in a manner that the debtor is entitled
to with regard to his/her claim.
(2) The provisions of Articles 172, 175 and 176 (1) shall apply mutatis
mutandis to the application
for appeal.
SECTION 3 Inspection and Confirmation of Rehabilitation
Claims and Rehabilitation Security Rights,
etc.
Article 158 (Table of Rehabilitation Creditors, Rehabilitation Secured
Creditors and Shareholders and Equity Right Holders)
The
clerk, etc, of the court shall prepare a table of rehabilitation creditors,
a table of rehabilitation secured creditors and a table
of shareholders
and equity right holders based on rehabilitation claims, rehabilitation
security rights, shares or equity shares
that are recorded on the list or
reported, categorize them according to the nature of their rights and
then the matters falling
under each of the following subparagraphs in
such tables:
1. Table of rehabilitation creditors:
(a) The names and domiciles of rehabilitation creditors;
(b) The contents and grounds for
rehabilitations claims;
(c) The amount of voting rights; and
(d) When claims have general priority rights, the gist thereof;
2. Table of rehabilitation secured creditor:
(a) The names and domiciles of rehabilitation secured creditors;
(b) The details of,
and grounds for rehabilitation security rights, the
reasons for and values of the security rights, and when any person
who is a
debtor other, than the debtor, his/her name and domicile;
and
(c) The amount of voting rights; and
3. Table of shareholders and equity right holders:
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 754
(a) The names and domiciles of shareholders and equity right holders;
and
(b) The kinds, the number or amount of shares or equity shares.
Article 159 (Delivery of Certified Copies)
The clerk, etc. of the court shall deliver to custodians the certified copies
of the table of rehabilitation creditors, the table
of rehabilitation secured
creditors and the table of shareholders and equity right holders.
Article 160 (Perusal of Documents During
Inspection Period)
The documents falling under each of the following subparagraphs shall
be held in the court for inspection by
interested persons during the inspection
period:
1. The catalog;
2. Documents concerning reports and objections; and
3. The table of rehabilitation creditors, the table of rehabilitation secured
creditors, and the table of shareholders and equity
right holders.
Article 161 (Objections, etc. Raised to Rehabilitation Claims and
Rehabilitation Security Rights)
(1) Anyone falling under any of the following subparagraphs may raise
a written objection to the court with respect to any rehabilitation
claim
and any rehabilitation security right entered in the list or reported within
the inspection period:
1. The custodian;
2. The debtor; and
3. Any rehabilitation creditor, any rehabilitation secured creditor, any
shareholder and any equity right holder who are all entered
in the
list or are reported.
(2) When has been decided to alter the inspection period, the court shall
deliver a written decision to each of the persons referred
to in the provisions
of paragraph (1).
(3) The delivery referred to in the provisions of paragraph (2) may be
made in the same manner that any document is mailed.
Article
162 (Inspection of Rehabilitation Claims and Rehabilitation
Security Rights Reported after Reporting Period)
The court shall set a special date (hereinafter referred to as the special
inspection date ) for inspecting any rehabilitation claim
and any
rehabilitation security right that are all reported pursuant to the provisions
10
755 (Supp. 39)
of Articles 152 (1) and 153 (1). In this case, expenses incurred to conduct
such inspection shall be borne by the relevant rehabilitation
creditor or
the relevant rehabilitation secured creditor.
Article 163 (Delivering Notification of Special Inspection Date)
When the court decides to set the special inspection date, it shall
deliver
a written decision to the persons falling under each of the following
subparagraphs:
1. The custodian;
2. The debtor; and
3. The rehabilitation creditor, the rehabilitation secured creditor, the
shareholder and the equity right holder who are all recorded
on the
list or are reported.
Article 164 (Presence of Persons Concerned)
(1) The representative of an individual debtor or the representative of
the non-individual debtor shall be present on the special
inspection date
to state his/her opinion: Provided, That he/she may cause his/her agent
to be present on the special inspection
date when justifiable grounds
therefor exist.
(2) Any rehabilitation creditor, any rehabilitation secured creditor, any
shareholder, any equity right holder or his/her agent
may be present on
the special inspection date to raise objections to any other rehabilitation
claim or any other rehabilitation
security right.
(3) The agent referred to in the provisions of paragraphs (1) and (2) shall
submit a written statement attesting
to the authority for his/her agency.
Article 165 (Presence of Custodians)
The inspection of any rehabilitation claim and any rehabilitation security
right shall not be conducted without the presence of
the relevant custodian
on the special inspection date.
Article 166 (Confirmation of Rehabilitation Claims and Rehabilitation
Security Rights, etc.)
When no objection is raised by any custodian, any rehabilitation creditor,
any rehabilitation secured creditor, any shareholder
and any equity right
holder during the inspection period or on the special inspection date, the
features of the rights and the
amount of the voting rights falling under
both of the following subparagraphs shall be confirmed, and with respect
to any claim
with the priority rights, its priority right shall be confirmed:
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 756
1. Rehabilitation claims and rehabilitation security rights that are
reported; and
2. When any rehabilitation claim or any rehabilitation security right that
is reported is nonexistent, the rehabilitation claim or
the rehabilitation
security right that is recorded on the list submitted by any custodian.
Article 167 (Recording on Table of Rehabilitation
Creditors and Table
of Rehabilitation Secured Creditors)
(1) The clerk, etc. of the court shall record the results of the inspection
of rehabilitation claims and rehabilitation security
rights on the table of
rehabilitation creditors and the table of rehabilitation secured creditors.
The same shall apply to any
objections raised by debtors.
(2) The clerk, etc. of the court shall record the gist of confirmation in
the evidential documents
of the rehabilitation claims and the rehabilitation
security rights that are confirmed and affix the court seal to each of them.
(3) The clerk, etc. of the court shall, upon receiving a claim filed by any
rehabilitation creditor or any rehabilitation secured
creditor, deliver to
him/her an abridged copy of the table of rehabilitation creditors or the
table of rehabilitation secured creditors
on their rights.
Article 168 (Effect of Entries)
When any rehabilitation claim and any rehabilitation security right that
are confirmed are recorded in the table of rehabilitation
creditors and
the table of rehabilitation secured creditors, such entries shall have the
same effect as the effect of a final judgment
on all of them recorded on
the tables.
Article 169 (Notification of Objection)
When an objection to any rehabilitation claim or any rehabilitation security
right is raised, the court shall notify the rightful
claimants of such objection.
Article 170 (Final Judgement on Inspection of Rehabilitation Claims and
Rehabilitation Security Rights)
(1) When any custodian, any rehabilitation creditor, any rehabilitation
secured creditor, any shareholder or any equity right holder
raises an
objection to any rehabilitation claim and any rehabilitation security right
that are recorded on the list or reported,
the rightful claimant who holds
the rehabilitation claim or the rehabilitation security right (hereinafter
referred to as an objection
to claims in this Part) may file an application
with the court for a final claim inspection judgment (hereinafter referred
to in
this Part as a final claim inspection judgment ) for the confirmation
10
757 (Supp. 39)
of his/her claim and rights with all of the objectors as the other parties:
Provided, That the same shall not apply to cases under
Articles 172 and
174.
(2) The application referred to in the main sentence of paragraph (1) shall
be filed within one month from the last day of
the inspection period or
from the special inspection date.
(3) The final claim inspection judgment shall determine whether claims
to which any objection is raised exist and the contents of
such objection.
(4) When the court gives the final claim inspection judgment, it shall examine
objectors.
(5) The court shall deliver a written decision on the final claim inspection
judgment to each of the parties.
Article 171 (Appeal against Final Claim Inspection Judgment)
(1) Anyone who is dissatisfied with a final claim inspection judgment
may file an appeal against such final claim inspection judgment within
one month from the date on which he/she receives service
of the written
judgment thereon.
(2) The appeal referred to in the provisions of paragraph (1) shall be placed
under the exclusive jurisdiction of the rehabilitation
court.
(3) When anyone who files the appeal referred to in the provisions of
paragraph (1) is a rightful claimant who holds any
claim to which the
objection is raised, all of the objectors shall be adjoined as defendants
and when he/she is an objector, the
rehabilitation creditors or the
rehabilitation secured creditors shall be adjoined as defendants.
(4) No arguments can be presented
for the appeal referred to in the
provisions of paragraph (1) until after the lapse of one month from the
date on which the written
decision is served.
(5) When multiple lawsuits are pending on the same claim to which an
objection is raised, the court shall combine arguments therefor.
(6) With respect to the appeal referred to in the provisions of paragraph (1),
unless the appeal is unlawful, the court shall grant
the final claim inspection
judgment or make a ruling to amend such final claim judgment inspection.
Article 172 (Taking Assignment
of Lawsuit on Objection to Claims)
(1) Where any lawsuit on claims to which an objection is raised is pending
at the time that
rehabilitation procedures commence, when any
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 758
rehabilitation creditor or any rehabilitation secured creditor intends to
have such claims confirmed, all of the objectors shall
take over the litigation
procedures as other parties of the lawsuit.
(2) The provisions of Articles 167 (3) and 170 (2) shall apply mutatis
mutandis to any application that is filed for taking assignment
of the
litigation procedures.
Article 173 (Restrictions on Assertions)
Rehabilitation creditors or rehabilitation secured creditors may only assert
matters that are recorded in the table of rehabilitation
creditors and the
table of rehabilitation secured creditors, which are pertain to the grounds
and details of claims to which objections
are raised in the final claim
inspection judgment, in the lawsuit that is filed an appeal to the final
claim inspection judgment
provided for in the provisions of Article 171
(1) and the litigation procedures assignment of which is taken pursuant
to the provisions
of Article 172 (1).
Article 174 (Objections Raised to Claims, etc. with Title Having Executory
Power)
(1) With respect to title with executory power or the final judgment among
claims to which an objection is raised, an objector is
asserting of objections
thereto are limited to the litigation procedures that the debtor is permitted
to take.
(2) Where a lawsuit on the rehabilitation claim or the rehabilitation security
right referred to in the provisions of paragraph
(1) is pending in the court
at the time that rehabilitation procedures commence, when any objector
intends to assert the objection
provided for in the provisions of paragraph
(1), the objector shall take assignment of the litigation procedures for the
rehabilitation
creditor or the rehabilitation secured creditor who holds the
rehabilitation claim or the rehabilitation security right as the other
party.
(3) The provisions of Article 170 (2) shall apply mutatis mutandis to the
assertion of the objections referred to in the
provisions of paragraph (1)
or the taking of assignment provided for in the provisions of paragraph (2),
and the provisions of
Articles 171 (4) and (5) and 173 shall apply mutatis
mutandis to paragraphs (1) and (2). In this case, one month after the
date
on which the written decision is served in Article 171 (4) shall be
deemed the last day of the inspection period involving the claim
to which
an objection is raised or the invariable period of one month from the special
10
759 (Supp. 39)
inspection date.
(4) Where the assertion of the objection provided for in the provisions
of paragraph (1) is not made or the taking of assignment
provided for
in the provisions of paragraph (2) is not effected within the period provided
for in the provisions of Article 170
(2) that are applied mutatis mutandis
under the provisions of paragraph (3), when the objector is the rehabilitation
creditor or
the rehabilitation secured creditor, the objection provided for
in the provisions of Article 161 (1) or 164 (2) shall be deemed
nonexistent
and when the objector is the custodian, it shall be deemed that the custodian
recognizes the rehabilitation claim or
the rehabilitation security right.
Article 175 (Record of Result of Lawsuit Concerning Confirmation of
Rehabilitation Claims and
Rehabilitation Security Rights)
Upon the clerk, etc. of the court receiving an application filed by any
custodian, any rehabilitation
creditor or any rehabilitation secured creditor,
record the results of the lawsuit (when an appeal to the final claim inspection
judgment is not filed or is declined within the period provided for in the
provisions of Article 171 (1), this refers to the contents
of the judgment)
of the confirmation of the rehabilitation claim or the rehabilitation security
right in the table of rehabilitation
creditors and the table of rehabilitation
secured creditors.
Article 176 (Effect of Judgment, etc. in Lawsuit Filed for Confirmation
of Rehabilitation Claims and Rehabilitation Security Rights)
(1) The judgment in the lawsuit filed for the confirmation of the rehabilita
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(Supp. 39) 760
tion claims and the rehabilitation security rights shall have effect on all
of rehabilitation creditors, rehabilitation secured
creditors, shareholders
and equity right holders.
(2) When no appeal against the final claim inspection judgment is filed
within the period provided for in the provisions of Article
171 (1) or is
declined, the judgment shall have the same effect as that of the final
judgment on all of the rehabilitation creditors,
rehabilitation secured
creditors, shareholders and equity right holders.
Article 177 (Reimbursement of Legal Costs)
When any profit accrues to the debtor s assets from the lawsuit (including
the final claim inspection judgment) on confirmation
of rehabilitation
claims or rehabilitation security rights, any rehabilitation creditor, any
rehabilitation secured creditors,
any shareholder, any equity right holder
may claim for reimbursement of the legal costs as public-interest creditors
within the
scope of such profit.
Article 178 (Value of Subject Matter of Lawsuit Filed for Confirmation
of Rehabilitation Claims or Rehabilitation Security Rights)
The value of the subject matter of a lawsuit filed for the confirmation of
any rehabilitation claim or any rehabilitation security
right shall be
determined by the rehabilitation court taking into account the estimated
amount of the profits to accrue from the
rehabilitation plan.
SECTION 4 Public-Interest Claims and Other Claims after
Rehabilitation Procedures Commence
Article 179 (Claims That Become Public-Interest Claims)
Claims falling under any of the following subparagraphs shall be made
public-interest
claims:
1. Claims for expenses incurred in a judgment for the joint profits of
any rehabilitation creditor, any rehabilitation secured creditor,
any
shareholder and any equity right holder;
2. Claims for expenses incurred to perform the management of the debtor s
business and assets and the disposal of his/her assets
after the
rehabilitation procedures commence;
3. Claims for expenses incurred to implement the rehabilitation plan:
Provided, That any expenses that incurred after the completion
of the
10
761 (Supp. 39)
rehabilitation procedures shall be excluded;
4. Claims for any expenses, remuneration, compensation and special
compensation provided for in the provisions of Articles 30 and
31;
5. Claims for funds borrowed by any custodian in order to manage the
debtor s business and assets after the rehabilitation procedures
commence
and any claim that accrues from any other act;
6. Claims that accrue to the debtor from clerical work or unlawful gains
after the rehabilitation procedures commence;
7. Claims held by other parties when any custodian fulfills obligations
pursuant to the provisions of Article 119 (1);
8. Claims that accrue from the supply made by the other party of a bilateral
contract that obliges the continued supply before the
rehabilitation
procedures commence after an application is filed for commencing them;
9. Tax that falls under any of the following items and the deadline for
payment thereof has yet to arrive at the time that rehabilitation
procedures commence:
(a) Tax withheld at source: Provided, That the tax imposed on any
bonus that is deemed reverted to the representative pursuant to
the provisions of Article 67 of the Corporate Tax Act shall be limited
to tax collected at source;
(b) Value-added tax, individual consumption tax, liquor tax, and traffic,
energy and environment tax;
(c) Education tax and special tax for agricultural and fishing villages,
levied and collected according to the example of a disposition
taken
to impose and collect the main tax; and
(d) Local tax collected and paid by the person liable for the special
collection;
10. The wages, severance pay and disaster compensation of the debtor s
workers;
11. The right to claim reimbursement of the bailment moneys and the
money spent to guarantee the identities of the debtor s workers,
which
accrue from causes arising before rehabilitation procedures commence;
12. The borrowing of funds and procurement of materials that are performed
by the debtor or any preservative custodian after obtaining
permission
therefor from the court after an application is filed for commencement
of rehabilitation procedures and prior to the
com-
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(Supp. 39) 762
mencement of rehabilitation procedures and other claims that accrue
from acts that are inevitable in continuing the debtor s business;
13. Expenses determined by the court as necessary for the creditors
consultative council to carry out its activities pursuant to
the provisions
of Article 21 (3); and
14. Other expenses to be incurred for debtors, other than those provided
for in the provisions of subparagraphs 1 through 13.
Article
180 (Repayment, etc. of Public-Interest Claims)
(1) Public-interest claims shall be reimbursed frequently without resorting
to
rehabilitation procedures.
(2) Public-interest claims shall take precedence over rehabilitation claims
and rehabilitation security rights in the repayment
thereof.
(3) In the instances falling under any of the following subparagraphs, the
court may, upon receiving an application filed
by any custodian or by its
inherent jurisdiction, order the suspension or any cancellation of any
compulsory execution performed
against, or any provisional seizure of the
debtor s assets based on public-interest claims, by requiring or not requiring
security
to be furnished:
1. When the compulsory execution or the provisional seizure significantly
impedes rehabilitation and the debtor has other assets
that can readily
be liquidated; and
2. When it becomes clear that the total value of the debtor s assets is
inadequate for the repayment of the total amount of the public-interest
claims.
(4) The court may alter or rescind the suspension order referred to in the
provisions of paragraph (3).
(5) An immediate appeal may be filed against the suspension or revocation
order referred to in the provisions of paragraph (3) and
the decision referred
to in the provisions of paragraph (4).
(6) The immediate appeal referred to in the provisions of paragraph (5)
shall not have the effect of suspending any execution.
(7) When it becomes clear that the value of debtor s assets is inadequate
for the repayment of the total amount of the public-interest
claim, the
public-interest claim shall be repaid according to the ratio of the amount
of claim that is not yet repaid, notwithstanding
the priority right of the
public-interest claims that are prescribed by Acts and subordinate statutes:
10
763 (Supp. 39)
Provided, That this shall not affect the effects of lien, pledge rights,
mortgages and special priority rights for public-interest
claims.
Article 181 (Other Claims after Commencement)
(1) With respect to any property claim that accrues from causes arising
after rehabilitation procedures commence, which is not a
public-interest
claim, a rehabilitation claim or a rehabilitation security right (hereinafter
referred to as other claims after
the commencement ), the act of repaying
such claim, taking the repayment of such claim or extinguishing such claim
(excluding the
act of excluding) shall be prohibited from being performed
from the time when the rehabilitation procedures commence to the time
when the repayment period has ended (referring to the time when the
rehabilitation procedures are completed where the rehabilitation
procedures
are completed before it is decided to grant an authorization for the
rehabilitation plan and the time when the repayment
is completed where
repayment based on the rehabilitation plan is completed before the period
has expired).
(2) No application may be filed for any auction with the aim of compulsorily
executing, provisionally seizing, provisionally disposing
of the debtor s
assets or exercising security rights against the debtor s assets based on
other claims after the rehabilitation
procedures commence during the
period referred to in the provisions of paragraph (1).
CHAPTER MEETING OF PERSONS
CONCERNED
Article 182 (Notification of Date)
(1) The court shall notify persons falling under each of the following
subparagraphs of the date on which the meeting of persons
concerned is
to be held:
1. Custodians;
2. Inspectors;
3. The debtor;
4. Rehabilitation creditors, rehabilitation secured creditors, shareholders
and equity right holders who are recorded on the list
or are reported;
and
5. When any person bears any obligation or furnishes any security for
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(Supp. 39) 764
the rehabilitation, such person.
(2) Notwithstanding the provisions of paragraph (1), the court may not
notify any rehabilitation creditor, rehabilitation secured
creditor,
shareholder and equity right holder who is prohibited from exercising his
voting rights as of the date on which the meeting
of persons concerned
is held. In the case of the first meeting of persons concerned, the court
may not notify any person who takes
the delivery pursuant to the provisions
of Article 51 (2) of the date on which the meeting of persons concerned
is held.
Article 183 (Notification of Date)
The court shall notify the administrative agency in charge of supervising
the business of the debtor who is a stock company, the
Minster of Justice
and the Financial Services Commission of the date on which the meeting
of persons concerned is to be held.
The court shall preside over the meeting of persons concerned.
Article 185 (Publication of Date and Purposes)
(1) The court shall publish the date on which the meeting of persons
concerned is to be held and the agenda of such meeting.
(2)
When a declaration is made on the postponement or the continuation
of the meeting of persons concerned, the delivery thereof and
the publication
thereof may be omitted.
Article 186 (Combination of Date for Meeting of Persons Concerned and
Special Inspection Date)
When it is deemed appropriate, the court may combine the date of the
meeting of persons concerned and the special inspection date
by its inherent
jurisdiction or upon receiving an application filed by the custodian therefor.
Article 187 (Objection Raised to
Voting Rights)
Anyone falling under both of the following subparagraphs may raise an
objection to the voting rights of any rehabilitation creditor,
rehabilitation
secured creditor, shareholder and any equity right holder at the meeting
of persons concerned: Provided, That the
same shall not apply to the
voting rights of any rehabilitation creditor or any rehabilitation secured
creditor who holds the rehabilitation
claim or the rehabilitation security
right that is confirmed in the inspection procedures provided for in the
provisions of the
Section 3 of the Chapter of this Part:
1. The custodian; and
10
765 (Supp. 39)
2. Any rehabilitation creditor, rehabilitation secured creditor, shareholder
and any equity right holder who are all recorded on
the list or are reported.
Article 188 (Exercise of Voting Rights)
(1) Every rehabilitation creditor or every rehabilitation secured creditor
who holds the rehabilitation claim or the rehabilitation
security right that
is confirmed may exercise his/her voting rights according to the amount
thereof or the number thereof that
is confirmed and every shareholder
or equity right holder who holds the voting rights to which no objection
is raised may exercise
those voting rights according to the amount or the
number recorded on the list or are reported.
(2) With respect to any voting rights to which an objection is raised, the
court shall determine whether to permit the exercise
of the voting rights
and the amount or the number on which the voting rights is permitted
to be exercised.
(3) The court may amend the determination referred to in the provisions
of paragraph (2) at any time upon receiving an application
filed by interested
persons or by its inherent jurisdiction.
(4) The determination referred to in the provisions of paragraphs (2)
and (3) need not be delivered.
Article 189 (Exercise of Voting Right in Descent)
(1) Any voting right holder may exercise his/her voting right in descent.
(2)
In cases under paragraph (1), every holder of voting rights shall report
in writing the gist thereof to the court at least 7 days
prior to the meeting
of persons concerned is held.
Article 190 (Exclusion of Unjust Voting Right Holders)
(1) When it is deemed that any rehabilitation creditor, rehabilitation secured
creditor, shareholder and equity right holder has acquired his/her rights
for the purpose of making unfair gains, including the
giving and taking
of asset gains with respect to any resolution in light of the time at which
the right is acquired, the price
therefor is paid and of other circumstances,
the court may prohibit him/her from exercising his/her voting rights.
(2) The court
shall examine the relevant holder of voting rights before
it takes the disposition pursuant to the provisions of paragraph (1).
Article 191 (Persons Prohibited from Exercising His/Her Voting Rights)
Anyone falling under any of the following subparagraphs
shall be prohibited
from exercising his/her voting rights:
1. Anyone whose rights are not affected by the rehabilitation plan;
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(Supp. 39) 766
2. Anyone who holds a claim provided for in the provisions of Article 140
(1) and (2);
3. Anyone who holds the claim provided for in the provisions of
subparagraphs 2 through 4 of Article 118;
4. Anyone who is prohibited from exercising his/her voting rights pursuant
to the provisions of Articles 188 and 190; and
5. Anyone who is protected pursuant to the provisions of Article 244 (2).
Article 192 (Exercise of Voting Rights by Proxy)
(1) Any rehabilitation creditor, rehabilitation secured creditor, shareholder
and any equity right holder may cause his/her agent
to exercise those
voting rights. In this case, the agent shall submit a written statement
attesting to his/her agency authority.
(2) The provisions of Article 189 (2) shall apply mutatis mutandis to cases
where the agent fails to exercises the delegated voting
right as delegated.
CHAPTER REHABILITATION PLAN
SECTION 1 Contents of Rehabilitation Plan
Article 193 (Contents of Rehabilitation Plan)
(1) The matters falling under of the following subparagraphs shall be
prescribed in the rehabilitation plan:
1. Any change to all or part of the rights of any rehabilitation creditor,
rehabilitation secured creditor, shareholder or any equity
right holder;
2. The repayment of public-interest claims;
3. Means of raising fund to repay the debtor s obligations;
4. The purpose for using profits, that exceed the amount anticipated in
the rehabilitation plan; and
5. When any other claims are known after the rehabilitation procedures
commence, the details thereof.
(2) The matters falling under any of the following subparagraphs may
be prescribed in the rehabilitation plan:
1. The transfer of any business or any assets, any investment or any
rent and the commission of any corporate governance;
2. Any amendment of the articles of incorporation;
3. Any change in directors and the chief executive officer. (When the debtor
is not a stock company, anyone who holds the authority
to represent
10
767 (Supp. 39)
the debtor shall be included);
4. A decrease in the capital;
5. The issuance of new shares or bonds;
6. The all-inclusive exchange, transfer, merger, split and merger by split
of shares;
7. Dissolution;
8. The incorporation of a new company; and
9. Other matters necessary for the rehabilitation.
(3) When an agreement is reached among all or some creditors on the
repayment
order of claims that they hold by the date preceding the date
on which the first meeting of persons concerned is held, any provisions
shall not be prescribed against claims repayment order for which is agreed
within a scope so as not to damage other creditors under
the rehabilitation
plan. In this case, the creditors shall submit data attesting to their agreement
to the court by the date preceding
the date on which the first meeting
of persons concerned is held.
Article 194 (Rights of Rehabilitation Creditors, etc.)
(1) When any change is made in the rights of any rehabilitation creditor,
rehabilitation secured creditor, shareholder or any equity right holder,
such change in rights shall be expressly stated in the
rehabilitation plan
and the details of the altered rights shall be prescribed after the change
thereof.
(2) When the rights of a rehabilitation creditor, a rehabilitation secured
creditor, a shareholder or an equity right holder are
not affected by the
rehabilitation plan, the rights of such person shall be explicitly stated
in the rehabilitation plan.
Article 195 (Deadline for Obligations)
Where any obligations are borne and the deadline for any obligations are
postponed according to the rehabilitation plan, the time
limit of such
obligations, when such obligations are secured, shall not exceed the period
of the existence of the secured assets.
When no security exists or it is
not possible to determine on the period of the existence of such security,
the period of existence
thereof shall not exceed 10 years: Provided, That
the same shall not apply to cases where bonds are issued under the conditions
prescribed by the rehabilitation plan.
Article 196 (Furnishing of Security and Bearing of Obligations)
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(Supp. 39) 768
(1) When the debtor or anyone other than the debtor furnishes any security
for the rehabilitation, the person who furnishes such
security shall be
expressly mentioned in the rehabilitation plan and the details of such
security shall be prescribed in the rehabilitation
plan.
(2) When anyone other than the debtor assumes obligations, becomes a
guarantor thereof and bears obligations, etc, for the
rehabilitation, he/she
shall be expressly mentioned and the details of the obligations shall be
prescribed in the rehabilitation
plan.
Article 197 (Unconfirmed Rehabilitation Claims, etc.)
(1) When any rehabilitation claim or any rehabilitation security right to
which an objection is raised and the confirmation procedures therefor are
not completed, appropriate measures therefor shall be
prescribed in the
rehabilitation plan, taking into account the possibility of confirming such
claim and such rights.
(2) Appropriate measures shall be prescribed in the rehabilitation plan
for claims that are reportable pursuant to the provisions
of Article 109
(2).
Article 198 (Repaid Rehabilitation Claims, etc.)
Any rehabilitation claim and any rehabilitation security right that are
repaid pursuant to the provisions of the proviso to Articles
131 and 132
(1) and (2) among the rehabilitation claims and the rehabilitation security
rights shall be expressly mentioned in
the rehabilitation plan.
Article 199 (Public-Interest Claims)
Any public-interest claims that are already repaid shall be expressly
mentioned in the rehabilitation plan and public-interest claims
that are
scheduled to be repaid in the future shall also be prescribed in the
rehabilitation plan.
Article 200 (Transfer, etc. of Business or Assets)
(1) In cases falling under any of the following subparagraphs, the subject
matter,
the price thereof, the other party and other matters shall be
prescribed in the rehabilitation plan:
1. Where the whole or part of the debtor s business or assets are transferred,
invested or rented;
2. Where the whole or part of the management of the debtor s business
is commissioned;
3. Where any contract under which the profits and losses are shared with
10
769 (Supp. 39)
any other person and any other contract corresponding to the former
are concluded, changed or canceled; and
4. Where the whole or part of another person s business and assets are
acquired by transfer.
(2) In cases under paragraph (1), where the proceeds are distributed to
any rehabilitation creditor, rehabilitation secured creditor,
shareholder
and equity right holder, the methods of such distribution shall also be
prescribed.
Article 201 (Rights on Which Dispute Is Not Settled)
When any dispute on the rights that belong to the debtor are not settled,
matters concerning the acceptance of the compromise or the mediation
or the performance of lawsuit and methods of exercising the
rights custodians
shall be prescribed in the rehabilitation plan.
Article 202 (Amendment of Articles of Incorporation)
When the articles of incorporation of the debtor are amended, the details
of the change in the articles of incorporation shall be prescribed in the
rehabilitation plan.
Article 203 (Change in Directors, etc.)
(1) When directors of a corporate debtor are selected and appointed or
the chief executive officer thereof (when the debtor is not
a stock company,
anyone who holds the authority to represent the debtor shall be included;
hereafter in this Article referred to
as the chief executive officer ) is selected,
the persons who are selected and appointed or to be selected, their terms
of office
or methods of their selection and appointment shall be prescribed
in the rehabilitation plan.
(2) When anyone who is to remain in his/her position among the directors
or the chief executive officer of a corporate debtor, he/she
shall be designated,
along with his/her term of office, in the rehabilitation plan: Provided, That
when rehabilitation procedures
commence on the grounds of the flight or
concealment of the assets or intentional, poor corporate governance, etc.
that are perpetrated
and performed by any director or chief executive officer,
such persons shall not be entitled to retain their positions.
(3) In
cases under paragraphs (1) and (2), when multiple chief executive
officers jointly represent the debtor, the gist thereof shall
be prescribed
in the rehabilitation plan.
(4) The court shall select and appoint the auditor of a corporate debtor
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 770
after hearing the opinion thereof of the creditors consultative council.
In this case, the court shall determine his/her term of
office.
(5) The terms of office for the directors referred to in the provisions of
paragraph (1) shall not exceed one year.
Article 204 (Matters Concerning Selection and Appointment of Directors,
etc.)
The rehabilitation plan concerning methods of selection, appointment or
the manner of retention of office of directors, the chief
executive officer
or auditors of corporate debtors or any new company (excluding any new
company incorporated by merger or merger
by split shall be excluded) shall
conform to the principle of equity and also conform to the overall interests
of rehabilitation
creditors, rehabilitation secured creditors, shareholders
and equity right holders.
Article 205 (Capital Reductions of Stock Companies or Limited-Liability
Companies)
(1) When the capital of a debtor who is a stock company is reduced, matters
falling under both of the following subparagraphs shall
be prescribed in
the rehabilitation plan:
1. The amount of capital to be reduced; and
2. Means of reducing the capital.
(2) The capital reduction referred to in the provisions of paragraph (1)
shall be determined taking
into account the debtor s assets and obligations
and the debtor s profit-making ability.
(3) When the total amount of the obligations of the debtor who is a stock
company exceeds the total amount of his/her assets at
the time rehabilitation
procedures commence, the rehabilitation plan shall include that the capital
is to be reduced by retiring
not less than 1/2 of the issued shares or by
amalgamating not less then 2 shares into one share.
(4) When rehabilitation procedures
commence due to an act for which any
director or any manager of the debtor who is a stock company is totally
responsible, the rehabilitation
plan shall include that the capital is to be
reduced by retiring not less than 2/3 of shares held by shareholders, their
relatives
and shareholders with a special relationship, the scope of which
is prescribed by the Presidential Decree, any of whom exercise
influence
over the conduct that causes the rehabilitation procedures; or by
amalgamating not less than 3 shares into one share.
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771 (Supp. 39)
(5) When new shares are issued pursuant to the provisions of Article 206
after the capital reduction referred to in the provisions
of paragraph (4),
the shareholders provided for in the provisions of paragraph (4) shall not
be permitted to underwrite the newly
issued shares: Provided, That stock
options provided for in the provisions of Article 340-2 of the Commercial
Act may be granted
to the shareholders referred to in the provisions of
paragraph (4).
(6) The provisions of paragraphs (1) through (4) and the main sentence
of paragraph (5) shall apply mutatis mutandis to limited-liability
companies.
Article 206 (Issuance of New Shares by Stock Companies and
LimitedLiability Companies)
(1) When the debtor who is a stock company issues new shares without
causing rehabilitation creditors, rehabilitation secured creditors
or
shareholders to pay for such newly issued shares or to make investments
in kind, the matters falling under each of the following
subparagraphs
shall be prescribed in the rehabilitation plan:
1. The types and number of new shares;
2. Matters concerning the distribution of new shares;
3. The amount of capital and reserve increased by the issuance of new
shares; and
4. The amount of obligations decreased by the issuance of new shares.
(2) When the debtor who is a stock company issues new shares
and causes
rehabilitation creditors, rehabilitation secured creditors or shareholders
to pay for the newly issued shares or to
make investments in kind, the
matters falling under each of the following subparagraphs shall be prescribed
in the rehabilitation
plan:
1. The matters referred to in paragraph (1) 1 and 3;
2. The matters concerning the amount paid, the distribution of new shares
and the date on which payments are made for the new shares;
and
3. When a person makes new investment in kind, the name of such person,
the assets that are the object of such new investment in
kind, the
price thereof and the types and the number of shares that are given
in return for the price.
(3) When the debtor who is a stock company issues new shares with the
exception of cases under paragraphs (1) and (2), the matters
falling under
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 772
each of the following subparagraphs shall be prescribed in the rehabilitation
plan:
1. The matters referred to in paragraph (1) 1;
2. The matters referred to in paragraph (2) 3;
3. The value of newly issued shares and the date on which such value
is paid; and
4. The amount not added to the capital among the value of the newly
issued shares.
(4) Where new shares are issued pursuant to the provisions of paragraph
(1), the provisions falling under each of the following
subparagraphs shall
not apply thereto: 1. The provisions of Article 37 and subparagraph 1 of Article 38 of the
Banking Act;
2. The provisions of Article 19 of the Insurance Business Act;
3. The provisions of Article 344 of the Captial Market and Financial
Investment Business Act;
4. The provisions of Article 24 of the Act on Structural Improvement of
the Financial Industry; and
5. Other Acts and subordinate statutes that place restrictions on
investments, the acquisition of securities and the management of
assets
that are each performed by financial institutions (referring to the financial
institutions provided for in the provisions
of Article 2 of the Act on
the Efficient Disposal of Non-Performing Assets, etc. of Financial
Institutions and the Establishment
of Korea Asset Management
Corporation and Article 2 of the Act on the Structural Improvement
of the Financial Industry).
(5) The provisions of paragraphs (1) through (3) shall apply mutatis
mutandis to cases of limited-liability companies.
Article
207 (All-Inclusive Exchange of Shares of Stock Companies)
When the debtor who is a stock company performs a total exchange of
shares
with another company, the matters falling under any of the following
subparagraphs shall be prescribed in the rehabilitation plan:
1. The trading name of the other company;
2. Where other company becomes a full parent company, as detailed under
the provisions of Article 360-2 (1) of the Commercial Act
(hereinafter
referred to as the full parent company ), when the other company
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773 (Supp. 39)
amends its articles of incorporation by way of the total exchange of
shares. the regulations therefor;
3. Matters concerning the total number and types of shares and the
number of shares by type that are newly issued by the company
that
becomes a full parent company for the total exchange of shares and
the distribution of newly issued shares to shareholders
by the company
that becomes a full subsidiary (hereinafter referred to as the full
subsidiary ) as defined under the provisions
of Article 360-2 (1) of
the Commercial Act;
4. Matters concerning the amount of capital and reserve to be raised by
the company that becomes a full parent company;
5. When it is prescribed to pay money or distribute bonds to shareholders
of the other company, the regulations therefor;
6. The date and time on, and at which the general meeting of shareholders
is held to approve a resolution for a written contract
under which the
total exchange of shares is performed with any other company (where
the company performs the total exchange of
shares without obtaining
approval therefor at the general meeting of shareholders, the gist
thereof);
7. The date on which the total exchange of shares is performed;
8. When the other company distributes its profits by the date on which
the total exchange of shares is performed or distributes the
profits in
cash pursuant to the provisions of Article 462-3 (1) of the Commercial
Act, the limited amount thereof;
9. When the company that becomes a full parent company pursuant to
the provisions of Article 360-6 of the Commercial Act transfers
its
shares, the total number and the types of shares, and the number of
shares by type that are to be transferred; and
10. When the company that becomes a full parent company appoints directors
and an auditor, their names and their resident registration
numbers.
Article 208 (Total Transfer of Shares of Stock Companies)
When the debtor who is a stock company incorporates a new company
that
is a full parent company through a total transfer of shares, the matters
falling under each of the following subparagraphs
shall be prescribed in
the rehabilitation plan:
1. The trading name of the newly incorporated company;
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 774
2. The articles of incorporation of the newly incorporated company;
3. Matters concerning the types and the number of shares that are issued
by the newly incorporated company for the total transfer
of shares,
the distribution of shares by the debtor who becomes a full parent
company to rehabilitation creditors, rehabilitation
secured creditors
or shareholders;
4. Matters concerning the amount of capital and reserve of the newly
incorporated company;
5. When it is decided to pay cash or distribute bonds to the shareholders
of the debtor who becomes a full subsidiary, the regulations
therefor;
6. The time frame during which total transfer of shares is performed;
7. When the debtor who becomes a full subsidiary distributes his/her
profits by the date on which the total transfer of shares is
peformed
and the profits are distributed in cash pursuant to the provisions Article
462-3 (1) of the Commercial Act, the limited
amount thereof; and
8. The names and resident registration numbers of the directors and
auditors of the newly incorporated company.
Article 209 (Issuance of Bonds by Stock Companies)
When a debtor who is a stock company issues bonds, the matters falling
under
each of the following subparagraphs shall be prescribed in the
rehabilitation plan:
1. The total amount of bonds;
2. The value of each of the bonds, the interest rate of the bonds, methods
of redeeming the bonds and the deadline for redeeming
the bonds,
methods of paying the interest thereon and the details of the bonds;
3. Methods to issue the bonds and when the bonds are issued by causing
rehabilitation creditors, rehabilitation secured creditors
or shareholders
to make new payments or without causing them to do so, the matters
concerning the distribution of such new payments;
and
4. When the bonds are collateralized, the details of the security rights.
Article 210 (Mergers of Companies by Absorption)
When a debtor, who is a company, merges with any other company and
either of them survives the merger, the matters falling under
each of the
following subparagraphs shall be prescribed in the rehabilitation plan:
1. The trading name of the other company;
2. The types and the number of shares and equity shares that are issued
10
775 (Supp. 39)
by the surviving company when it merges with any other company,
and matters concerning restrictions on the rights of shareholders
and
equity right holders to underwrite newly issued shares, or equity shares
and when it is decided to grant such rights to any
third person, matters
concerning such rights;
3. The types, the number and the distribution of shares or equity shares
that are issued to the rehabilitation creditors, rehabilitation
secured
creditors, shareholders and equity right holders of any company that
is extinguished by merger and matters concerning the
distribution of
such shares or equity shares;
4. The amount of capital and reserve that are expected to be raised in
the surviving company;
5. When it is decided to pay cash or distribute bonds to the shareholders
and equity right holders of any company that is extinguished
by merger,
the regulations therefor;
6. The date and the time on, or at which the general meeting of shareholders
or the general meeting of employees is held to resolve
on the approval
of a written merger contract;
7. The date on which a merger is effected;
8. Where surviving company decides to amend the articles of incorporation
due to merger, the regulations therefor;
9. When the other company distributes its profits or distributes the profits
in cash due to merger pursuant to the provisions of
Article 462-3 (1)
of the Commercial Act, the amount limited thereof; and
10. When any director or any auditor (including audit committee members;
hereafter in this Article through Article 213 the same shall
apply) who
is to take office in the surviving company due to merger is selected,
his/her name and resident registration number.
Article 211 (Incorporation of Companies by Mergers)
When the debtor, who is a company incorporates a new company after
his/her
company merges with another company, the matters falling under
each of the following subparagraphs shall be prescribed in the rehabilitation
plan:
1. The trading name of the other company;
2. The trading name, purposes, the locations of the principal office and
the branch offices, the amount of capital and reserve and
methods of
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 776
notification of the newly incorporated company;
3. The types and the number of shares and equity shares that are issued
by the newly incorporated company and their distribution;
4. When matters concerning restrictions on the rights of shareholders and
equity secured creditors to underwrite shares or equity
shares that
are newly issued by the newly incorporated company at the time that
the company is newly incorporated and matters concerning
the
underwriting of such shares or equity shares by any specific third person
are prescribed, the matters thereof;
5. The types and the number of shares or equity shares that are issued
for rehabilitation creditors and rehabilitation secured creditors,
the
shareholders and equity right holders of the debtor or the shareholders
and equity right holders of the other company and matters
concerning
their distribution;
6. When it is decided to pay cash or distribute bonds to shareholders
and equity right holders of each company, the regulations therefor;
7. The date and the time on, and at which the general meeting of
shareholders or the general meeting of employees of any other company
is held to resolve on the approval for a merger contract;
8. The date on which the merger is effected;
9. When the other company distributes its profits or its profits in cash
on the grounds of merger pursuant to the provisions of Article
462-3
(1) of the Commercial Act, the limited amount thereof; and
10. When any director and any auditor who are to take office in any company
that survives the merger are selected, their names and
resident
registration numbers.
Article 212 (Splits of Stock Companies)
(1) When a debtor, who is a stock company, incorporates a new company
after a split of its stock company, the matters falling under
each of the
following subapragraphs shall be prescribed in the rehabilitation plan:
1. The firm name, purposes, the locations of the principal office and the
branch offices, the number of shares to be issued, the
value per share,
the amount of capital and reserve and the methods of notification of
the newly incorporated company;
2. The total number and the types of shares and the number of shares
by type that are issued by the newly incorporated company;
10
777 (Supp. 39)
3. The matters concerning restrictions on the rights of shareholders to
underwrite new shares issued by any new company, which are
prescribed
at the time that such new company is incorporated and when the right
to underwrite new shares is granted to any specific
third person, the
matters with regard thereto;
4. When the shares of any newly incorporated company are distributed
to the rehabilitation creditors, rehabilitation secured creditors
or
shareholders of the debtor without causing them to make new payments,
the matters concerning the total number and the types
of shares and the
number of shares by type that are issued, and the distribution of such
shares and when the shares are combined
or divided by their distribution,
the matters with regard thereto;
5. When it is decided to pay cash and distribute bonds to the shareholders
of the debtor, the regulations therefor;
6. The assets and the value thereof, which are transferred to the newly
incorporated company;
7. When anything is prescribed pursuant to the provisions of Article 530-
9 (2) of the Commercial Act, the details thereof;
8. Persons who are expected to become directors, the chief executive officer
and auditors of the newly incorporated company, ways
to select and
appoint them and their terms of office. In this case, their terms of
office shall not exceed one year;
9. When the newly incorporated company issues bonds, the matters referred
to in each subparagraph of Article 209;
10. When shares are issued by causing rehabilitation creditors,
rehabilitation secured creditors, shareholders or any third person
to
pay for them. the matters concerning the amount of their payments,
the distribution of such shares and the dates of their payments;
11. When anyone makes investment in kind, his/her name and resident
registration number, the property that is the object of such
investment,
the price thereof and the types and the number of shares that are
distributed in return;
12. The matters that are intended to be entered in the articles of
incorporation of the newly incorporated company;
13. The amount of capital and reserve; and
14. The date on which the split is effected.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 778
(2) When the debtor remains existance after a split, the matters falling
under each of the following subparagraphs with respect
to the debtor shall
be prescribed in the rehabilitation plan:
1. The amount of capital and reserve to be reduced;
2. Ways to reduce the capital;
3. The assets that are transferred on the due to the spit and their value;
4. The total number of shares issued after the split;
5. When the total number of shares issued by the debtor is reduced, the
total number and the kinds of shares and the number of shares
by
kind, which are reduced; and
6. Other matters that result in an amendment of in the articles of
incorporation.
Article 213 (Split and Merger of Stock Companies)
(1) When a debtor, who is a stock company, is split and part of such stock
company
is merged with another company and such other company remains
in existance and other company is split and part of such other company
merges with the debtor who is a stock company and such debtor remains
in existance, the matters falling under each of the following
subparagraphs
shall be prescribed in the rehabilitation plan:
1. The trading name of the other company;
2. When the total number of shares that the surviving company has to
issue on the grounds of thesplit and merger increases, the matters
concerning the total number of shares that increases, the types of
shares and the number of shares by type that increase and restrictions
on the rights of shareholders to underwrite such shares and the right
of any third person to underwrite newly issued shares is
given, the
regulations therefor;
3. The matters concerning the total number, types of new shares and the
number of shares by type issued for the rehabilitation creditors,
rehabilitation secured creditors and shareholders of the debtor who
is split or the distribution of such shares, and when the combination
or the division of shares is performed on the grounds of their distribution,
the matters thereabout;
4. When it is decided to prescribe the payment of cash and the distribution
of bonds to shareholders of any company that is to split,
the matters
thereabout;
10
779 (Supp. 39)
5. Matters concerning the total amount of capital and reserve of the
surviving company, which is raised;
6. The assets and their value that the debtor who is split transfers to
the surviving company;
7. When it is prescribed pursuant to the provisions of Article 530-9 (3)
of the Commercial Act, the matters with regard thereto;
8. The date and time on, and at which the general meeting of shareholders
of the other company is held to resolve on the approval
of a written
split and merger contract;
9. The date on which the split and the merger are effected;
10. Where the other company survives, when the directors and auditors
of such company are selected, their names and resident registration
numbers; and
11. Other matters that result in an amendment of the articles of
incorporation of the surviving debtor.
(2) When the debtor is split and part of the debtor is merged with another
company or part of another company to form a new company,
when the
other company is split and part of such other company is merged with
the debtor or part of the debtor to form a new company,
the matters falling
under each of the following subparagraphs shall be prescribed in the
rehabilitation plan:
1. The trading name of the other company;
2. The trading name, purposes, the locations of the principal office and
branch offices, the number of shares to be issued, the value
per share,
the amount of capital and reserve, and methods of notification of the
newly incorporated company;
3. Matters concerning restrictions on the rights of shareholders to underwrite
shares that are issued by the newly incorporated company
at the time
that the new company is incorporated and when it is prescribed that
the right to underwrite new shares is granted to
any third person, the
matters with regard thereto;
4. The assets and their value, which are transferred by the debtor or the
other company to the newly incorporated company;
5. When anything is prescribed pursuant to the provisions Article 530-9
(2) of the Commercial Act, the details thereof;
6. Other matters to be entered in the articles of incorporation of the newly
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-1(Supp. 33)
incorporated company;
7. Matters concerning the total number and the types of shares, and the
number of shares by type issued for the rehabilitation creditors,
rehabilitation secured creditors and shareholders of the debtor or the
shareholders of the other company, and when the shares are
combined
or split upon distribution, the matters with regard thereto;
8. When it is prescribed to pay cash or distribute bonds to the debtor
or the shareholders of the other company, the matters with
regard
thereto;
9. The date and the time on, and at which the general meeting of
shareholders of the other company is held to resolve on the approval
for a written split and merger contract;
10. The date on which the split and the merger are effected; and
11. Persons who are expected to become directors, the chief executive officer
and auditors of the newly incorporated company, their
selection and
appointment, methods of selecting them and their terms of office. In
this case, their terms of office shall not exceed
one year.
(3) The provisions of Article 212 shall apply mutatis mutandis to cases
where the part that is not subject to the split
and merger of the debtor
provided for in the provisions of paragraphs (1) and (2) is prescribed.
Article 214 (Asset Spinoff of
Stock Companies)
The provisions of Articles 212 and 213 shall apply mutatis mutandis to
cases where the debtor, who is a stock company to be split,
acquires all
of the shares of any company that is incorporated on the grounds of split
or merger by split.
Article 215 (Incorporation of New Company by Stock Companies or
LimitedLiability Companies)
(1) When a new company (limited to any stock company or any
limitedliability company. hereafter in this Article the same shall apply)
is incorporated by causing rehabilitation creditors, rehabilitation secured
creditors, shareholders and equity right holders to
underwrite its shares
or its equity shares instead of causing them to make new payments or
make investment in kind therein, the
following matters under each of the
following subparagraphs shall be prescribed in the rehabilitation plan:
1. The trading name, purposes, the locations of the principal office and
branch offices and methods of notification of the newly
incorporated
10
(Supp. 33)779-2
company;
2. The kinds and the number of shares and equity shares issued by the
newly incorporated company;
3. The value per share or per investment;
4. Matters concerning restrictions on the rights of shareholders to underwrite
shares or equity shares or the rights of equity right
holders to underwrite
equity shares, each of which are issued by the newly incorporated
company at the time that the new company
is incorporated, and when
the right of any third person to do so is prescribed, the matters with
regard thereto;
5. Matters concerning the types, the number and the distribution of
shares or equity shares issued for rehabilitation creditors,
rehabilitation
secured creditors, shareholders and equity right holders;
6. Other matters that are entered in the articles of incorporation of the
newly incorporated company;
7. The amount of capital and amount of reserve of the newly incorporated
company;
8. The assets, and their value, that are transferred from the debtor to
the newly incorporated company;
9. Persons who are expected to become directors, the chief executive officer
and auditors in the newly incorporated company, their
selection and
appointment, methods of selecting them and their terms of office. In
this case, their terms of office shall not exceed
one year; and
10. When the newly incorporated company issues bonds, the matters
provided for in each subparagraph of Article 209.
(2) With the
exception of cases under paragraph (1), when a new company
is incorporated without resorting to the total exchange of shares, any
merger, any split or any split by merger, the matters falling under each
of the following subparagraphs shall be prescribed in
the rehabilitation
plan:
1. The matters referred to in paragraph (1) 1 through 3, 6, and 8 through
10;
2. The types and the number of shares or equity shares issued at the
time the new company is incorporated and when rehabilitation
creditors,
rehabilitation secured creditors or equity right holders are permitted
to underwrite shares or equity shares without
causing them to make
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-3(Supp. 33)
new payments or make investments in kind, the matters referred to
in paragraph (1) 5; and
3. When anyone makes a new investment in kind, his/her name and resident
registration number, the assets that are the object of his/her
investment
and the value thereof, and the types and number of shares and equity
shares each provided in return for his/her investment.
Article 216 (Dissolution)
When the debtor dissolves his/her company without resorting to any
merger, any split or any split by merger. the gist thereof and
the time
of the dissolution of his/her company shall be prescribed in the rehabilitation
plan.
Article 217 (Fair and Equal Differentiation)
(1) The restoration plan shall provide differentiation in terms of its fairness
and equality taking into account the ranking order
of the rights referred
to in the provisions of each of the following subparagraphs:
1. Rehabilitation security rights;
2. General preferential rehabilitation claims;
3. Rehabilitation claims, other than the rehabilitation claims referred
to in subparagraph 2;
4. The rights of shareholders and equity right holders, the details of
which call for the preferential distribution of the residual
property;
and
5. The rights of shareholders and equity right holders, other than the
rights referred to in the provisions of subparagraph 4.
(2)
The provisions of paragraph (1) shall not apply to claims provided
for in the provisions of Article 140 (1) and (2).
Article 218
(Principles of Equality)
(1) The conditions of the rehabilitation plan shall allow for equality
between persons who hold rights of the same nature: Provided,
That the
same shall not apply to instances falling under any of the following
subparagraphs:
1. When consent is obtained from a person who suffers disadvantage;
2. When the principles of equality are not undermined even if any
rehabilitation creditor, any rehabilitation secured creditor whose
claims
are minor in terms of amount, or any person who holds a claim provided
for in the provisions of subparagraphs 2 through
4 of Article 118 are
differently prescribed or differentiated; and
10
(Supp. 33)779-4
3. When the principles of equality are not undermined even if persons
who hold rights of the same kind are differentiated.
(2) Where
a claim falling under any of the following subapragraphs is
prescribed differently from other rehabilitation claims or is differentiated
in the rehabilitation plan, it is recognized that such does not undermine
the principles of equality, and such claim may be handled
more
disadvantageously than other rehabilitation claim:
1. A claim that accrues from a consumer cash loan extended to a person
with a special relationship, whose scope is prescribed by
the Presidential
Decree, with the debtor before rehabilitation procedures commence;
2. A claim regarding guarantee obligations where the debtor becomes a
guarantor without compensation for the person in a special
relationship,
the scope of which is prescribed by the Presidential Decree, with the
former before rehabilitation procedures commence;
and
3. A claim for indemnification that accrues from a guarantee liability for
the debtor where the person in a special relationship,
whose scope is
prescribed by the Presidential Decree, with the debtor becomes a
guarantor for the debtor before rehabilitation
procedures commence.
Article 219 (Setting Aside of Act of Giving Special Profits)
The act of giving special profits to any rehabilitation
creditor, rehabilitation
secured creditor, shareholder and equity right holder in his/her name, or
the name of any third person,
without resorting to the rehabilitation plan
shall be set aside.
SECTION 2 Submission of Draft Rehabilitation Plan
Article 220 (Submission of Draft Rehabilitation Plan)
(1) When the value is deemed
higher where the debtor s business continues
than its value where the debtor s business is liquidated, the court shall
order any
custodian to submit without delay a draft rehabilitation plan,
the contents of which are geared toward the continuation of the debtor
s
business through debtors being in existence, the exchange of shares. the
transfer of shares, merger, split, split by merger,
the incorporation of a
new company and the transfer of business on or after the date on which
the first meeting of persons concerned
is held within a fixed period.
(2) When the court determines to grant the order referred to in the provisions
of paragraph (1),
it shall publish the details of such decision and the gist
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-5(Supp. 33)
provided for in the provisions of Article 221 (1).
(3) The court may extend the fixed period referred to in the provisions
of paragraph
(1) by its inherent jurisdiction or upon receiving an application
therefor.
(4) When any custodian is unable to develop the draft rehabilitation plan,
he/she shall advise the court his/her inability to do
so within the period
referred to in the provisions of paragraph (1) or (3).
(5) The period set by the court pursuant to the provisions
of paragraph (1)
shall not exceed 4 months: Provided, That if the debtor is an individual,
the period shall not exceed 2 months.
(6) The extension of the period referred to in the provisions of paragraph (3)
shall not exceed 2 months: Provided, That if the
debtor is an individual
or a small- and medium-sized enterpriser, the extension of the period
shall not exceed one month.
Article 221 (Submission of Draft Rehabilitation Plan by Rehabilitation
Creditors, etc.)
(1) Anyone falling under any of the following subparagraphs may develop
and submit a draft rehabilitation plan to the court within
the period provided
for in the provisions of Article 220 (1):
1. The debtor; and
2. Any rehabilitation creditor, rehabilitation secured creditor, shareholder
and any equity right holder, each of whom are recorded
on the list
or are reported.
(2) The provisions of Article 220 (3) and (6) shall apply mutatis mutandis
to cases under paragraph (1).
Article 222 (Draft Rehabilitation Plan Whose Details Aim for Liquidation
or Business Transfer, etc.)
(1) When the value of the debtor s business is deemed higher where the
business is liquidated than its value when the debtor s business
continues,
the court may, upon receiving an application filed by a person falling
under any of the following subapragraphs, permit
the development of a
rehabilitation plan, the details of which are geared toward liquidation
(including the transfer of the whole
or part of the business and the asset
spinoff of the business): Provided, That the same shall not apply where
it causes damage
to general creditors interests:
1. The custodian;
2. The debtor; and
10
(Supp. 33)779-6
3. Any rehabilitation creditor, rehabilitation secured creditor, shareholder
and any equity right holder each of whom are recorded
on the list and
are reported.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to cases
where it becomes manifestly difficult to develop a draft
rehabilitation plan,
the details of which are geared toward the continuation of the business
through debtors being in existence,
merger, split, split by merger and the
incorporation of a new company, etc. after rehabilitation procedures
commence.
(3) The court may revoke the permission referred to in the provisions of
paragraph (1) or (2) at any time prior to the draft rehabilitation
plan
being placed in a resolution.
(4) The provisions of Article 236 (4) shall apply mutatis mutandis to the
permission referred to in the provisions of paragraphs
(1) and (2).
Article 223 (Prior Submission of Draft Rehabilitation Plan)
(1) Any creditor who holds a claim corresponding to not
less than 1/2
of the debtor s obligations may develop a rehabilitation plan and submit
it to the court from the time when rehabilitation
procedures commence
until the date preceding the date on which the fist meeting of persons
concerned is held.
(2) The court shall keep the draft rehabilitation plan (when the draft
rehabilitation plan is revised pursuant to the provisions
of Article 228
or 229 (2), this refers to the revised draft rehabilitation plan; hereafter
in this Article refers to as the prior
draft plan ) in the court in order
for interested persons to inspect it.
(3) Creditors other than creditors who have submitted the prior draft plan,
may express their intentions to agree to the prior draft
plan in writing
to the court by the date preceding the date on which the meeting of persons
concerned is held to resolve on the
draft rehabilitation plan.
(4) Where the total amount of claims held by a creditor who has submitted
the prior draft plan, or who
has agree to the prior draft plan is equivalent
to not less than 2/3 of rehabilitation claims and rehabilitation security
rights
that are recorded on the list or reported by the date preceding the
date on which the first meeting of persons concerned is held,
the period
that is set by the court pursuant to the provisions of Article 220 (1) shall
not exceed 2 months, notwithstanding the
provisions of paragraph (5) of
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-7(Supp. 33)
the same Article and the extension of the period referred to in the provisions
of paragraph (3) of the same Article shall not exceed
one month,
notwithstanding the provisions of paragraph (6) of the same Article.
(5) When the prior draft plan is submitted, the
relevant custodian need
not submit the draft rehabilitation plan after obtaining exemption thereof
from the court or may withdraw
the draft rehabilitation plan that he/she
has submitted to the court.
(6) Any creditor who submits the prior draft plan or expresses an intention
to agree to the prior draft plan (including any creditor
who expresses his/her
intention of agreeing to the prior draft plan provided for in the provisions
of paragraph (3) after the date
on which the meeting of persons concerned
is held) shall be deemed to have agreed to it when the prior draft plan
is approved by
a resolution at the meeting of persons concerned that is
called for the adoption thereof: Provided, That when the contents of the
prior draft plan are revised so as to be disadvantageous for creditors,
circumstances are greatly changed and serious grounds exist,
such creditors
may withdraw their agreements after obtaining the court s permission
therefor by the day preceding the date on which
the meeting of persons
concerned is held.
Article 224 (Meeting of Persons Concerned Held to Examine Draft
Rehabilitation Plan)
When the draft rehabilitation plan is submitted, the court shall call a
meeting of persons concerned to examine such draft rehabilitation
plan
on a fixed date: Provided, That the same shall not apply to cases where
it is placed on a written resolution provided for
in the provisions of Article
240.
Article 225 (Hearing of Opinions with Respect to Draft Rehabilitation
Plan)
The court shall hear the opinions of persons falling under each of the following
subparagraphs concerning the draft rehabilitation
plan after hearing an
explanation of the draft rehabilitation plan from the submitters of such draft
rehabilitation plan at the
meeting of persons concerned provided for in
the provisions of Article 224:
1. The custodian;
2. The debtor; and
3. Rehabilitation creditors, rehabilitation secured creditors, shareholders
and equity right holders who are entered in the list
or are reported.
10
(Supp. 33)779-8
Article 226 (Opinions of Supervisory Administrative Agencies, etc.)
(1) When it is deemed necessary, the court may request any administrative
agency in charge of supervising the debtor s business, the Minister of Justice,
the Financial Services Commission and any other
administrative agency
to state their opinions with respect to the draft rehabilitation plan.
(2) With respect to a draft rehabilitation plan that prescribes matters
that require permission, authorization, license and other
dispositions of
administrative agencies, the court shall hear the opinions of administrative
agencies with respect thereto.
(3) The administrative agency in charge of supervising the debtor s
business, the Minister of Justice and the Financial Services
Commission
may state their opinions with respect the draft rehabilitation plan to the
court at any time.
The court shall hear the opinion of the person falling under each of the
following subparagraphs with respect to the draft rehabilitation
plan:
1. A union comprised of a majority of the debtor workers; and
2. When the union referred to in subparagraph 1 is nonexistent, the person
who represents a majority of the debtor s workers.
Article
228 (Revision of Draft Rehabilitation Plan)
Any submitter of the draft rehabilitation plan may revise the draft
rehabilitation
plan after obtaining permission from the court therefor by
the date on which a meeting of person concerned is held to examine the
draft rehabilitation plan or by the date on which it is decided to place
the draft rehabilitation plan on a written resolution
pursuant to the
provisions of Article 240.
Article 229 (Order Given to Revise Draft Rehabilitation Plan)
(1) The court may order any submitter of the draft rehabilitation
plan
to revise it by its inherent jurisdiction or upon receiving an application
filed by interested persons.
(2) When an order is given by the court pursuant to the provisions of
paragraph (1), any submitter of the draft rehabilitation plan
shall revise
it within by the deadline set by the court.
Article 230 (Resumption of Meeting of Persons Concerned)
(1) When the revision provided for in the provisions of Article 229 is
made
after the date on which the meeting of persons concerned is held to examine
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-9(Supp. 33)
the draft rehabilitation plan, the court may call a meeting of persons
concerned to examine a draft revision on a fixed date.
(2)
The provisions of Article 225 shall apply mutatis mutandis to the meeting
of persons concerned referred to in the provisions of
paragraph (1).
Article 231 (Exclusion of Draft Rehabilitation Plan)
Where the draft rehabilitation plan falls under any of the
following
subparagraphs, the court may not place the draft rehabilitation plan under
the examination or on the resolution of the
meeting of persons concerned:
1. If the draft rehabilitation plan is in violation of the Act;
2. If the draft rehabilitation plan is unfair or is not in conformity with
the principles of equality; and
3. If it is impossible to implement the draft rehabilitation plan.
Article 232 (Meeting of Persons Concerned Called to Resolve on
Draft
Rehabilitation Plan)
(1) When the court does not order the revision of the draft rehabilitation
plan that goes through an examination of the meeting
of persons concerned
pursuant to the provisions of Articles 224 and 230, the court shall call
a meeting of persons concerned to
resolve on the draft rehabilitation plan
after setting the date therefor.
(2) In cases under paragraph (1), the court shall deliver in advance a
copy or summary of the draft rehabilitation plan to persons
falling under
each of the following subparagraphs:
1. The custodian;
2. The debtor;
3. Rehabilitation creditors, rehabilitation secured creditors, shareholders
and equity right holders (excluding anyone not entitled
to exercise
his/her voting rights) who are entered in the list or are reported; and
4. Any person who bears any obligations or provides security for the
rehabilitation.
(3) The delivery referred to in the provisions of paragraph (2) may be
performed in the same manner as documents are mailed.
(4)
The provisions of Article 8 (4) and (5) shall apply mutatis mutandis
to the delivery referred to in the provisions of paragraph
(3).
Article 233 (Presence of Persons who Bear Obligations for Rehabilitation)
(1) Anyone who bears any obligation or provides
any security for
rehabilitation shall be present to state the gist thereof on the date provided
10
(Supp. 33)779-10
for in the provisions of Article 232 (1): Provided, That he/she may cause
his/her agent to be present when justifiable grounds thereof
exist.
(2) The agent referred to in the proviso to the provisions of paragraph (1)
shall submit a written statement attesting his/her
agency authority.
(3) When it is placed in a written resolution pursuant to the provisions
of Article 240, the terms of an agreement
of any person who bears any
obligations or provides a security shall be prescribed in the draft
rehabilitation plan after obtaining
such agreement from such person instead
of the statement referred to in the provisions of paragraph (1).
Article 234 (Amendment
of Draft Rehabilitation Plan)
Any submitter of the draft rehabilitation plan may amend such draft
rehabilitation plan at the meeting
of persons concerned provided for in
the provisions of Article 232 (1) after obtaining permission therefor from
the court only
when such change does not disadvantageously affect
rehabilitation creditors, rehabilitation secured creditors, shareholders
and
equity right holders.
SECTION 3 Resolution for Draft Rehabilitation Plan
Article 235 (Timing of Resolution)
The draft rehabilitation plan shall not be placed in a resolution before
the inspection period expires.
Article 236 (Methods of Resolution and Categorization of Rehabilitation
Creditors, etc.)
(1) When a resolution is placed on the agenda of a meeting of persons
concerned pursuant to the provisions of Article 232 (1), or
a written
resolution is placed on the agenda pursuant to the provisions of Article
240, rehabilitation creditors, rehabilitation
secured creditors, shareholders
and equity right holders shall participate in such resolution as a group
as categorized pursuant
to the provisions of paragraphs 2, 3 and 5.
(2) Rehabilitation creditors, rehabilitation secured creditors, shareholders,
equity
right holders shall be categorized into the groups falling under
each of the following subparagraphs for their participation in
the
development and the passing of resolutions on the draft rehabilitation plan:
Provided, That the same shall not apply to anyone
who holds a claim provided
for in the provisions of Article 140 (1) and (2):
1. Rehabilitation secured creditors;
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-11(Supp. 33)
2. Rehabilitation creditors who hold general priority rights;
3. Rehabilitation creditors other than rehabilitation creditors referred
to in the provisions of subparagraph 2;
4. Shareholders and equity right holders who hold shares or equity shares
that carry priority provisions for the distribution of
the residual property;
and
5. Shareholders and equity right holders other than the shareholders and
the equity right holders provided for in the provisons of
subparagraph
4.
(3) The court may categorize persons who fall under at least two
subparagraphs into one group or persons who fall under one subparagraph
into at least 2 groups taking into account the nature of the rights held
by the persons referred to in each subparagraph of paragraph
(2) and the
relation of interest: Provided, That rehabilitation secured creditors,
rehabilitation creditors, shareholders and equity
right holders shall each
be categorized into another group.
(4) Anyone falling under any of the following subparagraphs may state
his/her opinion with respect to the categorization referred
to in the provisions
of paragraph (3):
1. The custodian;
2. The debtor; and
3. Any rehabilitation creditor, any rehabilitation secured creditor, any
shareholder and any equity right holder who are all recorded
on the
list or are reported.
(5) The court may alter the categories referred to in the provisions of
paragraphs (2) and (3) at any time before the draft rehabilitation
plan
is placed in a resolution.
(6) The provisions of Article 163 shall apply mutatis mutandis to the
delivery of the decision referred to in the provisions of
paragraphs (3)
and (5): Provided, That when a declaration is made on the date on which
the meeting of persons concerned is held,
the delivery need not be made.
Article 237 (Requirements for Resolutions)
The draft rehabilitation plan shall be resolved upon at a meeting of persons
concerned according to the classifications falling
under the following
subparagraphs:
1. The group of rehabilitation creditors:
10
(Supp. 33)779-12
The agreement is required to be obtained from the persons who hold
the voting rights equivalent to not less than 2/3 of the total
amount
of the voting rights of the rehabilitation creditors who are entitled to
exercise their voting rights;
2. The group of rehabilitation secured creditors:
(a) Agreement is required from persons who hold voting rights equivalent
to not
less than 3/4 of the total voting rights of the rehabilitation
secured creditors who are entitled to exercise their voting rights
on the draft rehabilitation plan pursuant to the provisions of Article
220; and
(b) Agreement is required from persons who hold the voting rights
equivalent to not less than 4/5 of the total amount of the voting
rights of the rehabilitation secured creditors who are entitled to
exercise their voting rights on the draft rehabilitation plan
provided
for in the provisions of Article 222; and
3. The group of shareholders and equity right holders:
Agreement is required from persons who hold voting rights equivalent
to not
less them 1/2 of the total voting rights of shareholders and
equity right holders who are entitled to exercise their voting rights
at the meeting of persons concerned for the resolution of the draft
rehabilitation plan.
Article 238 (Designation of Extended Deadline)
Where a meeting of persons concerned fails to resolve on the draft
rehabilitation plan, when persons falling under the following
subparagraphs
agree to extend the deadline, the court may set an extended deadline by
its inherent jurisdiction or upon receiving
an application filed by the
custodian or the debtor and any rehabilitation creditor, any rehabilitation
secured creditor, any shareholder
and any equity right holder who are
entitled to exercise their voting rights:
1. Persons who hold voting rights equivalent to not less than 1/2 of the
total voting rights of the rehabilitation creditors who
are entitled
to exercise their voting rights from among group of rehabilitation
creditors;
2. Persons who hold voting rights equivalent to not less than 2/3 of the
total voting rights of the rehabilitation secured creditors
who are entitled
to exercise their voting rights from among the group of rehabilitation
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-13(Supp. 33)
secured creditors; and
3. Persons who hold voting rights equivalent to not less than 1/3 of the
total voting rights of the shareholders and equity right
holders who
are entitled to exercise their voting rights from among the group of
shareholders and equity right holders.
Article 239 (Timing of Resolution)
(1) The draft rehabilitation plan shall be resolved upon within 2 months
from the fist day of the meeting of persons concerned provided
for in the
provisions of Article 232 (1).
(2) When it is deemed necessary, the court may extend the period referred
to in the provisions of paragraph (1) by its inherent
jurisdiction or upon
receiving an application filed by any submitter of the draft rehabilitation
plan. In this case, the period
shall not exceed one month.
(3) The draft rehabilitation plan shall be resolved upon within one year
from the date on which rehabilitation
procedures commence: Provided,
That the court may extend the period within the scope of 6 months on
the grounds of expediency.
Article 240 (Resolutions in Writing)
(1) If it is deemed appropriate when the draft rehabilitation plan is
submitted, the court may determine the gist of a written resolution
into
which the draft rehabilitation plan is placed (hereinafter in this Part referred
to as the written resolution ). In this case,
the court shall publish the
gist thereof.
(2) When the written resolution referred to in the provisions of paragraph
(1) is decided, the court deliver a copy or a summary
of the draft rehabilitation
plan to each of the persons provided for in Article 182 (1) and also deliver
a written statement to
each of the voting right holders, requesting them
to confirm in writing as to whether they agree with the draft rehabilitation
plan, their opinions with respect to whether authorization is granted and
whether they agree with the designation of the extended
deadline if the
draft rehabilitation plan is not resolved within the period set by the court
(hereafter referred to as the response
period in this Article). In this
case, the response period shall not exceed 2 months from the date on
which the decision referred
to in the provisions of paragraph (1) is made.
(3) The delivery referred to in the provisions of paragraph (2) may be
made in the
same manner as documents are mailed.
10
(Supp. 33)779-14
(4) When the draft rehabilitation plan is delivered pursuant to the provisions
of paragraph (2), it shall be deemed that the meeting
of persons concerned
held to examine the draft rehabilitation plan provided for in the provisions
of Article 224 comes to an end.
(5) When the written agreement of voting right holders to the draft
rehabilitation plan delivered to the court within the response
period meet
the requirements for a resolution provided for in the provisions of Article
237, the draft rehabilitation plan shall
be deemed resolved upon.
(6) The provision of Articles 188 (1) through (3) and 189 shall apply mutatis
mutandis to every written
resolution.
(7) When the extended deadline provided for in the provisions of Article
238 is designated for the draft rehabilitation plan that
is not resolved
upon by means of a written resolution, the draft rehabilitation plan shall
be placed in a resolution on the continuation
date and it shall not be
placed in a written resolution again.
Article 241 (Surviving Corporation If Draft Rehabilitation Plan Adopted)
When rehabilitation procedures commence and the draft rehabilitation
plan is resolved upon for a debtor who is an incorporated association or
an incorporated foundation that is under liquidation or
is declared bankrupt,
such incorporated association may continue to exist according to the
regulations governing the amendment
of its articles of association and such
incorporated foundation may continue to exist after obtaining an
authorization therefor
from the administrative agency in charge of incorporated
foundations.
SECTION 4 Authorization, etc. of Rehabilitation Plan
Article 242 (Authorization Granted for Rehabilitation Plan)
(1) When a draft
rehabilitation plan is resolved upon at a meeting of persons
concerned, the court shall determine whether to grant authorization
for
the rehabilitation plan immediately or on the date on which a report is
made on the resolution for the draft rehabilitation
plan.
(2) Persons falling under either of the following subparagraphs may state
their opinions on whether to grant an authorization
for the rehabilitation
plan on the date referred to in the provisions of paragraph (1):
1. A person provided for in any subparagraph of Article 182 (1); and
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-15(Supp. 33)
2. The administrative agency in charge of supervising the debtor s
business, the Minister of Justice and the Financial Services Commission.
(3) When a declaration is made, the decision on the date on which it is
determined whether to grant an authorization for the rehabilitation
plan
is made need not be published and delivered.
(4) When the draft rehabilitation plan is adopted by means of a written
resolution, the court shall promptly determine whether to
grant
authorization for the rehabilitation plan.
(5) When the court determines whether to grant authorization for the
rehabilitation plan pursuant to the provisions of paragraph
(4), it shall
deliver a written statement in which the main passage of such determination
and a summary of the grounds thereof
are entered to the persons provided
for in the provisions of each subparagraph of Article 182 (1).
Article 243 (Requirements for
Authorizing Rehabilitation Plan)
(1) The court may determine to grant authorization for the rehabilitation
plan only in cases where
the requirements falling under each of the following
subparagraphs are met:
1. The rehabilitation procedures or the rehabilitation plan are or is required
to be in conformity with the provisions of Statutes;
2. The rehabilitation plan is required to provide for fairness and equality
and to be capable of implementation;
3. The resolution on the rehabilitation plan is required to be passed in
a sincere and fair manner;
4. Repayment methods based on the rehabilitation plan are required to
be in terms geared towards making repayments more advantageously
than repayments would be made to each creditors when the debtor s
business is liquidated: Provided, That the same shall not apply
to cases
where the creditors agree to the payment methods;
5. The rehabilitation plan, the terms of which are geared for a merger
or merger by split, requires a resolution passed by a general
meeting
of shareholders and a general meeting of employees of the other company,
which approves any merger contract or a merger
by split contract:
Provided, That the same shall not apply to cases where the relevant
company does not require such approval resolution
of the general meeting
of shareholders or the general meeting of employees;
6. Matters requiring permission, authorization, a license or other
10
(Supp. 33)779-16
disposition of the relevant administrative agency in the rehabilitation
plan are required to be consistent with the opinion of the
administrative
agency provided for in the provisions of Article 226 (2) with respect
to major points; and
7. With respect to a rehabilitation plan, the terms of which are geared
toward an exchange of shares, a general meeting of shareholders
of
the other company is required to pass a resolution that approves such
total exchange of shares: Provided, That the same shall
not apply to
cases where the company performs the total exchange of shares pursuant
to the provisions of Article 360-9 and 360-10
of the Commercial Act.
(2) Even in cases where the procedures for determining whether to grant
authorization for the rehabilitation
plan are in violation of the provisions
of Statutes, when it is deemed inappropriate not to grant authorization
for the rehabilitation
plan taking into account the extent of the violation,
the current state of the debtor and all other circumstances, the court
may
determine to grant such authorization.
Article 244 (Authorization in Case of Group in Disagreement)
(1) In cases where a resolution on a draft rehabilitation plan is passed
at a meeting of persons concerned or the draft rehabilitation plan is placed
in a written resolution, even when any group fails
to reach agreement
thereon among persons who hold voting rights that exceed the statutory
amount and number, the court may amend
the draft rehabilitation plan,
prescribe provisons aimed at protecting the rights of the rehabilitation
creditors, rehabilitation
secured creditors, shareholders and equity right
holders of such group in a manner falling under any of the following
subparagraphs
and determine to grant authorization for the rehabilitation
plan:
1. The means by which assets subject to security rights are transferred
to a newly incorporated company or any other person or is
withheld
for the debtor while keeping the security rights intact for the
rehabilitation secured creditors;
2. The means by which assets subject to security rights for rehabilitation
secured creditors, the debtor s assets to be appropriated
for the
repayment of claims for rehabilitation creditors and the debtor s assets
that is to be appropriated for the distribution
of residual property
for shareholders and equity right holders are all sold at a price that
DEBTOR REHABILITATION AND BANKRUPTCY
ACT
779-17(Supp. 33)
exceeds fair value (with respect to assets that are subject to security
rights, any burden incurred by such rights shall be deemed
nonexistent)
that is set by the court and the balance obtained by subtracting costs
of sale from the sale proceeds is used for
repayment, distribution and
deposit;
3. The means by which proceeds of the fair trade price of the rights that
is set by the court are distributed to the rightful claimants;
and
4. The means by which the rightful claimants are fairly and equally
protected according to the means referred to in the provisons
of
subparagraphs 1 through 3.
(2) In cases where a resolution is passed at a meeting of persons concerned
on the draft rehabilitation plan or the draft rehabilitation
plan is placed
in a written resolution pursuant to the provisions of Article 240, when
it is clear that it is impossible to obtain
from any group the agreement
necessary to meet the requirements for resolving upon the draft
rehabilitation plan, the court, upon
receiving an application filed by the
person developing the draft rehabilitation plan, shall prescribe provisions
that aim for
protecting the rights of such group of rehabilitation creditors,
rehabilitation secured creditors, shareholders and equity right
holders by
means of the ways referred to in the provisons of each subparagraph of
paragraph (1) and permit developing the draft
rehabilitation plan.
(3) When the application referred to in the provisions of paragraph (2)
is filed, the court shall hear the
opinions of the applicant and not less
than one rightful claimant of the group from which it is evidently impossible
to obtain
an agreement.
Article 245 (Declaration, etc. of Determination on Whether to Grant
Authorization for Rehabilitation Plan)
(1) The court shall declare its determination on whether to grant
authorization for the rehabilitation plan and publish the main
passage thereof,
a summary of the grounds, and the rehabilitation plan or a summary thereof.
In this case, no delivery need be
made.
(2) The provisions of Article 41 (1) shall apply mutatis mutandis to cases
where the determination referred to in the provisions
of paragraph (1)
is made.
(3) Notwithstanding the provisions of paragraph (1), where the
determination on whether to grant authorization for the rehabilitation
plan
10
(Supp. 33)779-18
is concerned with the written resolution provided for in the provisions of
Article 240, the court shall deliver the main passage,
a summary of the
grounds, the rehabilitation plan or a summary thereof to each person falling
under both of the following subparagraphs:
1. The person provided for in the provisions of each subparagraph of Article
182 (1); and
2. In cases where the debtor is a stock company, the administrative agency
in charge of supervising the debtor, the Minister of Justice
and the
Financial Services Commission.
Article 246 (Timing When Rehabilitation Plan Takes Effect)
The rehabilitation plan shall take effect from the time a decision is
made
to grant authorization therefor.
Article 247 (Appeal)
(1) An immediate appeal may be filed against a decision on whether to
grant authorization for the rehabilitation plan: Provided,
That the same
shall not apply to any rehabilitation creditor, any rehabilitation secured
creditor, any shareholder and any equity
right holder who are not entered
in the list or are not reported.
(2) Any rehabilitation creditor, any rehabilitation secured creditor, any
shareholder and any equity right holder who do not hold
voting rights
shall, when they file for an immediate appeal pursuant to the provisions
of paragraph (1), substantiate that they
are a rehabilitation creditor, a
rehabilitation secured creditor, a shareholder and an equity right holder,
respectively.
(3) Any appeal against a decision to grant authorization for the rehabilitation
plan shall not affect the implementation of such
rehabilitation plan: Provided,
That when the appellate court or the rehabilitation court deem that the
appeal has grounds and the
need is substantiated to urgently prevent any
irrecoverable loss caused by the implementation of the rehabilitation plan,
they
may require any security to be furnished, suspend the whole or part
of the rehabilitation plan without requiring such security to
be furnished
and take other necessary dispositions until it determines
such appeal upon receiving an application therefor.
(4)
When an appeal is filed against a decision to grant authorization for
the rehabilitation plan, the rehabilitation court may order
the appellant
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-19(Supp. 33)
to deposit, by way of bonds, fund, or securities recognized by the court
within the scope that is prescribed by the rules of the
Supreme Court for
a fixed period.
(5) In cases under paragraph (4), when the appellant fails to furnish the
bond within the period set by the court, the court shall
determine the
appeal by its dismissed.
(6) When the appeal referred to in the provisions of paragraph (4) is
dismissed, the debtor is declared bankrupt or the rehabilitation
procedures
continue, the funds or securities furnished as a bond shall revert to the
bankrupt organization.
(7) Any protest against the judgment on the immediate appeal referred
to in the provisions of paragraph (1) shall be governed by
the provisions
of Article 442 of the Civil Procedure Act. In this case, the provisions of
paragraphs (1) through (6) shall apply
mutatis mutandis to such protest.
Article 248 (Where Decision Not to Grant Authorization for Rehabilitation
Plan is Confirmed)
The provisions of Articles 291 and 292 shall apply mutatis mutandis to
cases where a decision not to grant authorization for the
rehabilitation
plan is confirmed.
Article 249 (Entires in Table of Rehabilitation Creditors, etc.)
When a decision to grant authorization for the rehabilitation plan
is
confirmed, the clerk, etc. of the court shall enter the rights recognized
in the rehabilitation plan in the table of rehabilitation
creditors and in
the table of rehabilitation secured creditors and in the table of shareholders
and equity right holders.
Article 250 (Scope of Effect of Rehabilitation Plan)
(1) The rehabilitation plan shall effect persons falling under each of the
following subparagraphs:
1. The debtor;
2. Any rehabilitation creditor, any rehabilitation secured creditor, any
shareholder and any equity right holder;
3. Anyone who bears obligations or furnishes security for rehabilitation;
and
4. Any newly incorporated company (excluding any company that is
incorporated by merger or merger by split).
(2) The rehabilitation plan shall not affect the rights or security falling
10
(Supp. 33)779-20
under either of the following subparagraphs:
1. Rights held by any rehabilitation creditor or any rehabilitation secured
creditor against a guarantor of the debtor for whom rehabilitation
procedures commence and on any person who bears any obligation jointly
with the debtor for whom rehabilitation procedures commence;
and
2. The security furnished by any person other than the debtor for any
rehabilitation creditor or any rehabilitation secured creditor.
Article 251 (Immunity of Rehabilitation Claims, etc.)
When it is decided to grant authorization for the rehabilitation plan, the
debtor shall be exempted from his/her responsibilities under all of the
rehabilitation claims and rehabilitation security rights,
with the exception
of rights recognized pursuant to the rehabilitation plan or the provisions
of this Act and the rights of shareholders
and equity right holders, and
all security rights over the debtor s assets shall be extinguished: Provided,
That the same shall
not apply to claims provided for in the provisions
of Article 140 (1).
Article 252 (Change in Rights)
(1) When it is decided to grant authorization for the rehabilitation plan,
the rights of rehabilitation creditors, rehabilitation
secured creditors,
shareholders and equity right holders shall be changed according to the
rehabilitation plan.
(2) The provisions of Articles 339 and 340 (3) of the Commercial Act shall
apply mutatis mutandis to cash, goods, shares or equity
shares, claims,
and other rights and share certificates to be gained by shareholders and
equity right holders on the grounds of
a change in the rights pursuant
to the provisions of paragraph (1).
Article 253 (Rights of Rehabilitation Creditors and Rehabilitation Secured
Creditors)
The rights of rehabilitation creditors and rehabilitation secured creditors
that are prescribed according to the rehabilitation
plan shall be recognized
only for persons who hold rehabilitation claims or rehabilitation security
rights that are all confirmed.
Article 254 (Rights of Shareholders and Equity Right Holders who are
Not Reported)
The rights of shareholders and equity right holders that are recognized
according to the rehabilitation plan shall also apply to
the rights of
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-21(Supp. 33)
shareholders and equity right holders who fail to report their shares and
equity shares.
Article 255 (Effect of Entries in Table of Rehabilitation Creditors, etc.)
(1) The entries of the table of rehabilitation creditors
or the table of
rehabilitation secured creditors that govern the rights recognized according
to the rehabilitation plan on the
basis of rehabilitation claims or
rehabilitation security rights shall take effect in the same manner as the
final judgment on
persons falling under each of the following subparagraphs
when a decision to grant authorization for the rehabilitation plan is
confirmed:
1. The debtor;
2. Rehabilitation creditors, rehabilitation secured creditors, shareholders
and equity right holders;
3. Anyone who bears obligations or furnishes security for the rehabilitation;
and
4. The newly incorporated company (excluding any company that is
incorporated by merger or merger by split).
(2) Anyone who holds the rights referred to in the provisions of paragraph
(1), the terms of which are geared at claiming the payment
of funds
and any other performance, may perform compulsory execution on the debtor
and any person who bears any obligation for
the rehabilitation according
to the table of rehabilitation creditors or the table of rehabilitation secured
creditors after the
rehabilitation procedures are completed. In this case,
the guarantor may lodge an objection against such compulsory execution
pursuant
to the provisions of Article 437 of the Civil Act.
(3) The provisions of Articles 2 through 18, 20 and 28 through 55 of the
Civil
Execution Act shall apply mutatis mutandis to cases under paragraph
(2): Provided, That the lawsuit provided for in the provisions
of Articles
33, 44 and 45 of the Civil Execution Act shall be placed under
the exclusive jurisdiction of the rehabilitation court.
Article 256 (Invalidation of Suspended Procedures)
(1) When it is decided to grant authorization for the rehabilitation plan,
the auction procedures for the bankruptcy procedures, the compulsory
execution, the provisional seizure, the provisional disposition
and the
exercise of security right, etc. that are suspended respectively pursuant
to the provisions of Article 58 (2) shall lose
their effect: Provided, That
10
(Supp. 33)779-22
the same shall not apply to procedures or dispositions that continue pursuant
to the provisions of paragraph (5) of the same Article.
(2) Foundations claims (excluding any foundations claims falling under
subparagraphs 2 and 9 of Article 473) that lose their effect
pursuant to
the provisions of paragraph (1) in the bankruptcy procedures shall be
deemed a public-interest claim.
CHAPTER PROCEDURES AFTER
REHABILITATION PLAN
AUTHORIZED
Article 257 (Implementation of Rehabilitation Plan)
(1) When it is decided to grant authorization for the rehabilitation plan,
the custodian shall implement the rehabilitation plan without delay.
(2) When a new company is incorporated according to the rehabilitation
plan, the custodian shall perform the duties of the promoters and
incorporators members.
(3) The Custodial Committee shall assess whether the rehabilitation plan
is appropriately implemented each year and submit the results
of such
assessment to the court.
(4) The Custodial Committee may present to the court its opinion with
respect to the completion or the discontinuation of the rehabilitation
procedures.
Article 258 (Court s Order Given to Implement Rehabilitation Plan)
(1) The court may issue persons falling under any of the following
subparagraphs orders necessary to implement the rehabilitation plan:
1. The debtor;
2. Any rehabilitation creditors, any rehabilitation secured creditors, any
shareholders and any equity right holders;
3. Anyone who bears obligations or furnishes security for the rehabilitation;
4. A newly incorporated company (excluding any new company that is
incorporated by merger or merger by split); and
5. The custodian.
(2) When it is deemed necessary to ensure the implementation of the
rehabilitation plan, the court may require
a considerable amount of security
to be furnished for persons who hold claims pursuant to the provisions
of this Act or according
to the rehabilitation plan and any other persons
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-23(Supp. 33)
who hold rehabilitation claims to which an objection is raised and
rehabilitation security rights for which the confirmation procedures
are
not yet completed.
(3) The provisions of Articles 122, 123, 125 and 126 of the Civil Procedures
Act shall apply mutatis mutandis to the security referred
to in the provisions
of paragraph (2).
Article 259 (Inspection of Debtor)
In cases falling under any of the following subparagraphs, the court may
order any inspection commissioner to inspect assets and
the current business
of the debtor by its inherent jurisdiction or upon receiving an application
filed by the creditors consultative
council:
1. Where the rehabilitation plan is not implemented properly;
2. Where it is necessary to determine whether to cease or discontinue
the rehabilitation procedures; and
3. Where it is necessary for amending the rehabilitation plan.
Article 260 (Exclusion of Provisions of Acts and Subordinate Statutes
Governing Resolutions, etc. of General Meetings)
In the implementation of the rehabilitation plan, notwithstanding the
provisions of Acts and subordinate statutes or the articles
of incorporation,
a general meeting of an incorporation, a general meeting of shareholders,
a general meeting of employees (including
a general meeting of specific
class of shareholders and a general meeting of employees corresponding
thereto) or a meeting of the
board of directors of the debtor who is a
corporation need not resolve on anything.
Article 261 (Special Cases Concerning Business Transfer, etc.)
(1) When acts falling under any of the following subparagraphs are
prescribed
in the rehabilitation plan pursuant to the provisions of Article 200, any
of such acts may be performed according to
the rehabilitation plan:
1. The conclusion, amendment or revocation of contracts falling under
any of the following items or the conclusion, amendment or
revocation
of contract corresponding to the former:
(a) Contracts by which the whole or part of the business or assets of
the debtor are transferred, invested or rented;
(b) Contracts by which the whole or part of the management of the
debtor s business is delegated; and
(c) Contracts by which the profits and losses of the business are shared
with other persons and other contracts corresponding to
the former;
10
(Supp. 33)779-24
and
2. Agreements by which the whole or part of the business or the assets
of other persons are acquired by transfer.
(2) The provisions of Articles 374 (2) and 374-2 of the Commercial Act
and Article 191 of the Securities and Exchange Act shall
not apply to
cases under paragraph (1).
Article 262 (Special Cases Concerning Amendment to Articles of
Incorporation)
In cases where any amendments to the articles of incorporation of the
debtor are prescribed in the rehabilitation plan pursuant
to the provisions
of Article 202, such articles of incorporation shall be amended according
to the rehabilitation plan when it
is decided to grant authorization for
the rehabilitation plan.
Article 263 (Special Case Concerning Change in Directors, etc.)
(1) In cases where the selection and appointment of directors and
the
selection of the chief executive officer are prescribed in the rehabilitation
plan pursuant to the provisions of Article 203,
they shall be deemed selected
and appointed at the time authorization is granted for the rehabilitation
plan.
(2) In cases where means of selecting and appointing directors or of selecting
the chief executive officer are prescribed in the
rehabilitation plan pursuant
to the provisions of Article 203, such directors may be selected and appointed
and the chief executive
officer may be selected according to the means
prescribed in the rehabilitation plan. In this case, the provisions of other
Acts
and subordinate statutes and the articles of incorporation governing
the selection and appointment of directors and the selection
of the chief
executive officer shall not apply.
(3) When the court selects and appoints any auditor pursuant to the
provisions of Article 203 (4), the provisions of other Acts
and subordinate
statues and the articles of incorporation governing the selection and
appointment of auditors shall not apply to
the selection and appointment
of such auditors.
(4) Any director or any chief executive officer who is not prescribed in
the rehabilitation plan as to remain in his/her position
shall be deemed
dismissed at the time that authorization is granted for the rehabilitation
plan. Any auditor who is not selected
and appointed pursuant to the
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-25(Supp. 33)
provisions of Article 203 (4) shall be deemed dismissed at the time the
court selects and appoints an auditor pursuant to the provisions
of Article
203 (4).
(5) The terms of office for directors or the chief executive officer who are
selected or appointed pursuant to the provisions of
paragraphs (1) and (2),
the terms of office for directors or the chief executive officer who are or
are decided to stay in their
positions and means by which the chief executive
officer represents the board shall be prescribed in the rehabilitation plan
and
the terms of office of any auditor who is selected and appointed pursuant
to the provisions of Article 203 (4) shall be prescribed
by the court.
Article 264 (Special Cases Concerning Decrease in Capital)
(1) When any decrease in capital is prescribed in the
rehabilitation plan
pursuant to the provisions of Article 205, such capital may be decreased
according to the rehabilitation plan.
(2) The provisions of Articles 343 (2), 439 (2) and(3), 440, 441, 445 and
446 of the Commercial Act shall not apply to cases under
paragraph (1).
The cases provided for in the proviso to Article 443 (1) of the same Act
shall be placed under the jurisdiction
of the rehabilitation court.
(3) In cases under paragraph (1), an application filed for rectifying the
register on the grounds
of a decrease in the debtor s capital shall be
accompanied by a certified copy or an abridged copy of a written decision
to grant
authorization for the rehabilitation plan.
Article 265 (Special Cases Concerning Issuance of New Shares without
Payment, etc. therefor)
(1) When it is prescribed in the rehabilitation plan pursuant to the provisions
of Article 206 (1) and (4) that the debtor issue
new shares without requiring
rehabilitation creditors, rehabilitation secured creditors or shareholders
to make new payments or
investments in kind, the rightful claimants shall
become shareholders at the time that it is decided to grant authorization
for
the rehabilitation plan: Provided, That when any specific timing is
prescribed in the rehabilitation plan, the rightful claimants
shall become
shareholders at such specific time.
(2) The provisions of the articles of incorporation governing the underwriting
of newly issued shares shall not apply to cases under
paragraph (1).
(3) The provisions of Articles 440 through 444 of the Commercial Act
shall apply mutatis mutandis to cases where
there is an uneven number
10
(Supp. 33)779-26
of shares to be distributed to shareholders. In this case, cases provided
for in the proviso to Article 443 (1) of the same Act
shall be placed under
the jurisdiction of the rehabilitation court and the provisions of Article
83 of the Non-Contentious Case
Litigation Procedure Act shall apply mutatis
mutandis to such cases.
Article 266 (Special Cases concerning Issuance of New Shares for which
Payments, etc. are Made)
(1) When it is prescribed in the rehabilitation plan that the debtor issues
new shares pursuant to the provisions of Article 206
(2) and (3), he/she
may issue such new shares according to the rehabilitation plan.
(2) The provisions of Articles 418, 422, 424,
424-2, 428, and 429 through
432 of the Commercial Act shall not apply to the cases under paragraph (1).
(3) The provisions of the
articles of incorporation that govern rights to
underwrite newly issued shares shall not apply to cases under paragraph (1)
and
cases provided for in the provisions of Article 306 of the Commercial
Act that are applied mutatis mutandis under Article 425 (1)
of the same
Act shall be placed under the jurisdiction of the rehabilitation court.
(4) The provisions of Article 419 of the Commercial
Act shall apply mutatis
mutandis to the cases under paragraph (1). In this case, share certificates
in Article 419 (2) of the Commercial
Act shall be deemed share certificates
or debentures.
(5) When new shares are issued by requiring rehabilitation creditors,
rehabilitation secured creditors or shareholders to make new
payments
or make investments in kind, the rightful claimants thereof may pay the
amount or make investments in kind as prescribed
in the rehabilitation
plan.
(6) The provisions of Article 265 (3) shall apply mutatis mutandis to
cases where there is an uneven number of shares to be distributed
to
shareholders by requiring them to make payments and investments in
kind: Provided. That the amount corresponding to the investment
in kind
to be made or the amount to be paid for a broken lot of shares shall be
deducted from the price to be paid to the previous
shareholders.
(7) In cases under paragraph (1), the written commission for the register
of a change accruing from the issuance
of shares by the debtor or an
application thereof shall be accompanied by a certified copy or an abridged
copy of the written decision
authorizing the rehabilitation plan, a written
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-27(Supp. 33)
statement attesting to the subscription and takeover of shares and a
certificate attesting to the custody of payments.
Article
267 (Special Cases concerning Issuance of Bonds without Payments,
etc. by Stock Companies)
(1) When it is prescribed in the rehabilitation plan that the debtor who
is a stock company issues bonds without requiring rehabilitation
creditors,
rehabilitation secured creditors or shareholders to make new payments
pursuant to the provisions of Article 209, these
rightful claimants shall
become bond right holders when it is decided to grant authorization for
the rehabilitation plan.
(2) The provisions of Article 471 of the Commercial Act shall not apply
to the cases under paragraph (1).
(3) In cases under paragraph (1), the amount of bonds that are issued
for rehabilitation creditors or rehabilitation secured creditors
according
to the provisions of the rehabilitation plan shall not be included in the
total amount of the bonds provided for in the
provisions of Article 470
of the Commercial Act.
Article 268 (Special Cases Concerning Issuance of Bonds with Payments,
etc. by Stock Companies)
(1) With the exception of cases provided for in the provisions of Article
267, when it is prescribed in the rehabilitation plan
that the debtor who
is a stock company issues bonds under Article 209, the debtor may issue
such bonds according to the rehabilitation
plan.
(2) When bonds are issued by requiring rehabilitation creditors,
rehabilitation secured creditors or shareholders to make new payments,
these rightful claimants shall become bond right holders at the time the
amount prescribed in the rehabilitation plan is paid.
(3) The provisions of Articles 266 (4) and 267 (2) and (3) shall apply
mutatis mutandis to the cases under paragraph (1).
(4)
In the cases under paragraph (1), a written commission or an application
for the registration of convertible bonds or warrant bonds
shall be
accompanied by the written statements falling under each of the following
subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
an authorization for the rehabilitation plan;
2. A written statement attesting to the subscription and underwriting
10
(Supp. 33)779-28
of convertible bonds or warrant bonds; and
3. A written statement attesting to the payment for each convertible bond
or each warrant bond.
Article 269 (Special Cases concerning Total Exchange of Shares of Stock
Companies)
(1) When it is prescribed in the rehabilitation plan that the debtor who
is a stock company perform a total exchange of shares with
another company
pursuant to the provisions of Article 207, the debtor may perform such
total exchange of shares according to the
rehabilitation plan.
(2) In cases under paragraph (1), rehabilitation creditors or rehabilitation
secured creditors who receive
a distribution of shares of the company that
becomes a full parent company shall become the underwriters of shares
at the time
that authorization is granted for the rehabilitation plan and
become shareholders at the time that the total exchange of shares
becomes
effective.
(3) The provisions of Articles 360-4, 360-5, 360-7 and 380-14 of the
Commercial Act shall not apply to cases under paragraph (1).
(4) In cases under paragraph (1), when the provisions of Article 360-8
of the Commercial Act apply to the debtor, the approval
provided for in
the provisions of Article 360-3 (1) in the same Article shall be deemed
the authorization granted for the rehabilitation
plan, the terms of which
are geared toward the total exchange of shares.
(5) The provisions of paragraphs (1) through (4) shall not affect the
application of the Commercial Act to the other company that
is the other
party to the total exchange of shares.
(6) In cases under paragraph (1), when the debtor becomes a full parent
company, the written commission or the application for registration
of
the company change that accrues from the total exchange of shares shall
be accompanied by documents falling under each of the
following
subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
authorization for the rehabilitation plan; and
2. The contract for the total exchange of shares.
(7) In cases under paragraph (1), when the other company that is the
other party
in the total exchange of shares becomes a full parent company,
the application for the change registration that arises from the
total exchange
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-29(Supp. 33)
of shares of the company shall be accompanied by documents falling under
each of the following subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
authorization for the rehabilitation plan; and
2. The minutes of the general meeting of shareholders of the company
(when the company performs a total exchange of shares without
obtaining
approval therefor from the general meeting of shareholders, the minutes
of the meeting of the board of directors of the
company).
Article 270 (Special Cases concerning Total Transfer of Shares of Stock
Companies)
(1) When the total transfer of shares by the debtor who is a stock company
is prescribed in the rehabilitation plan pursuant to
the provisions of Article
208, the debtor may perform such total transfer of shares according to
the rehabilitation plan.
(2) In cases under paragraph (1), rehabilitation creditors or rehabilitation
secured creditors who receive a distribution of shares
of a newly incorporated
company that is a full parent company shall become the underwriters of
shares at the time that authorization
is granted for the rehabilitation plan,
and shall become shareholders at the time that the total transfer of shares
becomes effective.
(3) The provisons of Articles 360-17, 360-18, 360-5 that are applied mutatis
mutandis under Article 360-22 of the same Act and 360-23
of the Commercial
Act shall not apply to cases under paragraph (1).
(4) In cases under paragraph (1), with respect to the application
of the
provisions of Article 360-19 of the Commercial Act to companies, the
resolution provided for in the provisions of Article
360-16 (1) in the
same Article shall be deemed the authorization granted for the
rehabilitation plan the contents of which are
geared toward the total transfer
of shares.
(5) The written commission or the application for register of incorporation
arising from the total transfer of shares shall be accompanied
by the
documents falling under each of the following subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
authorization for the rehabilitation plan; and
2. The minutes of the meeting of the board of directors with respect to
the chief executive officer.
10
(Supp. 33)779-30
Article 271 (Special Case Concerning Mergers)
(1) When it is prescribed in the rehabilitation plan that the debtor is to
merge with another company pursuant to the provisions
of Article 210
or 211, the debtor may merge with any other company according to the
rehabilitation plan.
(2) In cases under paragraph (1), rehabilitation creditors or rehabilitation
secured creditors who receive the distribution of shares
or equity shares
of any surviving company after merger or any new company that is
incorporated by merger shall become underwriters
of the shares or equity
shares at the time it is decided to grant authorization for the rehabilitation
plan and the shareholders
or employees thereof at the time that the merger
becomes effective.
(3) The provisons of Articles 522-2, 522-3, 527-5, 527-6 and 529 of the
Commercial Act and the provisions of Article 191 of the
Securities and
Exchange Act shall not apply to cases under paragraph (1).
(4) Cases provided for under the provisions of Article
530 (3) of the
Commercial Act or the proviso to Article 443 (1) that is applied mutatis
mutandis under Article 603 of the same
Act shall be placed under the
jurisdiction of the rehabilitation court.
(5) Notwithstanding the provisions of Article 530 (2) or 603 of the
Commercial Act, Articles 237 through 240, 374 (2), 374-2 (2)
through (4)
and 439 (3) of the same Act shall not apply Mutatis mutandis to the case
of paragraph (1).
(6) The provisions of paragraphs (1) through (5) shall not affect the
application of the Commercial Act to the company that is the
other party
to merger.
(7) The provisions of Article 267 shall apply mutatis mutandis to cases
where bonds are distributed to shareholders pursuant to
provisions of
subparagraph 5 of Article 210 or subparagraph 6 of Article 211. In this
case, the shareholders become the debenture
holders when the merger
becomes effective.
(8) In cases under paragraph (1), the written commission or the application
for the register of the dissolution or the change in
the debtor on the grounds
of merger shall be accompanied by documents falling under each of the
following subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-31(Supp. 33)
authorization for the rehabilitation plan; and
2. The merger contract.
(9) In cases under paragraph (1), the written commission or the application
for the company registration
that is newly incorporated by merger shall
be accompanied by documents falling under each of the following
subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
authorization for the rehabilitation plan;
2. The merger contract;
3. The articles of incorporation;
4. The minutes of the general meeting of incorporation;
5. The minutes of the meeting of the board of directors with respect to
the chief executive officer; and
6. The written statement attesting to the qualifications of incorporating
members selected and appointed by the other debtor who
is the other
party to merger.
Article 272 (Special Case Concerning Merger or Merger by Split)
(1) When it is prescribed in the rehabilitation plan that the debtor
who
is a stock company is to be split, or part of the debtor who is a stock
company is to be merged by split with another company
or part of another
company pursuant to the provisions of Articles 212 through 214. the debtor
may perform the merger or the merger
by split as prescribed in the
rehabilitation plan.
(2) In cases under paragraph (1), the surviving debtor after the merger
by spit or the shareholders, rehabilitation creditors or
rehabilitation secured
creditors of the debtor who receive a distribution of shares of the company
that is newly incorporated by
the merger by split shall become underwriters
of the shares at the time that it is decided to grant authorization for the
rehabilitation
plan, and shall become shareholders at the time that the
merger by split becomes effective.
(3) The provisions of Articles 530-7 and 522-3 of the Commercial Act and
the provisions of Article 191 of the Securities and Exchange
Act shall not
apply to cases under paragraph (1) and cases provided for under the
provisions of the proviso to Article 443 (1)
of the Commercial Act that
applies mutatis mutandis under Article 530-11 (1) of the same Act shall
be placed under the jurisdiction
of the rehabilitation court.
10
(Supp. 33)779-32
(4) Notwithstanding the provisions of Articles 530-9 and 530-11 of the
Commercial Act, the provisions of Articles 237 through 240,
374 (2), 439 (3),
522-3, 527-5 and 529 of the same Act shall not apply mutatis mutandis
to cases under paragraph (1).
(5) The provisions of paragraphs (1) through (4) shall not affect the
application of the Commercial Act to the company that is the
other party
to the merger by split.
(6) The provisions of Article 267 shall apply mutatis mutandis to cases
where bonds are distributed to shareholders pursuant to
the provisions
of subparagraph 5 of Article 212 (1) or Article 213 (1) 4 or (2) 8. In this
case, the shareholders shall become
the debenture holders at the time
the merger or the merger by split becomes effective.
(7) In cases under paragraph (1), the written
commission or the application
for registration of the debtor s dissolution or the registration of change
on the grounds of split
shall be accompanied by a certified copy or an abridged
copy of the written decision to grant authorization for the rehabilitation
plan. The written commission or the application for registration of the
debtor s dissolution or registration of change on the grounds
of the merger
by split shall be accompanied by the written split and merger contract
in addition to a certified copy or an abridged
copy of the written decision
to grant authorization for the rehabilitation plan.
(8) In cases under paragraph (1), the written
commission or the application
for registration of incorporation on the grounds of the merger by split shall
be accompanied by documents
falling under each of the following
subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
authorization for the rehabilitation plan;
2. The written split and merger contract;
3. The articles of incorporation;
4. The minutes of the general meeting of incorporation; and
5. The minutes of the meeting of the board of directors with respect to
the chief executive officer.
Article 273 (Special Cases Concerning Incorporations of New Companies
without New Investments)
(1) When it is prescribed in the rehabilitation plan that a new company
is to be incorporated only with an investment made by the
debtor who
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-33(Supp. 33)
is a stock company after splitting the debtor pursuant to the provisions
of Article 212 (1) or 214, or it is prescribed in the rehabilitation
plan
that a new company is incorporated by requiring rehabilitation creditors,
rehabilitation secured creditors, shareholders and
equity right holders to
underwrite shares or equity shares instead of getting them to make new
payments or investments in kind,
the new company shall be formally
incorporated when it prepares the articles of incorporation and have its
incorporation entered
on the register after obtaining a certification from
the rehabilitation court.
(2) In cases under paragraph (1), the debtor s assets that are prescribed
to be transferred to the newly incorporated company in
the rehabilitation
plan when the new company is incorporated shall be transferred to the
newly incorporated company and the rehabilitation
creditors, rehabilitation
secured creditors, shareholders and equity right holders of the debtor who
all receive the distribution
of shares, equity shares or bonds of the newly
incorporated company shall become shareholders, equity right holders
or debenture
holders of the newly incorporated company.
(3) The provisions of Articles 263 (1), (2) and (5) and 265 (3) and 268
shall apply
mutatis mutandis to cases under paragraphs (1) and (2).
(4) In cases under paragraph (1), the written commission that is aimed
at placing the newly incorporated company on the register shall be
accompanied by documents falling under each of the following
subparagraphs:
1. A certified copy or an abridged copy of the written decision to grant
authorization for the rehabilitation plan;
2. The articles of incorporation;
3. When means of selecting and appointing directors or auditors and of
selecting the chief executive officer are prescribed in the
rehabilitation
plan, the document pertaining to their selection and appointment; and
4. When any transfer agent is employed on payroll, a written statement
attesting to his/her employment.
Article 274 (Other Special Cases concerning Incorporation of New
Companies)
(1) With the exception of cases provided for in the provisions of Article
273, when it is prescribed in the rehabilitation plan
that the debtor who
is a stock company is split to incorporate a new company pursuant to the
provisions of Article 212 (1) or 214
and it is prescribed in the rehabilitation
10
(Supp. 33)779-34
plan that a new company is to be incorporated pursuant to the provisions
of Article 215 without resorting to any merger, split or
merger by split,
a new company may be incorporated according to the rehabilitation plan.
(2) The provisions of Articles 288, 291
through 293, 295 (1), 296, 299,
300, 302 (2) 4, 310, 311, 313 (2), 314, 315, 321 through 324, 327 and
328 shall not apply to cases
under paragraph (1).
(3) In cases under paragraph (1), a certification for the articles of
incorporation shall be obtained from
the rehabilitation court. Cases provided
for under the provisions of 306 of the Commercial Act shall be placed under
the jurisdiction
of the rehabilitation court. A general meeting of
incorporation shall not amend the articles of incorporation in violation
of the
purposes of the rehabilitation plan. The debtor shall assume the
responsibilities of the promoters provided for in the provisions
of Article
326 of the same Act.
(4) In cases under paragraph (1), when the debtor, rehabilitation creditors,
rehabilitation secured creditors, shareholders and
equity right holders
are requested to underwrite shares or equity shares without being required
to make new payments or investments
in kind, or they are requested to
underwrite bonds without being required to make new payments, the rightful
claimants shall become
shareholders, equity right holders or debenture
holders at the time that a new company is incorporated.
(5) In cases under paragraph
(1), when rehabilitation creditors,
rehabilitation secured creditor, shareholders or third persons are requested
to underwrite
shares by being required to make new payments and
investments in kind, any shares that they have not underwritten among
the shares
that are to be issued for them may be subtracted from the total
number of shares enlisting issued at the time that a new company
is
incorporated without enlisting new shareholders unless this measure is
contrary to the provisions of Article 289 (2) of the
Commercial Act.
(6) The provisions of Article 263 (1), (2) and (5), 265 (3), 266 (4)
through (6), 267 (3) and 268 shall apply mutatis
mutandis to cases under
paragraphs (1) through (5).
(7) In cases under paragraph (1), the written commission or the application
for registration of any newly incorporated company shall
be accompanied
by documents falling under each of the following subparagraphs:
1. The document provided for in each subparagraph of Article 273 (4);
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-35(Supp. 33)
2. The written statement attesting to the subscription and underwriting
of shares;
3. The inspection report of directors and any auditors and other documents
attached thereto;
4. The minutes of the general meeting of incorporation; and
5. The written statement attesting to the custody of payments in any
financial institution.
Article 275 (Special Cases Concerning Dissolution)
(1) When it is prescribed in the rehabilitation plan that the debtor is dissolved
pursuant to the provisons of Article 216 without resorting to the merger,
the division or the merger by split, the debtor shall
be dissolved at the
time stipulated in the rehabilitation plan.
(2) In cases under paragraph (1), the application for registration of
dissolution register shall be accompanied by a certified copy
or an abridged
copy of the written decision to grant authorization for the rehabilitation
plan.
Article 276 (Transfer of Rights to Underwrite Shares, etc.)
When rehabilitation creditors, rehabilitation secured creditors,
shareholders
and equity right holders hold rights to underwrite shares,
equity shares or bonds of the debtor or any newly incorporated company
according to the rehabilitation plan, they may transfer such rights to
any other persons.
Article 277 (Exclusion of Application of Capital Market and Financial
Investment Business Act)
When the debtor who is a stock company or any newly incorporated company
issues shares or bonds, the provisions of Article 119 of
the Captial Market
and Financial Investment Business Act shall not apply thereto.
Article 278 (Special Cases Concerning Restrictions on Disposal of Factory
Foundation, etc.)
When the debtor s property is disposed of according to the rehabilitation
plan, Acts and subordinate statutes governing restrictions
on the disposal
of any factory foundation and any other foundation or the assets that belong
to any foundations shall not apply
thereto.
Article 279 (Succession of Rights by Means of Permission and
Authorization, etc.)
10
(Supp. 33)779-36
When it is prescribed in the rehabilitation plan that the debtor is to transfer
any rights and any obligations that accrue from
any permission,
authorization, license and any other disposition that he/she has acquired
from administrative agencies, the newly
incorporated company shall succeed
to such rights and such obligations, notwithstanding the provisions of other
Acts and subordinate
statutes.
Article 280 (Succession to Tax Liabilities)
When it is prescribed in the rehabilitation plan that any newly incorporated
company succeeds to the debtor s tax liabilities, the
newly incorporated
company shall responsibility for paying such tax liabilities and the debtor s
tax liabilities shall be extinguished
thereafter.
Article 281 (Severance Pays, etc.)
(1) Persons who were directors, the chief executive officer, auditors and
workers of the debtor and who continue to work for any
newly incorporated
company as directors, the chief executive officer, auditors and workers
after rehabilitation procedures commence
shall not receive payment of their
severance pay, etc. on the basis of their retirements from the debtor.
(2) The period during
which the persons referred to in the provisions of
paragraph (1) have worked for the debtor shall be deemed the period during
which
they have worked for the newly incorporated company.
Article 282 (Amendment of Rehabilitation Plan)
(1) When the need arises to amend the matters that are prescribed in
the rehabilitation plan on the grounds of inevitability after
it is decided
to grant authorization for the rehabilitation plan, the court may change
the rehabilitation plan upon receiving an
application filed by any custodian,
the debtor or any rehabilitation creditors, any rehabilitation secured
creditors, any shareholder
or any equity right holder, each of whom are
all entered on the list or reported only before rehabilitation procedures
are completed.
(2) When an application is filed for amending the rehabilitation plan
pursuant to the provisions of paragraph (1), which is deemed
to prejudice
any rehabilitation creditor, rehabilitation secured creditor, shareholder,
or equity right holder on the grounds of
such amendment, the provisions
governing the procedures for submitting the draft rehabilitation plan
shall apply mutatis mutandis
thereto: Provided, That in such cases, any
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-37(Supp. 33)
rightful claimant who is not prejudiced by any amendment to the
rehabilitation plan need not be required to participate in such
procedures.
(3) The provisions of Articles 246 and 247 shall apply to cases where it
is decided to amend the rehabilitation plan.
(4) In cases falling under either of the following subparagraphs, anyone
who agrees to the previous rehabilitation plan shall be
deemed to agree
to the amended rehabilitation plan:
1. Where he/she is absent a the meeting of persons concerned that is
called to resolve on amendment to the draft rehabilitation plan;
and
2. Where he/she fails to send a response in the written resolution procedures
for an amendment to the draft rehabilitation plan.
Article 283 (Discontinuation of Rehabilitation Procedures)
(1) When repayments commence according to the rehabilitation plan, the
court shall decide to discontinue the rehabilitation procedures by its inherent
jurisdiction or upon receiving an application filed
by the person falling
under either of the following subparagraphs:
1. The custodian; or
2. Any rehabilitation creditor or any rehabilitation secured creditor who
is entered in the list or reported.
(2) The court shall, when it makes the decision referred to in the provisions
of paragraph (1), publish the main passage of such
decision and a summary
of the grounds. In this case, the delivery thereof need not be made.
(3) The provisions of Article 40 (1)
shall apply mutatis mutandis to cases
where the decision referred to in the provisions of paragraph (1) is made.
Article 284 (Prohibition
on Participation in Corporate Governance by
Directors, etc.)
Directors or the chief executive officer who fail to retain their positions
pursuant to the provisions of the proviso to Article
203 (2) shall be prohibited
from being selected or appointed as directors or being selected as the chief
executive officer of the
debtor even after it is decided to discontinue the
rehabilitation procedures.
CHAPTER DISCONTINUATION OF
REHABILITATION
10
(Supp. 33)779-38
PROCEDURES
Article 285 (Discontinuation Prior to Order Given to Submit Draft
Rehabilitation Plan)
When the value of the debtor s business, when it is liquidated, is deemed
evidently higher than the value thereof when the debtor
s business
continues, the court shall determine to discontinue the rehabilitation
procedures by its inherent jurisdiction or upon
receiving an application
that is filed by the custodian and rehabilitation creditors or rehabilitation
secured creditors who are
entered in the list or are reported, even before
the first meeting of persons concerned is held without ordering the
submission
of the draft rehabilitation plan provided for in the provisions
of Article 220 (1): Provided, That the same shall not apply to cases
where
the court permits developing a draft rehabilitation plan, the details of which
are geared toward the liquidation, etc. provided
for in the provisions of
Article 222.
Article 286 (Discontinuation before Authorization Granted for
Rehabilitation Plan)
(1) In cases falling under any of the following subparagraphs, the court
shall determine to discontinue rehabilitation Procedures
by its inherent
jurisdiction:
1. Where the draft rehabilitation plan is not submitted within the period
or extended period respectively, set by the court or all
of the draft
rehabilitation plans that are submitted within the period are so poorly
developed that it does not justify placing
them before the examination
or in a resolution of the meeting of persons concerned;
2. Where the draft rehabilitation plan is voted against or is not resolved
upon at the meeting of persons concerned within 2 months
or the extended
period from the first day of the meeting of persons concerned;
3. The draft rehabilitation plan is not resolved upon at the meeting of
persons concerned within the period provided for in the provisions
of Article 239 (3); and
4. When it is decided to place the draft rehabilitation plan in a written
resolution pursuant to the provisions of Article 240 (1),
however the
draft rehabilitation plan is not resolved upon according to the written
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-39(Supp. 33)
resolution: Provided, That when the continuation date provided for
in the provisions of Article 238 is designated with respect to
the draft
rehabilitation plan that is not resolved upon by a written resolution,
it shall mean the time the written resolution
is not passed at the meeting
of persons concerned on the continuation date.
(2) When the value of the debtor s business when if is liquidated is deemed
evidently higher than the value thereof when the debtor
s business continues
after an order is given to submit the draft rehabilitation plan, the court
may decide to discontinue the rehabilitation
procedures by its inherent
jurisdiction or upon receiving an application filed by any custodian before
it is decided to grant authorization
for the rehabilitation plan.
Article 287 (Discontinuation by Application)
(1) When it is evidently clear that the debtor is able to fully fulfil his/her
obligations to rehabilitation creditors and rehabilitation
secured creditors
who are entered in the list or are reported, the court shall determine to
discontinue the rehabilitation procedures
upon receiving an application
filed by persons falling under any of the following subparagraphs:
1. The custodian;
2. The debtor; or
3. Any rehabilitation creditor or any rehabilitation secured creditor, each
of whom are entered in the list or are reported.
(2) The applicant shall substantiate the factual grounds for discontinuing
the rehabilitation procedures referred to in the provisions
of paragraph (1).
(3) When the application referred to in the provisions of paragraph (1)
is filed, the court shall notify the
debtor, the Custodial Committee, the
creditors consultative council, rehabilitation creditors and rehabilitation
secured creditors
who are entered in the list and are reported of the gist
of such application, request them to present any opinions they may have
with respect to the application and keep documents concerning the
application in the court for inspection by the interested persons.
(4) The court shall be prohibited from determining to discontinue the
rehabilitation procedures unless at least one month has lapsed
after the
notification referred to in the provisions of paragraph (3) is delivered.
Article 288 (Discontinuation after Authorization
Granted for
Rehabilitation Plan)
10
(Supp. 33)779-40
(1) When it is evidently impossible to implement the rehabilitation plan
after it is decided to grant authorization for the rehabilitation
plan, the
court shall determine to discontinue the rehabilitation procedures by its
inherent jurisdiction or upon receiving an
application field by the custodian,
rehabilitation creditors or rehabilitation secured creditors entered in the
list or reported.
(2) The court may hear opinions of the Custodial Committee, the creditors
consultative council and interested persons on a fixed
date before it makes
the decision referred to in the provisions of paragraph (1): Provided, That
when the court fails to specify
the fixed date, it shall provide each of them
with an opportunity to present their opinions within a specified deadline.
(3) The
decision to specify the date or the deadline referred to in the
provisions of paragraph (2) shall be published and such fixed date
or such
specified deadline shall be delivered to persons who are known as persons
who hold the rights recognized in the rehabilitation
plan on the basis of
the rehabilitation claims or rehabilitation security rights that are confirmed
respectively.
(4) The discontinuation of the rehabilitation procedures referred to in the
provisions of paragraph (1) shall not affect the implementation
of the
rehabilitation plan and effects that accrue from the provisions of this
Act.
Article 289 (Publication of Discontinuation Decision)
When the court it decides to discontinue the rehabilitation procedures,
it
shall publish the main passage of such decision and a summary of the
grounds thereof. In this case, no delivery need be made.
Article
290 (Appeal)
(1) The provisions of Article 247 (1), (2) and (4) through (7) shall apply
mutatis mutandis to the appeal filed against the decision
to discontinue
the rehabilitation procedures.
(2) The provisions of Article 40 (1) shall apply mutatis mutandis to cases
where a decision to discontinue the rehabilitation procedures
is confirmed.
Article 291 (Repayment of Public-Interest Claims)
When a decision to discontinue the rehabilitation procedures is
confirmed,
the custodian shall pay public-interest claims out of the debtor s assets
and with respect to the payment of any public-interest
claim to which
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-41(Supp. 33)
an objection is raised, the payment in question shall be deposited for
creditors, except in cases where bankruptcy must be declared
pursuant
to the provisions of Article 6 (1).
Article 292 (Effect of Entires in Tables, etc. of Rehabilitation Creditors)
(1) When a decision to discontinue rehabilitation procedures
is confirmed
pursuant to the provisions of Article 286 or 287, with respect to the
determined rehabilitation claims or determined
rehabilitation security
rights, the entries in the table of rehabilitation creditors or the table of
rehabilitation secured creditors
shall have the same effect as that of a
final judgment on the debtor: Provided, That the same shall be limited
to cases where the
debtor does not raise any objection to such claims and
such rights during the inspection period of the rehabilitation claims and
the rehabilitation security rights or on the special inspection date.
(2) Rehabilitation creditors or rehabilitation secured creditors
may perform
the compulsory execution on the debtor based on the table of rehabilitation
creditors or the table of rehabilitation
secured creditors except in cases
where the debtor is declared bankrupt pursuant to the provisions of Article
6 after the completion
of the rehabilitation procedures.
(3) The provisions of Article 225 (3) shall apply mutatis mutandis to the
cases under paragraph
(2).
Article 293 (Provisions Applicable Mutatis Mutandis)
The provisions of Article 255 (2) and (3) shall apply mutatis mutandis
to
cases where a decision to discontinue the rehabilitation procedures is
confirmed pursuant to the provisions of Article 288 (1).
PART BANKRUPTCY PROCEDURES
CHAPTER COMMENCEMENT OF
BANKRUPTCY
PROCEDURES, ETC.
SECTION 1 Petition for Bankruptcy
Article 294 (Holders of Right to File Petition for Bankruptcy)
(1) Any creditor or the debtor may file a petition for bankruptcy.
10
(Supp. 33)779-42
(2) When any creditor files a petition for bankruptcy, he/she shall
substantiate the existence of his/her claim and the factual
grounds for
such bankruptcy.
Article 295 (Holders of Rights to File Petition for Bankruptcy of
Corporation)
(1) With respect to any corporation that is incorporated pursuant to the
Civil Act and other Acts, any director may file a petition
for bankruptcy,
with respect to any general partnership or any joint venture, any partner
with unlimited liability may file a petition
for bankruptcy and, with respect
to any stock company or any limited-liability company, any director may
file a petition for bankruptcy,
respectively.
(2) Any liquidator may file a petition for bankruptcy on any corporation
under liquidation.
Article 296 (Petition for Bankruptcy Filed by Directors, Etc.)
When no petition for bankruptcy has been filed by any of the directors,
partners with limited liability or liquidators, the fact that is the cause
of such bankruptcy shall be substantiated.
Article 297 (Mutatis Mutandis Application to other Corporations)
The provisions of Articles 295 and 296 shall apply mutatis mutandis
to
any corporation, other than the corporations provided for in the provisions
of Article 295, any incorporated association or
any foundation that is not
a corporation, each of which have its representative or custodian.
Article 298 (Petition of Bankruptcy
Filed after Corporation Dissolution)
With respect to any corporation, any petition for bankruptcy shall be filed
in any period
during which the delivery or the distribution of its residual
assets have not been completed even after such corporation is dissolved.
Article 299 (Holders of Rights to File Petition for Bankruptcy on Inherited
Assets)
(1) Any inheritance creditor, anyone who receives any legacy, any inheritor,
any inherited assets custodian and any executor of
a will may file a petition
for bankruptcy against any inherited assets.
(2) When any inherited assets custodian, any executor of a will or any
inheritor, in case where the qualified acceptance is made
or the property
is separated, finds it difficult to fully pay back obligations with the inherited
property to any inheritance creditor
and any person who receives the legacy,
they shall promptly file a petition of bankruptcy.
DEBTOR REHABILITATION AND BANKRUPTCY
ACT
779-43(Supp. 33)
(3) Any inheritor, any inherited assets custodian or any executor of a will
shall, when each of them files a petition for bankruptcy,
substantiate the
factual grounds for such bankruptcy.
Article 300 (Bankruptcy Petition Period for Inherited Assets)
With respect to inherited property, a petition of bankruptcy may be
filed
only within the period during which a claim may be filed for dividing up
the assets pursuant to the provisions of Article
1045 of the Civil Act. In
this case, when the qualified acceptance is made or the assets are divided
up during the period, a petition
for bankruptcy may be filed with the
period during which the repayment to any inheritance creditor and any
person who receives
the legacy is not completed.
Article 301 (Where Bankruptcy Is Declared Overseas)
When the debtor has already been declared bankrupt overseas at the time
that
a petition for bankruptcy is filed against him/her, the factual grounds
for bankruptcy shall be presumed to exist.
Article 302 (Written Petition)
(1) Every petition of bankruptcy shall be filed in a written statement
containing matters falling under each of the following subpargraphs:
1. The names and domiciles of the applicant and his legal representative;
2. In cases where the debtor is an individual, his/her name, resident
registration number and domicile;
3. In cases where the debtor is not an individual, the trading name, the
location of the principal office or the place of business
of the debtor
and the name of the representative;
4. The purport of the petition;
5. The grounds for the petition;
6. The purposes of the debtor s business and his/her current business;
7. The total number of shares or equity shares that are issued by the
debtor, the amount of his/her capital and the current state
of his/
her assets, his/her obligations and property;
8. Other procedures for or any dispositions on the debtor s property, of
which the applicant is aware;
9. When any creditor files a petition for bankruptcy, the amount of, and
the ground for the claim that is held by him; and
10. When any shareholder or any equity right holder files a petition for
bankruptcy. the number and the amount of shares or equity
shares
10
(Supp. 33)779-44
that are held by him/her.
(2) The written statement referred to in the provisions of paragraph (1)
shall be accompanied by documents falling under each of
the following
subpargraphs: Provided, That it is impossible to annex the document at
the time that the written statement is filed,
such document shall be
submitted promptly after the reasons therefor are substantiated:
1. The list of creditors;
2. The list of assets;
3. The list concerning the revenue and expenditure of the debtor; and
4. Other documents that are prescribed by the rules of the Supreme Court.
Article 303 (Prepayment of Expenses for Bankruptcy Procedures)
When anyone files a petition for bankruptcy, he/she shall prepay the
amount as expenses necessary for the bankruptcy procedures,
which is
recognized as being appropriate by the court.
Article 304 (Provisional Payment of Expenses for Bankruptcy Procedures)
When anyone who files a petition for bankruptcy is not a
creditor, the
expenses for the bankruptcy procedures may be provisionally paid from
the national treasury. The same shall apply
to cases when any prepayment
falls short of the fixed amount, when the court makes a declaration of
bankruptcy by its inherent
jurisdiction and when the petitioner of
bankruptcy is the creditor and the court declares the debtor bankrupt,
notwithstanding
the nonpayment of the expenses,
SECTION 2 Declaration of Bankruptcy, etc.
Article 305 (Grounds for General Bankruptcy)
(1) When the debtor is insolvent, the court shall declare him/her bankrupt
by its inherent jurisdiction or upon receiving an application.
(2) When the debtor suspends making his/her payment, it shall be presumed
that he/she is unable to make such payment.
Article 306 (Grounds for Corporate Bankruptcy)
(1) With respect to any corporation, even when the total amount of its
liabilities exceeds the total amount of its assets, such
corporation may
be declared bankrupt.
(2) The provisions of paragraph (1) shall not apply to the period during
which any general partnership and any joint venture remains
solvent.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-45(Supp. 33)
Article 307 (Grounds for Bankruptcy regarding Inherited Assets)
When it is unable to fully repay the obligations to any inheritance
creditor
and anyone who receives a legacy with their inherited properties, the
court shall makes a declaration of bankruptcy by
its determination upon
receiving an application.
Article 308 (Inheritance after Petition for Bankruptcy or Declaration of
Bankruptcy)
When any inheritance commences after a petition of bankruptcy is filed
or the bankruptcy is declared, the bankruptcy procedures
continue on the
inherited assets.
Article 309 (Grounds for Dismissal)
(1) The court may, in instances falling under any of the following
subparagraphs, dismiss any petition for bankruptcy:
1. When the petitioner fails to meet the expenses for the bankruptcy
procedures;
2. When rehabilitation procedures or individual rehabilitation procedures
are pending in the court and the means of resorting to
such procedures
is compatible with the interests of all of creditors;
3. When the debtor is not responsible for the cause of the bankruptcy;
4. When it is impossible to locate the petitioner; or
5. When the petition is deemed to be not genuine.
(2) Even in cases where the debtor is responsible for the cause of bankruptcy,
when it is recognized that the petition for bankruptcy amounts to an abuse
of bankruptcy procedures, the court may dismiss the
petition for bankruptcy
after going through oral examination.
Article 310 (Declaration of Bankruptcy)
The year, month, date and time of the declaration of bankruptcy shall
be entered in the written statement of the bankruptcy decision.
Article 311 (Time When Bankruptcy Takes Effect)
Bankruptcy shall take effect from the time that such bankruptcy is declared.
Article 312 (Matters Needed to be Prescribed at Declaration
of Bankruptcy)
(1) The court shall select and appoint the trustee in bankruptcy at the
time that bankruptcy is declared and prescribe
the matters falling under
each of the following subparagraphs:
1. The period during which claims are to be reported. In this case, such
period shall be from not less than 2 weeks to not more than
3 months
10
(Supp. 33)779-46
from the date on which the bankruptcy is declared;
2. The date on which the first meeting of creditors is to be held. In this
case, the date shall be set within 4 months from the date
on which
the bankruptcy is declared; and
3. The date on which the claims are to be inspected. In this case, the
period of between not less than one week to not more than
one month
is required between such date and the last date of the period during
which the claims are reported pursuant to the provisions
of subparagraph
1.
(2) The dates referred to in the provisions of paragraph (1) 2 and 3 may
coincide.
Article 313 (Publication and Service of Declaration of Bankruptcy)
(1) The court shall, when it makes a declaration of bankruptcy,
publish
without delay the matters falling under each of the following subparagraphs:
1. The main passage of the decision on the bankruptcy;
2. The name, domicile and office of the trustee in bankruptcy;
3. The period and the date provided for in the provisions of Article 312;
4. The gist of an order that is given to the effect that the debtor of the
debtor who is declared bankrupt and the owner of the assets
that
belong to the bankrupt organization are prohibited from making any
repayments or transferring any assets to the debtor who
is declared
bankrupt; and
5. The gist of an order that is given to the effect that the debtor of the
debtor who is declared bankrupt and the owner of the assets
that belongs
to the bankrupt organization report the matters falling under each of
the following items to the trustee in bankruptcy
within the fixed period:
(a) Matters concerning the obligations they bear;
(b) Matters concerning the assets they own; and
(c) When the holders have the right to foreclose outside bankruptcy,
matters concerning the claims that they hold.
(2) The court shall deliver a written statement in which the matters referred
to in the provisions of paragraph (1) are entered
to each creditor, the
debtor and each asset owner who the court is aware of.
(3) The provisions of paragraphs (1) and (2) shall
apply mutatis mutandis
to cases where any change takes place in the matters referred to in paragraph
(1) 2 through 5.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-47(Supp. 33)
(4) Anyone who neglects making the report provided for in the provisions
of paragraph (1) 5 shall compensate for the damage caused
by his/her
negligence to the bankrupt organization.
Article 314 (Notification of Corporate Bankruptcy)
(1) In cases where any corporation is declared bankrupt, when permission
for
its incorporation and business which is its objectives is obtained from
any administrative agency, the court shall notify such administrative
agency of the declaration of its bankruptcy.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to cases
where a decision to revoke any bankruptcy or to discontinue
any bankruptcy
is confirmed or a decision to terminate any bankruptcy is made.
Article 315 (Notification to Prosecutors)
If it is deemed necessary, the court may notify prosecutors of the fact of
its declaration of bankruptcy.
Article 316 (Immediate Appeal Filed against Judgment on Petition for
Bankruptcy)
(1) An immediate appeal may be filed against any judgment on a petition
for bankruptcy.
(2) The provisions of Articles 323 and 324 shall apply mutatis mutandis
to cases where an immediate appeal is filed against the
decision to dismiss
the petition for bankruptcy.
(3) The immediate appeal referred to in the provisions of paragraph (1)
shall not have the effect of suspending any execution.
(4) When the procedures for filing the immediate appeal are in violation
of Acts and the immediate appeal is deemed groundless,
the appellate court
shall dismiss or turn down such immediate appeal by its decision.
(5) When the immediate appeal is deemed well
grounded, the appellate
court shall revoke its original decision and remand the case to the court
of origin.
Article 317 (Declaration of Bankruptcy and Simultaneous Discontinuation
of Bankruptcy)
(1) When the appropriation of funds for expenses for bankruptcy procedures
with any bankrupt organization is deemed insufficient,
the court shall
determine to declare such foundation bankrupt and to discontinue such
bankruptcy simultaneously.
(2) In the case of paragraph (1), the court shall publish the main sentence
10
(Supp. 33)779-48
of the bankruptcy decision, the main sentence of the decision to discontinue
the bankruptcy procedures and the summary of the reasons
thereof.
(3) An immediate appeal may be filed against the decision referred to in
the provisions of paragraph (1).
(4) The immediate appeal referred to in the provisions of paragraph (3)
shall not have the effect of suspending any execution.
(5) The provisions of Articles 313 through 315 shall apply mutatis mutandis
to cases where the decision to discontinue the bankruptcy
procedures
referred to in the provisions of paragraph (1) is confirmed.
Article 318 (Exception of Simultaneous Discontinuation
of Bankruptcy
Procedures)
The provisions of Article 317 shall not apply to cases where the prepayment
of the amount sufficient to fully appropriate funds
for expenses for the
bankruptcy procedures is made.
Article 319 (Arrest of Debtor whose Bankruptcy Is Declared)
(1) When it is deemed necessary, the court may order the arrest of a
debtor
who is declared bankrupt.
(2) The provisions of the Criminal Procedure Act governing the arrest
shall apply mutatis mutandis to the arrest referred to in
the provisions
of paragraph (1).
(3) An immediate appeal may be filed against the decision referred to in
the provisions of paragraph (1).
Article 320 (Arrest of Legal Representative, etc. of Debtor who is Declared
Bankrupt)
The provisions of Article 319 shall apply mutatis mutandis to persons
falling under any of the following subparagraphs:
1. The legal representative of a debtor who is declared bankrupt;
2. The director of a debtor which is declared bankrupt;
3. The manager of the debtor who is declared bankrupt; and
4. In cases of the inherited assets that undergo bankruptcy, the inheritor,
the legal representative and the manager.
Article 321 (Obligation of Debtor, etc. to Explain)
(1) The person falling under each of the following subapragraphs shall
provide
necessary explanations for the bankruptcy at the request of the
trustee in bankruptcy, any audit committee member or the creditors
consultative council:
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-49(Supp. 33)
1. The debtor and his/her agent;
2. The debtor s director;
3. The debtor s manager; and
4. In cases of the bankruptcy regarding any inherited assets, the inheritors,
their agents, the manager of the inherited assets and
the executor of
the will.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to
anyone to whom the qualifications referred to in the provisions
of the previous
paragraph (1) apply.
Article 322 (Arrest Before Declaration of Bankruptcy)
(1) When a petition of bankruptcy is filed, the court may order the arrest
of the debtor and the person provided for in the provisions of Article 320
even before the debtor is declared bankrupt.
(2) The provisions of Article 319 (2) and (3) shall apply mutatis mutandis
to cases under paragraph (1).
Article 323 (Preservation Disposition before Declaration of Bankruptcy)
(1) The court may order the provisional seizure, the provisional
disposition
and other necessary preservation dispositions regarding the debtor s assets,
even before the debtor is declared bankrupt
by its inherent jurisdiction
or upon receiving an application filed by the interested persons. The same
shall apply to cases where
the court declares the debtor bankrupt by its
inherent jurisdiction.
(2) The court may alter or rescind the dispositions referred to in the
provisions of paragraph (1).
(3) The judgment on the matters referred to in the provisions of paragraphs
(1) and (2) shall be made by determination.
(4) An immediate appeal may be filed against the judgment referred to
in the provisions of paragraphs (1) and (2).
(5) The immediate appeal referred to in the provisions of paragraph (4)
shall not have the effect of suspending any execution.
Article 324 (Order Given to Suspend limitation of Liability Procedures)
(1) When it is deemed necessary in cases where a petition
for bankruptcy
is filed, the court may order the suspension of the limitation of liability
procedures (hereafter referred to as
the liability procedures in this Article,
and Articles 326 and 327) provided for in Part V of the Commercial Act
and the Act on
the Procedure for Limiting the Liability of Shipowners, etc.
10
(Supp. 33)779-50
by its inherent jurisdiction or upon receiving an application filed by the
interested persons until a decision is made on the petition
for bankruptcy:
Provided, That the same shall not apply to cases where it is decided to
commence the limitation of liability procedures.
(2) The court may cancel the suspension decision referred to in the provisions
of paragraph (1).
Article 325 (Publication and Service of Revocation of Bankruptcy)
(1) When a decision to revoke the bankruptcy is confirmed, the
court
shall publish the main passage of such decision.
(2) The provisions of Articles 313 (2), 315 and 547 shall apply mutatis
mutandis to cases under paragraph (1).
Article 326 (Suspension of Bankruptcy Procedures until Decision to
Discontinue Limitation of Liability Procedures is Confirmed)
When it is decided to discontinue the limitation of liability procedures that
has commenced for a debtor who is declared bankrupt,
the bankruptcy
procedures shall be suspended until such decision is confirmed.
Article 327 (Measures in Cases of Discontinuation
of Limitation of Liability
Procedures)
(1) When a decision to discontinue the limitation of liability procedures
that has commenced for a debtor who is declared bankrupt
is confirmed,
the court shall prescribed the matters falling under both of the following
subparagraphs for creditors with limited
liability:
1. The period during which claims are reported. In this case, such period
shall last for between not less than one week up to not
more than 2
months from the date on which a decision to discontinue the limitation
of liability procedures is confirmed; and
2. The date on which claims are inspected. In this case, the period of
from not less than one week up to not more than 1 month between
such date and the last date of the reporting period that is set pursuant
to the provisions of subparagraph 1 shall be set.
(2)
The court shall publish a period and the date referred to in the provisions
of paragraph (1).
(3) The court shall deliver the written statement in which the matters
falling under each of the following subparagraphs are entered
to each of
creditors who learn of the publication:
1. The period and the date referred to in the provisions of paragraph (1);
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-51(Supp. 33)
and
2. The matters referred to in the provisions of Article 313 (1) 1 and 313
(1) 2.
(4) The written statement in which the period and the date referred to
in the provisions of paragraph (1) are entered shall be delivered
to the
persons falling under each of the following subparagraphs:
1. The trustee in bankruptcy;
2. The debtor who is declared bankrupt; and
3. Each of the bankruptcy creditors who are reported.
(5) The provisions of paragraphs (2), (3) and the main sentence of paragraph
(4) shall apply mutatis mutandis to cases where the period and the date
referred to in the provisions of paragraph (1) are altered.
SECTION 3 Effect of Bankruptcy on Legal Acts
Article 328 (Dissolved Corporations)
Every corporation that is dissolved shall be deemed to still exist within
the scope of the purposes of bankruptcy.
Article 329 (Legal Act after Debtor is Declared Bankrupt)
(1) Any legal act performed by a debtor who is declared bankrupt on the
assets that belongs to the bankrupt organization after he/she is declared
bankrupt cannot defeat claims of bankruptcy creditors.
(2) Any legal act that is performed by a debtor on the date on which a
debtor is declared bankrupt shall be presumed to be performed
after the
debtor is declared bankrupt.
Article 330 (Acquisition of Rights after Declaration of Bankruptcy)
(1) Even in cases where rights to assets that belong to any
bankrupt
organization are acquired after it is declared bankrupt without resorting
to the debtor s legal acts, the acquisition
of such rights cannot defeat
bankruptcy creditors claims.
(2) The provisions of Article 329 (2) shall apply mutatis mutandis to the
rights acquired pursuant to the provisions of paragraph
(1).
Article 331 (Registration and Recording, etc. after Bankruptcy
Declaration)
(1) Any registration or any provisional registration that is effected after
bankruptcy is declared by fulfilling obligations that
accrue before that
bankruptcy is declared with respect to any real estate or any ship cannot
10
(Supp. 33)779-52
defeat bankruptcy creditors claims: Provided, That the same shall not
apply to any registration that is effected by the registration
authority
without knowledge of the fact that such bankruptcy has been declared.
(2) The provisions of paragraph (1) shall apply
mutatis mutandis to the
recording or the provisional recording of the establishment, transfer or
change of rights.
Article 332 (Repayment Made to Debtor after Bankruptcy Declaration)
(1) Any repayment made to the debtor after he/she is declared
bankrupt
without knowledge of his/her bankruptcy may defeat claims of bankruptcy
creditors.
(2) Any repayment made to the debtor after he/she is declared bankrupt
with knowledge of his/her bankruptcy may defeat claims of
bankruptcy
creditors within the limitation of the profits that the bankrupt organization
receives.
Article 333 (Underwriting and Paying Bills after Declaration of
Bankruptcy)
(1) In cases where the issuer or the endorser of bills of exchange is declared
bankrupt, when the payer or the preliminary payer
underwrites or pays
the bills of exchange without knowledge of the fact, he/she may exercise
his/her rights as a bankruptcy creditor
on the claim that accrues from
such act.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to the
securities that are geared forwards paying checks, cash,
goods and other
securities.
Article 334 (Presumption of Good Faith or Bad Faith)
When the provisions of Articles 331 through 333 are applied, it shall be
presumed
that before the declaration of bankruptcy is published, the fact
thereof is not known and it shall be presumed that after the declaration
of bankruptcy is published, the fact thereof is known.
Article 335 (Options Concerning Bilateral Contract Not Fulfilled by Both
Parties)
(1) When the debtor and the other party have yet to complete fulfillment
of their bilateral contract at the time that they are each
declared bankrupt,
the trustee in bankruptcy shall cancel or terminate the bilateral contract
in question or require the fulfillment
of the other party s obligations after
fulfilling the debtor s obligations.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-53(Supp. 33)
(2) In cases under paragraph (1), the other party may demand that the
trustee in bankruptcy cancel or terminate the contract or
provide
confirmation as to whether he/she will fulfill the contract within a reasonable
period after stipulating such reasonable
period. In this case, when the
trustee in bankruptcy does not confirm within such reasonable period,
the contract shall be deemed
canceled or terminated.
Article 336 (Special Rules Governing Payment and Settlement System,
etc.)
The provisions of Article 120 shall apply mutatis mutandis to cases where
any participant of the payment and settlement system and
the liquidation
settlement system or any party of the competent financial transaction,
each of which are prescribed in the same
Article, are declared bankrupt.
In this case, case where rehabilitation procedures commence in Article
120 (1) through (3) shall
be deemed case where bankruptcy is declared
and rehabilitation creditors or rehabilitation secured creditors in the
proviso to
Article 120 (3) shall be deemed bankruptcy creditors or the
holders of the rights to foreclose outside of bankruptcy .
Article
337 (Cancellation and Termination by Trustee in Bankruptcy and
Right of Other Parties)
(1) When the contract is cancelled or terminated pursuant to the provisions
of Article 335, the other party may exercise his/her
rights to claim
compensation for damage as a bankruptcy creditor.
(2) In cases where the contract is canceled or terminated pursuant
to
the provisions of paragraph (1), when any benefit in return that is taken
by the debtor exists in the bankrupt organization,
the other party shall
claim the refund thereof and when such benefit in return is nonexistent,
the other party may exercise his/her
rights on its value as a foundation
creditor.
Article 338 (Regular Purchase and Sale of Marketable Goods in Exchange)
(1) In cases where the failure to effect the purchase and
sale of marketable
goods in exchange on a fixed date, at a fixed time or within a fixed period
makes it impossible to attain the
purposes of the contract, when such time
arises after the declaration of bankruptcy, the contract shall be deemed
canceled. In
this case, the amount of compensation for loss shall be
determined according to the difference between the market price and the
price of the purchase and sale at the time that a transaction of the same
10
(Supp. 33)779-54
kind is effected in the same place.
(2) The provisions of Article 337 (1) shall apply mutatis mutandis to the
compensation for loss referred to in the provisions of
paragraph (1).
(3) In cases under paragraph (1), when the exchange differently prescribes
any thing, such thing shall be governed
by the prescription.
Article 339 (Where Civil Acts Prescribe Right to Terminate or Cancel)
The provisions of Article 335 (2) shall
apply mutatis mutandis to the
exercise of the right to terminate or the right to cancel that is held by
the other party or the
trustee in bankruptcy pursuant to the provisions
of Article 637, 663 or 674 of the Civil Act.
Article 340 (Rental Contracts)
(1) When any tenant is declared bankrupt, the disposition taken to pay
any rent or to claim any rent cannot defeat the claims of
any bankruptcy
creditor, with the exception of the payment of rent or the claim for rent
of the current term and the following
term.
(2) Anyone who suffers loss due to his/her inability to counter any bankruptcy
creditor pursuant to the provisions of paragraph
(1) may exercise his/her
right to claim compensation for such loss as a bankruptcy creditor.
(3) The provisions of paragraphs (1)
and (2) shall apply mutatis mutandis
to the surface right.
(4) In cases where the tenant is declared bankrupt and the tenant falls
under any of the following subparagraphs, the provisions
of Article 335
shall not apply:
1. When he/she meets the requirements for the counter provided for in
the provisions of Article 3 (1) of the Housing Lease Protection
Act;
and
2. When he/she meets the requirements for the counter provided for in
the provisions of Article 3 of the Commercial Building Lease
Protection
Act.
Article 341 (Contracts for Construction Works)
(1) When the debtor is liable to perform any construction work according
to a contract for construction work, the trustee in bankruptcy
may provide
the debtor with materials necessary to perform such construction work.
When the debtor is not liable to perform the
construction work, he/she
may cause any third person to perform the construction work.
(2) In case under paragraph (1), any remuneration
that is paid by the
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779-55(Supp. 33)
other party to the debtor shall revert to the bankrupt organization.
Article 342 (Delegation Contracts)
In cases where a delegating person is declared bankrupt, when the delegated
person performs the delegated clerical work without
receiving the
notification of his/her bankruptcy and without knowledge of his/her
bankruptcy, the delegated person may exercise
his/her right on any claim
that accrues to the delegating person who is declared bankrupt from the
delegated clerical work as a
bankruptcy creditor.
Article 343 (Mutual Accounting)
(1) Mutual accounting shall be brought to a close when either of the parties
thereof is declared bankrupt. In this case, each party
may close the mutual
accounting and claim the payment of any balance.
(2) When the debtor holds the claim referred to in the provisions of paragraph
(1), such claim shall revert to the bankrupt organization
and when the
other part holds the claim, such claim shall become a bankrupt claim.
Article 344 (Bankruptcy of Co-Owners)
(1) When any co-owner is declared bankrupt, even if an agreement
prohibiting any split exists, such split may be effected without
resorting
to bankruptcy procedures.
(2) In cases under paragraph (1), any other co-owner who is not declared
bankrupt may acquire the shares of the person who is declared
bankrupt
after paying a sustainable price therefor.
Article 345 (Management of Property of Spouse, etc.)
The provisions of Article 829 (3) and (5) of the Civil Act shall apply mutatis
mutandis to cases where anyone who manages his/her spouse s assets is
declared bankrupt and the provisions of Article 924 of the
same Act shall
apply mutatis mutandis to cases where anyone who exercises parental
authority is declared bankrupt, respectively.
Article 346 (Bankruptcy, Qualified Approval and Property Division)
Declaration of bankruptcy with regard to any inheritor or any
inherited
assets shall not affect qualified acceptance or asset division: Provided,
That the procedures therefor shall be suspended
until a decision to cancel
the bankruptcy or to discontinue the bankruptcy is confirmed or a decision
to complete the bankruptcy
is confirmed.
Article 347 (Takeover of Lawsuit Involving Assets Belonging to Bankrupt
Organization)
10
(Supp. 33)779-56
(1) Any lawsuit pending in the court at the time that the assets that belong
to the bankrupt organization is declared bankrupt may
be taken over by
the trustee in bankruptcy or the other party. The same shall apply to
cases where a lawsuit is filed on a claim
that is held by the other party
when the trustee in bankruptcy fulfills his/her obligations pursuant to
the provisions of Article
335 (1).
(2) The expenses of the lawsuit provided for in the provisions of paragraph
(1) shall be appropriated by foundation claims.
Article 348 (Effects of Compulsory Execution and Preservation
Disposition)
(1) Any compulsory execution, provisional seizure or provisional disposition,
either of which is performed on assets that belong
to the bankruptcy
foundation based on bankruptcy claims shall lose its effects against the
bankruptcy foundation: Provided, That
the trustee in bankruptcy may
continue compulsory execution procedures for the bankruptcy foundation.
(2) Expenses incurred by
the trustee in bankruptcy to continue compulsory
execution procedures pursuant to the provisions of the proviso to paragraph
(1)
shall be appropriated by foundation claims and in the lawsuit on an
objection that is raised by any third person to such compulsory
execution,
the trustee in bankruptcy shall be adjoined as a defendant.
Article 349 (Effect of Disposition on Default)
(1) When a disposition for the recovery of arrears is taken on assets that
belong to the bankruptcy foundation based on collectable
claims (referring
to claims that are collectable according to the example of collecting the
national tax and a preferential collection
therefor order takes precedence
over the general bankruptcy claim) pursuant to the National Tax Collection
Act or the Local Tax
Act, before such assets are made subject to bankruptcy.
the declaration of bankruptcy shall not impede the continuation of such
disposition.
(2) The disposition for the recovery of arrears shall not be taken based
on claims (including any claim that can be collected according
to the example
of collecting the national taxes) that are collectable pursuant to the National
Tax Collection Act or the Local
Tax Act on assets that belong to the
bankruptcy foundation after such assets are made subject to bankruptcy.
Article 350 (Effect
on Administrative Cases)
(1) When any case is pending in any administrative agency at the time
that the assets that belongs to the bankruptcy foundation
are made subject
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779-57(Supp. 33)
to bankruptcy, the procedures for such case shall be suspended by the
time the takeover thereof or the bankruptcy procedures are
completed.
(2) The provisions of Article 347 shall apply mutatis mutandis to cases
under paragraph (1).
SECTION 4 Responsibilities of Corporate Directors, etc.
Article 351 (Disposition Taken to Preserve Assets of Corporate Directors)
(1) In cases where the debtor who is a corporation is declared bankrupt,
the court may, when it is deemed necessary, take a disposition
to preserve
the assets of directors, etc. by its inherent jurisdiction or upon receiving
an application filed by the trustee in
bankruptcy in order to preserve the
rights to claim investments by the debtor s promoters, directors (including
deemed directors
pursuant to the provisions of Article 401-2 (1) of the
Commercial Act), auditors, examiners or liquidator (hereafter referred to
as directors, etc in this Article through Article 353) or the right to claim
compensation for loss based on the responsibilities
of the directors, etc.
(2) When the trustee in bankruptcy becomes aware of the existence of
the claims referred to in the provisions
of paragraph (1), he/she shall request
the court to take a disposition to preserve such claims referred to in the
provisions of
paragraph (1).
(3) When it is deemed urgent, the court may take a disposition to preserve
the assets referred to in the provisions of paragraph
(1) by its inherent
jurisdiction or upon receiving an application filed by the debtor even before
the debtor is declared bankrupt.
(4) The court may decide to alter or rescind the preservation disposition
referred to in the provisions of paragraph (1) or (3)
after hearing the opinions
of the Custodial Committee.
(5) An immediate appeal may be filed against the preservation disposition
referred to in the provisions of paragraph (1) or (3)
and the decision referred
to in the provisions of paragraph (4).
(6) The immediate appeal referred to in the provisions of paragraph (5)
shall not have the effect of suspending any execution.
(7) When a judgment is made on the immediate appeal filed against the
preservation disposition referred to in the provisions of
paragraph (1) or (3)
and the decision referred to in the provisions of paragraph (4), a written
10
(Supp. 33)779-58
judgment shall be delivered to each of the parties.
Article 352 (Final Inspection Judgment on Right to Claim Compensation
for Loss,
etc.)
(1) When it is deemed necessary in cases where the debtor, who is a
corporation is declared bankrupt, the court may issue a judgment
calling
for inspection and determination as to whether the right to claim investments
by directors, etc. and the right to claim
compensation for loss based on
the responsibilities of directors, etc. exist and the nature of such rights.
(2) When the trustee
in bankruptcy becomes aware of the claim rights
referred to in the provisions of paragraph (1), he/she shall file an application
with the court for the judgment referred to in the provisions of paragraph
(1).
(3) When the trustee in bankruptcy files the application referred to in
the provisions of paragraph (1), he/she shall substantiate
the factual
grounds thereof.
(4) When the court commences the inspection and confirmation procedures
by its inherent jurisdiction, it shall decide on their purport.
(5) When the application referred to in the provisions of paragraph (1)
is filed or it is decided to commence the inspection and
confirmation
procedures referred to in the provisions of paragraph (4), it is deemed
that a claim is filed for a judgment on the
interruption of prescription.
(6) Any judgment that dismisses the final inspection judgment referred
to in the provisions of paragraph
(1) and the application filed for the
inspection and confirmation shall be made by a decision that is accompanied
by the grounds
thereof.
(7) When the court makes the decision referred to in the provisions of
paragraph (6), it shall examine interested persons in advance.
(8) The inspection and confirmation procedures (excluding any inspection
and confirmation procedures after an inspection and confirmation
decision
is made) shall be completed when the bankruptcy procedures are completed.
(9) When an inspection and confirmation decision
is made, the written
decision shall be delivered to the parties.
Article 353 (Lawsuit Filed for Objection)
(1) Anyone who is dissatisfied with the final inspection judgment provided
for in the provisions of Article 352 (1) may file a lawsuit
raising an objection
to such judgment within one month from the date on which he/she
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-59(Supp. 33)
receives the delivery of the judgment.
(2) The period referred to in the provisions of paragraph (1) shall be an
invariable period,
(3) When the director, etc. files the lawsuit referred to in the provisions
of paragraph (1), the trustee in bankruptcy shall be
adjoined as a defendant
and when the trustee in bankruptcy files the lawsuit, the director, etc.
shall be the defendant, etc.,
respectively.
(4) The lawsuit referred to in the provisions of paragraph (1) shall be
placed under the exclusive jurisdiction of the bankruptcy
court (referring
to the district court in which the bankruptcy case is pending; hereinafter
the same shall apply) and arguments
shall not be put forward until after
the lapse of one month from the date on which the decision is delivered.
(5) When multiple
lawsuits are pending, the court shall merge arguments.
(6) The judgment that is given in the lawsuit referred to in the provision
of paragraph (1) shall authorize, alter and rescind the decision under the
same paragraph: Provided, That the same shall not apply
to cases where
the lawsuit is dismissed on the grounds of its unlawful.
(7) The judgment that authorizes or changes a decision
on the inspection
and confirmation shall have the same effect as that of a judgment ordering
the implementation of compulsory execution.
Article 354 (Effect of Final Inspection Judgment)
When the lawsuit provided for in the provisions of Article 353 (1) is not
filed
or, is withdrawn or dismissed within the period provided for in the
provisions of the same paragraph, the final inspection judgment
shall
have the same effect as that of a final judgment ordering the implementation.
CHAPTER INSTITUTIONS IN CHARGE OF
BANKRUPTCY PROCEDURES
SECTION 1 Trustees in Bankruptcy
Article 355 (Selection and Appointment of Trustees in Bankruptcy)
(1) The court shall select and appoint every trustee in bankruptcy
after
hearing the opinion of the Custodial Committee.
(2) Any corporation may become a trustee in bankruptcy. In this case,
the corporation shall designate one of its director to perform
his/her duties
10
(Supp. 33)779-60
as a trustee in bankruptcy and report its designation to the court.
Article 356 (Number of Trustees in Bankruptcy)
The trustee in bankruptcy shall be one person: Provided, that multiple
trustees in bankruptcy may be selected and appointed when
the court
recognizes the need to select and appoint them.
Article 357 (Qualification Certificates)
(1) The court shall deliver to every trustee in bankruptcy a written statement
attesting to their selection and appointment.
(2) Every trustee in bankruptcy shall, while performing his/her duties,
produce the written statement referred to in the provisions
of paragraph (1)
at the request of any of the interested persons.
Article 358 (Supervision of Court)
Every trustee in bankruptcy shall be placed under the supervision of the
court.
Article 359 (Standing to Sue)
The trustee in bankruptcy shall become a party in and lawsuit involving
the bankruptcy foundation.
Article 360 (Performance of Duties by Multiple Trustees in Bankruptcy)
(1) When there is at least one trustee in bankruptcy is not
less than one,
they shall perform their duties jointly. In this case, they may share their
duties after obtaining permission therefor
from the court.
(2) When multiple trustees in bankruptcy perform their duties, the
expression of will of any third person may be
made to one trustee in
bankruptcy.
Article 361 (Obligations, etc. of Trustees in Bankruptcy)
(1) Every trustee in bankruptcy shall perform his/her duties with the
due care of a good manager.
(2) When any trustee in bankruptcy neglects such due care, he/she shall
be liable to compensate for loss caused to interested persons.
In this case,
while multiple trustees in bankruptcy are involved in the neglect of such
due care, they shall be collectively liable
to compensate for result at loss.
Article 362 (Agents for Trustees in Bankruptcy)
(1) When it is deemed necessary, every trustee in bankruptcy may select
and appoint an agent at his/her own ri, in order to cause
him/her to
perform his/her duties.
(2) Permission shall be obtained from the court for selecting and appointing
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-61(Supp. 33)
any agent referred to in the provisions of paragraph (1).
(3) In cases where the debtor is a corporation, and the permission referred
to in the provisions of paragraph (1) is granted, the clerk, etc. of the court
shall promptly commission the registry office by
their inherent jurisdiction
to register the selection and appointment of the agent by providing the
registry office with a written
commission accompanied by a certified copy
of the written decision. The same shall apply to cases where the permission
for selecting
and appointing such an agent is altered or rescinded.
(4) The agent referred to in the provisions of paragraph (1) may perform
any act on behalf of the trustee in bankruptcy with the exception of acts
involving any trial.
Article 363 (Resignation of Trustee in Bankruptcy)
Any trustee in bankruptcy may resign after obtaining permission therefor
from
the court when there are justifiable grounds for his/her resignation.
Article 364 (Dismissal of Trustee in Bankruptcy)
(1) The court may dismiss any trustee in bankruptcy by its inherent
jurisdiction and by a resolution of the meeting of creditors
or upon receiving
an application filed by any member of the audit committee. In this case,
the court shall examine the trustee
in bankruptcy.
(2) An immediate appeal may be filed against the decision to dismiss the
trustee in bankruptcy pursuant to the provisions
of paragraph (1).
(3) The immediate appeal referred to in the provisions of paragraph (2)
shall not have the effect of suspending
any execution.
Article 365 (Obligation to Report Accounting)
(1) When the trustee in bankruptcy completes his/her duties, he/she or
the inheritor shall promptly make a report on his/her accounting
to a meeting
of creditors.
(2) When the debtor, the trustee in bankruptcy or the successor of the
trustee in bankruptcy do not raise any objections to the
accounting at
the meeting of creditors, such accounting report shall be deemed approved.
(3) Every trustee in bankruptcy shall
submit the accounting report and
the written opinions of members of the audit committee thereon to the
court by 3 days prior to
the meeting of creditors being held in order for
interested persons to inspect them.
Article 366 (Emergency Disposition Upon Completion of Duties)
In cases where the duties of the trustee in bankruptcy are completed,
when
10
(Supp. 33)779-62
an emergency situation occurs, the trustee in bankruptcy and the
inheritors shall take necessary measures to manage the assets until
the
time what the successor trustee in bankruptcy and the debtor manage
such assets.
SECTION 2 Meeting of Creditors
Article 367 (Convocation)
The court shall call the meeting of creditors under its inherent jurisdiction
or upon receiving an application filed by the trustee
in bankruptcy or any
member of the audit committee. The same shall apply to cases where an
application is filed by any bankruptcy
creditor who holds not less than
1/5 of the amount of total claims as appraised by the court.
Article 368 (Publication of Date
and Agenda of Meeting)
(1) The court shall publish the date and the agenda of the meeting of
creditors.
(2) When an extension or continuation of the meeting of creditors is
announced, the delivery and the publication of such announcement
need
not be made.
Article 369 (Presiding Over by Court)
The meeting of creditors shall be presided over by the court.
Article 370 (Requirements for Passing Resolutions)
(1) A resolution
of the meeting of creditors requires the agreement of persons
who hold not less than 1/2 of the total amount of the claims held
by bankruptcy creditors who attend the meeting of creditors and are entitled
to exercise their voting rights.
(2) Anyone who has any special interest in the resolution of the meeting
of creditors can not exercise his/her voting rights.
Article
371 (Independent Exercise of Voting Rights)
(1) Bankruptcy creditors may exercise their voting rights independently.
(2) In cases
under paragraph (1), the bankruptcy creditors shall report
in writing the purposes of their meeting to the court 7 days prior to
the
date on which the meeting of bankruptcy creditors is held.
Article 372 (Vicarious Exercise of Voting Rights)
(1) Bankruptcy
creditors may exercise their voting rights through their
agents. In this case, such agents shall submit written statements attesting
to their proxy rights.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-63(Supp. 33)
(2) The provisions of Article 371 (2) shall apply mutatis mutandis to
cases where agents independently exercise their voting rights.
Article 373 (The Amount of Claims over which Voting Rights Can be
Exercised)
(1) The bankruptcy creditors may exercise their voting rights according
to the confirmed amount of their claims.
(2) When the trustee in bankruptcy or any bankruptcy creditor raises an
objection to the amount of claims that can not be repaid
by the exercise
of unconfirmed claims, condition precedent claims, future claims, the court
shall determine whether to permit them
to exercise their voting rights
and the amount on which the voting rights are exercised.
(3) The court may alter the decision referred
to in the provisions of paragraph
(2) at any time upon receiving an application filed by interested persons.
(4) The decision referred
to in the provisions of paragraph (2) or (3) need
not be delivered when a declaration is made.
(5) The bankruptcy creditors cannot exercise their voting rights on the
claims provided for in the provisions of Article 446.
Article
374 (Effect in Lieu of Agreement of Members of Audit Committee)
(1) Agreement by the audit committee members may be substituted
for
a resolution of the meeting of creditors.
(2) When the resolution of the meeting of creditors differs from the opinions
of the audit committee members, the resolution shall
prevail over such
opinions.
Article 375 (Prohibition on Execution of Resolution)
(1) When any resolution of the meeting of creditors runs counter to the
general
interests of the bankruptcy creditors, the court may prohibit the
resolution from being executed by its inherent jurisdiction or
upon receiving
an application filed by trustees in bankruptcy, members of the audit
committee, or bankruptcy creditors.
(2) When any bankruptcy creditor who does not have voting rights files
the application referred to in the provisions of paragraph
(1), he/she shall
substantiate that he/she is a bankruptcy creditor.
(3) When a decision is declared on the prohibition referred
to in the provisions
of paragraph (1), the delivery thereof need not be made.
(4) An immediate appeal may be filed against the
decision referred to in
the provisions of paragraph (1).
10
(Supp. 33)779-64
SECTION 3 Members of Audit Committee
Article 376 (Resolution on Establishment of Audit Committee)
In case where it is proposed at the first meeting of creditors that
the audit
committee be set up, the first meeting of creditors may resolve on whether
to set up the audit committee and the number
of its members: Provided,
That such resolution may be altered at the meeting of creditors after the
first meeting of creditors.
Article 377 (Qualifications, etc. for Members of Audit Committee)
(1) The members of the audit committee shall be selected and appointed
at a meeting of creditors.
(2) All of the members of the audit committee are required to be experts
in law and corporate governance who have no interest in
the bankruptcy
procedures.
(3) Any resolution on the selection and appointment of the members of
the audit committee shall obtain an authorization thereof
from the court,
Article 378 (Methods of Performing Duties)
(1) In case where the number of members of the audit committee is not
less than 3, the performance of their duties shall be decided
by the agreement
of a majority of them.
(2) Any member of the audit committee who is related by special interest
shall be prohibited from participating in the decision
referred to in the
provisions of paragraph (1).
Article 379 (Performance of Duties of Members of Audit Committee)
(1) Members of the audit committee shall oversee the performance
of the
duties of the trustees in bankruptcy.
(2) Each member of the audit committee may request the trustee in
bankruptcy to make a report on the bankruptcy foundation and inspect
the current state of the bankruptcy foundation at any time.
(3) When any member of the audit committee finds a fact that will inflict
substantial loss upon any bankruptcy creditor, he/she shall promptly make
a report thereon to the court or at a meeting of creditors.
Article 380 (Dismissal of Members of Audit Committee)
(1) Any member of the audit committee may be dismissed from his/her
post
by a resolution of a meeting of creditors.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-65(Supp. 33)
(2) When substantial grounds exist, the court may dismiss any member
of the audit committee upon receiving an application filed
by interested
persons.
(3) An immediate appeal may be filed against the judgment on the dismissal
of any member of the audit committee provided for in
the provisions of paragraph
(2).
(4) The immediate appeal referred to in the provisions of paragraph (3)
shall not have the effect of suspending any execution.
Article 381 (Mutatis Mutatis Provisions)
The provisions of Articles 30 (1) and 361 shall apply mutatis mutandis
to the members of the audit committee.
CHAPTER COMPOSITION AND
CONFIRMATION OF
BANKRUPTCY FOUNDATION
SECTION 1 Composition of Bankruptcy Foundation
Article 382 (Bankruptcy Foundation)
(1) All assets held by the debtor at the time he/she is declared bankrupt
shall revert to the bankruptcy foundation.
(2) Any claim based on grounds arising before the debtor is declared bankrupt
and is to be exercised by the debtor in the future
shall revert to the bankruptcy
foundation.
Article 383 (Assets not Belonging to Bankruptcy Foundation)
(1) Any assets that cannot be seized shall not revert to the bankruptcy
foundation.
(2) The court may exempt the assets falling under either of the following
subparagraphs from reverting to the bankruptcy foundation
upon receiving
an application filed by an individual debtor:
1. Any portion that does not exceed the amount prescribed by the
Presidential Decree within the scope of the amount preferentially
repayable pursuant to the provisons of Article 8 of the Housing Lease
Protection Act, which is the claim for refund of the security
money
for lease of a building used by the debtor or his/her defendants for
residential purposes; and
10
(Supp. 33)779-66
2. The portion of specific assets the amount of which does not exceed the
amount prescribed by the Presidential Decree, which is
used to cover
the living costs of the debtor and his/her dependants for 6 months.
(3) The application referred to in the provisions
of paragraph (2) shall
be filed in a written statement accompanied by the exempted assets,
inventory and materials necessary for
substantiation within 14 days from
the date on which the bankruptcy is declared after a petition of bankruptcy
is filed.
(4) In cases where the application referred to in the provisions of paragraph
(2) is filed before the bankruptcy is declared or
in cases where the application
referred to in the provisions of paragraph (2) is filed after the bankruptcy
is declared, the court
shall decide whether to grant the exemption, and
on the scope of such exemption within 14 days from the date on which
such application
is filed.
(5) When the decision referred to in the provisions of paragraph (4) is
made, the court shall deliver a written decision to the
debtor and each
of the creditors who are known.
(6) An immediate appeal may be filed against the decision referred to in
the provisions of paragraph (4).
(7) The immediate appeal referred to in the provisions of paragraph (6)
shall not have the effect of suspending any execution.
(8) In cases where an exception application is filed before the bankruptcy
is declared, the court may order the suspension or the
prohibition of any
compulsory execution, provisional seizure or provisional disposition on
the exempted assets referred to in the
provisons of paragraph (2) based
on the bankruptcy claims by its inherent jurisdiction or upon receiving
an application filed by
the debtor by the time bankruptcy is declared.
(9) When the exemption decision is confirmed, the procedures suspended
pursuant
to the provisions of paragraph (8) shall lose their effect.
(10) With respect to the assets exempted pursuant to the provisions
of
paragraph (4), any compulsory execution, provisional seizure or provisional
disposition based on bankruptcy claims shall not
be performed by the
deadline when the immunity application may be filed pursuant to the
provisions of Article 556 (1).
Article 384 (Authority to Perform Management and Disposal)
The authority to manage and dispose of a bankruptcy foundation shall
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779-67(Supp. 33)
be held by the trustees in bankruptcy.
Article 385 (Absolute Acceptance after Bankruptcy Declaration)
In cases where any inheritance commences for a debtor before the
debtor
is declared bankrupt, the debtor s absolute acceptance after he/she is
declared bankrupt shall have the effect of performing
a qualified acceptance
on the bankruptcy foundation.
Article 386 (Renunciation of Inheritance After Bankruptcy Declaration)
(1) In cases where the inheritance commences for a debtor
before he/she
is declared bankrupt, any inheritance that is renounced by the debtor
after he/she is declared bankrupt shall have
the effect of a qualified
acceptance on the bankruptcy foundation.
(2) Notwithstanding the provisions of paragraph (1), the trustee in
bankruptcy may recognize the effect of the renunciation of inheritance.
In this case, the trustee in bankruptcy shall report the gist thereof to
the court within 3 months from the date on which he/she
becomes aware
of such renunciation of inheritance.
Article 387 (Bankruptcy and General Legacy)
The provisions of Articles 385 and 386 shall apply mutatis mutandis to
a general legacy.
Article 388 (Bankruptcy and Specific Legacy)
(1) In cases where any specific legacy is held by the debtor before he/she
is declared bankrupt, when the debtor does not approve
of or renounces
such specific legacy at the time that he/she is declared bankrupt, the
trustee in bankruptcy may approve of or
renounce the specific legacy on
behalf of the debtor.
(2) The provisions of Article 1077 (1) of the Civil Act shall apply mutatis
mutandis to cases under paragraph (1).
Article 389 (Bankruptcy against Inherited Assets)
(1) When any inherited assets are subject to declaration of bankruptcy,
all of
such inherited assets that pertain to such declaration of bankruptcy
shall revert to the bankruptcy foundation.
(2) In cases where any inherited assets are subject to a declaration of
bankruptcy, the rights held by the predecessor over the
inheritor and no
rights held by the inheritor over the predecessor shall be extinguished.
(3) When the inherited assets are subject
to declaration of bankruptcy,
10
(Supp. 33)779-68
the inheritor thereof shall be deemed accepted on a qualified basis: Provided,
That the same shall not apply to cases where the
inheritor is deemed
accepted absolutely pursuant to the provisions of subparagraph 3 of Article
1026 of the Civil Act.
Article 390 (Disposal of Inheritor s Assets)
(1) When the inherited assets are declared bankrupt after the inheritor
disposes of the whole or part of such inherited assets,
rights to benefits
in return held by the inheritor shall revert to the bankruptcy foundation.
(2) In cases under paragraph (1),
when the inheritor has already received
the benefits in return, he/she shall return such benefits in return to the
bankruptcy foundation:
Provided, That when the inheritor is not aware
of the grounds of bankruptcy or the petition for bankruptcy when he/she
receives
the benefits in return, such inheritor may return such benefits
in return within the limitation of the existing interest thereof.
SECTION 2 Right of Negation
Article 391 (Negatable Act)
Any trustee in bankruptcy may set aside acts falling under any of the
following subparagraphs for the bankruptcy foundation:
1. An act performed by the debtor with knowledge that such act causes
loss to bankruptcy creditors: Provided, that the same shall
not apply
to cases where any beneficiary from the act does not become aware
of the fact that the debtor s act causes loss to the
rehabilitation creditors
at the time such act is performed;
2. An act by the debtor that causes loss to bankruptcy creditors and an
act of furnishing any security or extinguishing any obligation
by the
debtor after he/she files an application for suspending payments or
a petition for bankruptcy: Provided, That it is limited
to the event
when any beneficiary from the act learns of the fact that the debtor
files an application for suspending payments
or a petition for bankruptcy
at the time that the debtor performs such act;
3. The act of furnishing any security or extinguishing any debt by the
debtor, which does not pertain to the debtor s obligations
and whose
means and time do not pertain to the debtor s obligations before or
after 60 days from the date on which the debtor files
an application
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-69(Supp. 33)
for suspending payments or a petition for bankruptcy: Provided, That
the same shall not apply to cases where creditors are not aware
of
the fact that the debtor files an application for suspending payments
or a petition for bankruptcy and causes loss to them at
the time that
he/she performs such act; and
4. A gratuitous act or act for consideration that can be deemed identical
to the former, performed by the debtor before or after
6 months from
the date on which he/she files an application for suspending payments
or files a petition of bankruptcy.
Article 392 (Special Rules Governing Acts Performed with Specially Related
Persons as Other Parties)
(1) When anyone who derives a profit in cases of applying the provisions
of the proviso to subparagraph 2 of Article 391 is a person
who is in a
special relationship with the debtor (hereinafter referred to as a specially
related person ), the scope of which is
prescribed by the Presidential Decree,
the specially related person shall be presumed to be aware of the fact that
the debtor files
the application for suspending payments or a petition of
bankruptcy at the time that the debtor performs such act.
(2) In the application
of the provisions of subparagraph 3 of Article 391,
with respect to the act performed with the specially related person as
the
other party, 60 days provided for in the main sentence of the same
subparagraph shall be made one year and in the application of
the
proviso to the same subparagraph, it shall be presumed that the specially
related person is aware of the fact that the debtor
files an application
for suspending payments or a petition of bankruptcy and causes loss to
bankruptcy creditors at the time that
he/she performs such act.
(3) In cases under applying the provisions of subparagraph 4 of Article
391, when any act is performed
with a specially related person as the
other party, 6 months provided for in the same subparagraph shall be
made one year.
Article 393 (Exception of Payment on Promissory Notes)
(1) The provisions of Article 391 shall not apply to cases where anyone
who is entitled to payment on promissory notes from the debtor fails to
receive such payment from him/her, making it possible for
one or multiple
persons to face the loss of his/her rights or their rights over the debtor
for such payment on promissory notes.
10
(Supp. 33)779-70
(2) In cases under paragraph (1), when any person who is obligated to
make final payment or any person who commissions the issuance
of
promissory notes becomes aware of the fact that the debtor files an
application for suspending payments or a petition for bankruptcy
or does
not become aware of the fact due to negligence at the time that such
promissory notes are issued, the trustee in bankruptcy
may require such
person to refund the amount paid by the debtor.
Article 394 (Requirements for Establishing Alteration of Rights or
Negation of Requirements for Counter)
(1) In cases where any registration or any recording that has the effect
of establishing, transferring or altering rights is effected
after the debtor
files an application for suspending payments or a petition for bankruptcy,
when the act of incurring obligations
by way of such registration or such
recording is performed with the knowledge that the debtor files an application
for suspending
payments or a petition for bankruptcy, such act may be
set aside: Provided, That the same shall not apply to cases where any
principal
registration or any principal recording is effected after any
provisional registration or any provisional recording is effected
based on
the former.
(2) In cases where the act of establishing, transferring or altering the
right is performed out of the need to counter any third
person after the
debtor files an application for suspending payments or a petition for
bankruptcy, when such act is performed with
the knowledge that the
debtor files an application for suspending payments or a petition for
bankruptcy after the lapse of 15 days
from the date on which the act of
establishing, transferring or altering the right is performed, the provisions
of paragraph (1)
shall apply to such cases.
Article 395 (Negation of Act of Execution)
The right to set aside may be exercised when a title holding the executory
power over an act that is subject to being set aside
exists or when the
act is based on the act of execution.
Article 396 (Means of Exercising Negation Rights)
(1) The right to set aside shall be exercised by the trustee in bankruptcy
by
means of lawsuit, the claim of for setting aside or protest.
(2) The court may order the trustee in bankruptcy to exercise the right
to set aside by its inherent jurisdiction or upon receiving an application
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-71(Supp. 33)
filed by bankrupt creditors.
(3) The lawsuits and cases of claims for negation referred to in the provisions
of paragraph (1) shall be placed under the exclusive
jurisdiction of the
bankruptcy court.
(4) The provisions of Articles 106 and 107 shall apply mutatis mutandis
to the claims for setting aside referred to in the provisions
of paragraph (1).
Article 397 (Effect of Exercise of Negation Right)
(1) The effect of exercising the right of setting aside shall
restore the
bankruptcy foundation to its original status.
(2) In cases where the act provided for in the provisions of subparagraph
4 of Article 391 is set aside, when the other party is
bona fide at the
time that the other party performs the act, the refund may be made within
the limits of the existing profit.
Article 398 (Status of Other Party)
(1) In cases where the debtor s act is set aside, when the benefits in return
that is paid to him/her is included in the bankruptcy
foundation, the other
party may claim a refund thereof and when any profit that accrues from
the benefit in return exists in the
bankruptcy foundation, the debtor may
exercise his/her rights as a foundation creditor within the limits of such
profit.
(2) In cases where the debtor s act is set aside, when no profit accrues
from the benefits in return, the other party may exercise
his/her rights
as a bankruptcy creditor to have the value of such profit refunded. In cases
where the value of the benefits in
return is higher than that of the existing
profit, the same shall apply to the difference between them.
Article 399 (Restoration
of Claim of Other Party)
In cases where the debtor s act is set aside, when the other party returns
any payment that he/she has
received or refunds its value, the other
party s claim shall be restored to its original status.
Article 400 (Right of Negation
where Inherited Assets Subject to
Bankruptcy)
In cases where any inherited assets are subject to a declaration bankruptcy,
the provisions of Articles 391, 392, 393, 398 and 399
shall apply mutatis
mutandis to an act performed by any predecessor, any inheritor, the
custodian of the inherited asets and the
executor of the will with respect
to the inherited assets.
10
(Supp. 33)779-72
Article 401 (Negation of Repayment, etc. to Person who Takes Legacy)
In cases where the inherited assets are subject to a declaration
of bankruptcy,
when the act of making any repayment and extinguishing any obligation
to the person who takes the legacy causes
loss to any bankruptcy creditor
who holds preferential claims, such act may be set aside.
Article 402 (Repayment to Other Party
of Negation)
In cases where the inherited assets are subject to a declaration of bankruptcy,
when the act performed by the predecessor,
any inheritor, the custodian
of the inherited assests and the executor of a will on the assets property
is set aside, the residual
assets shall be distributed according to the value
of the rights to the other party of the act that is set aside after making
a
repayment to the inheritance creditor.
Article 403 (Right of Negation on Subsequent Purchasers)
(1) In the instances falling under any of the following subparagraphs,
the
right to set aside may be exercised on a subsequent purchaser:
1. When the subsequent purchaser is aware that the grounds for the setting
aside on the former exists at the time that the subsequent
purchase is
made;
2. When the subsequent purchaser is a specially related person provided
for in the provisions of Article 392: Provided, That the
same shall not
apply to instances when the subsequent purchaser is unaware of the
grounds for the setting aside on the former;
and
3. In cases where the subsequent purchaser performs the subsequent
purchase by means of a gratuitous act or an act for consideration
that
is deemed identical to the former, when the grounds for setting aside
on the former exists.
(2) The provisions of Article 397 (2) shall apply mutatis mutandis to cases
where the right to set aside is exercised pursuant to
the provisions of
paragraph (1) 3.
Article 404 (Restrictions on Negation on Grounds of Awareness of Payment
Suspension)
Any act that is performed one year prior to the date on which bankruptcy
is declared cannot be set aside on the grounds of awareness
of the fact
that the payment is suspended.
Article 405 (Period During Which Negation Right is Exercised)
The right to set aside shall not be exercised after 2 years lapse
from the
date on which bankruptcy is declared. The same shall apply to cases where
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-73(Supp. 33)
10 years lapse from the date on which the act provided for in each
subparagraph of Article 391 is performed.
Article 406 (Suspension of Lawsuit to Revoke Filed by Creditor)
(1) When a lawsuit filed by any bankruptcy creditor pursuant to
the
provisions of Article 406 of the Civil Act is pending in the court at the
time that he/she is declared bankruptcy, the litigation
procedures therefor
shall be suspended until the litigation procedures are taken over or the
bankruptcy procedures are completed.
(2) The provisions of Article 347 shall apply mutatis mutandis to cases
under paragraph (1).
SECTION 3 Reacquisition Rights
Article 407 (Reacquisition of Assets Not Belonging to Debtor)
A declaration of bankruptcy shall not affect rights to reacquire from
the
bankruptcy foundation any assets that do not belong to the debtor.
Article 408 (Reacquisition of Sold Goods in Transit)
(1)
When the seller ships out goods that are subject to purchase and sells
them to a buyer who is declared bankrupt before the latter
pays the total
purchase price of such goods and takes the delivery of such goods at their
destination, the former may reacquire
such goods: Provided, That the
same shall not apply to cases where the trustee in bankruptcy pays the
total purchase price therefor
and then claims delivery of such goods.
(2) The provisions of paragraph (1) shall not exclude the application of
the provisions
of Article 335.
Article 409 (Rights of Commission Agents to Reacquire)
The provisions of Article 408 (1) shall apply mutatis mutandis to cases
where any commission agent entrusted to purchase goods ships out such
goods to any entrusting person.
Article 410 (General Reacquisition Rights)
(1) When the debtor transfers his/her assets that are subject to the
reacquisition right before he/she is declared bankrupt, the
holder of the
reacquisition right may claim the transfer of the right to claim the payment
of the benefits in return. The same
shall apply to cases where the trustee
in bankruptcy transfers assets that are subject to the reacquisition right.
(2) In cases
under paragraph (1), when the trustee in bankruptcy has
10
(Supp. 33)779-74
received payment of the benefits in return, the reacquisition right holder
may claim the return of the assets that the trustee in
bankruptcy takes
as the benefits in return.
SECTION 4 Right to Foreclose Outside Bankruptcy
Article 411 (Holders of Rights to Foreclose Outside of Bankruptcy)
Anyone who holds rights of lien, pledge right, mortgage or the
rights to
lease assets that belong to the bankruptcy foundation shall hold the right
to foreclose outside bankruptcy on such assets
that are subject to such
rights.
Article 412 (Exercise of Right to Foreclose Outside Bankruptcy)
The right to foreclose outside of bankruptcy shall be exercised
without
resorting to bankruptcy procedures.
Article 413 (Exercise of Bankruptcy Claims by Holders of Rights to
Foreclose Outside of Bankruptcy)
The holder of the right to foreclose outside of bankruptcy may exercise
his/her right to foreclose outside of bankruptcy as a bankruptcy
creditor
on the amount of a claim that can not be met by the exercise of the right
to foreclose outside of bankruptcy: Provided,
That this shall not affect
the exercise of the right as a bankruptcy creditor on the renounced amount
of the claim on which the
right to foreclose outside of bankruptcy.
Article 414 (Holders of Quasi-Rights to Foreclose Outside of Bankruptcy)
(1) Anyone who
holds pledge rights or mortgage over the debtor s assets,
which do not belong to the bankruptcy foundation, may exercise his/her
right only on the amount of the claim that cannot be met by the exercise
of such rights as a bankruptcy creditor.
(2) The provisions governing the right to foreclose outside of bankruptcy
shall apply mutatis mutandis to anyone who holds the rights
referred to
in the provisions of paragraph (1).
Article 415 (Housing Tenants, etc.)
(1) Any tenant who is given a confirmation date in the rental contract
certificate after meeting the requirements for counterclaim
provided for
in the provisions of Article 3 (1) of the Housing Lease Protection Act shall
have the right to have his/her security
deposit repaid more preferentially
than the subsequent creditors and other creditors from the proceeds of
liquidation of the housing
that belongs to the bankruptcy foundation.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-75(Supp. 33)
(2) Any tenant provided for in the provisions of Article 8 of the Housing
Lease Protection Act shall have the right to have his/her
security deposit
as provided for in the provisions of the same Article, repaid more
preferentially than other secured creditors
from the proceeds of liquidation
of the housing that belong to the bankruptcy foundation. In this case,
the tenant shall meet the
requirements for counterclaim referred to in
the provisions of Article 3 (1) of the Commercial Building Lease Protection
Act by
the date on which a petition for bankruptcy is filed.
(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis
to tenants who meet the requirements for counterclaim and has the date
of confirmation entered in the rental contract certificate
and other tenants
provided for in the provisions of Article 14 of the same Act.
SECTION 5 Offset Right
Article 416 (Rights of Setoff)
When any bankruptcy creditor bears obligations for the debtor at the time
that the debtor is declared bankrupt, such obligations
may be offset without
resorting to bankruptcy procedures.
Article 417 (Setoff of Claims and Obligations Subject to Deadline and
Conditions for Rescission, etc.)
Even when the claim of any bankruptcy creditor is subject to deadline
or subject to recession at the time that the debtor is declared
bankrupt
and the claim provided for in the provisions of Article 426, such claims
may be offset. The same shall apply to cases
where any obligation is sub-
ject to deadline and subject to rescission or to future claims.
Article 418 (Offset of Condition Precedent
Claim and Claim of Future)
When anyone holding a condition precedent claim or future claim who fulfill
his/her obligations, he/she
may claim the depositing of the amount of the
repayment within the limit of the amount of offset of the future claim.
Article 419
(Offset of Claim Subject to Rescission)
When anyone holding a claim subject to rescission who offsets such claim,
he/she shall
furnish security or make a deposit for the amount of offset.
Article 420 (Setoff Amount of Automatic Claims)
(1) When the claim of any bankruptcy creditor is an interest-free claim
or a periodic payment claim, his/her claim may be offset
within the limit
of the amount obtained by deducting the portion falling under Article
10
(Supp. 33)779-76
446 (1) 5 through 7.
(2) The provisions of Articles 426 and 427 shall apply mutatis mutandis
to the claims of bankruptcy creditors.
Article 421 (Setoff of Rents, Security Deposits and Land Rents)
(1) When the bankruptcy creditor is a tenant, his/her rents for
the current
term and the following term may offset one another at the time that the
debtor is declared bankrupt. In cases where
any security deposit exists,
the same shall apply to rents thereafter.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to land
rents.
Article 422 (Prohibition on Setoff)
Setoff shall be prohibited in events falling under any of the following
subparagraphs:
1. When a bankruptcy creditor bears obligations for the bankruptcy
foundation after the debtor is declared bankrupt;
2. When a bankruptcy creditor bears obligations for the debtor with
knowledge that the debtor files an application for suspending
payments
or a petition for bankruptcy; Provided, That the same shall not apply
to events falling under any of the following items:
(a) When the bearing of obligations is based on statutory grounds;
(b) When the bearing of obligations accrues before the bankruptcy
creditor becomes aware of the fact that the debtor files an application
for suspending payments or a petition for bankruptcy; and
(c) The bearing of obligations accrues one year prior to the date on
which the debtor is declared bankrupt;
3. When a debtor to the debtor who is declared bankrupt acquires any
bankruptcy claim from another person after he/she is declared
bankrupt;
and
4. When a debtor to the debtor who is declared bankrupt acquires any
bankruptcy claim with knowledge of the fact that the latter
files an
application for suspending payments and a petition for bankruptcy:
Provided, That the same shall not apply to the events
falling under
any of the items of subparagraph 2.
CHAPTER BANKRUPTCY CLAIMS AND
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-77(Supp. 33)
FOUNDATION CLAIMS
SECTION 1 Bankruptcy Claims
Article 423 (Bankruptcy Claims)
Any assets claim that accrues before the debtor is declared bankrupt shall
be made a bankruptcy claim.
Article 424 (Exercise of Bankruptcy Claims)
No bankruptcy claim shall not be exercised without resorting to bankruptcy
procedures.
Article 425 (Arrival of Repayment Period for Claims Subject to Deadline)
Claims subject to deadline shall be deemed as arising in
the repayment
period when bankruptcy is declared.
Article 426 (Amount of Bankruptcy Claim of Non-Monetary Claims, etc.)
(1) When the purpose of any claim is not monetary and the
amount of
such claim is unclear or such claim is denominated in any foreign currency,
the appraised amount of such claim at the
time bankruptcy is declared
shall become the sum of the bankruptcy claim.
(2) The provisions of paragraph (1) shall apply to events when the amount
of the claim for the money payable by periodic installments
or the period
of existence are not confirmed.
Article 427 (Bankruptcy Claim Sum of Conditional Claims, etc.)
(1) The total amount of conditional claims shall become the sum of
the
bankruptcy claim.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to future
claims on the debtor.
Article 428 (Sum of Bankruptcy Claims Where Person Liable to Fulfill
Total Amount of Obligations Declared Bankrupt)
In cases where multiple debtors are liable to fulfill the total amount of
obligations, when all or some of such debtors are declared
bankrupt, creditors
may exercise their rights as bankruptcy creditors on the total amount of claims
they hold when the debtors
are declared bankrupt to each bankruptcy
foundation.
Article 429 (Amount of Bankruptcy Claim Where Guarantor Declared
Bankrupt)
When any guarantor is declared bankrupt, creditors may exercise their
10
(Supp. 33)779-78
rights as bankruptcy creditors on the total amount of claim that he/she
holds at the time that the guarantor is declared bankrupt.
Article 430 (Persons Holding Rights to Claim Reimbursements in Future)
(1) In cases where multiple debtors are liable to fulfill
all obligations,
when all or some of such debtors are declared bankrupt, persons who hold
rights to future claims for reimbursements
of on the debtors may exercise
their rights as bankruptcy creditors on the total amount of such
reimbursements on each bankruptcy
foundation: Provided, That the same
shall not apply to events when the creditors exercise their rights as bankruptcy
creditors
on the total amount of their claims.
(2) In cases under the proviso to paragraph (1), anyone who holds the
right to claim reimbursements pursuant to the provisions of
paragraph (1)
makes the repayment, he/she shall acquire rights as creditor according
to the ratio of his/her repayment.
(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis
to the right to future claims for reimbursement that is
held by any third
person who furnishes any security on the debtor.
Article 431 (Amount of Bankruptcy Claims When Multiple Persons Stand
as Guarantees)
The provisions of Articles 428, 429 and 430 (1) and (2) shall apply mutatis
mutandis to the portion of the guarantee that multiple
guarantors stand
part of obligations.
Article 432 (Bankruptcy of Partners with Unlimited Liability)
When any partner who has unlimited liability for the obligations of
any
corporation is declared bankrupt, the creditors of such corporation may
exercise their rights as bankruptcy creditors on the
total amount of claims
held by them at the time that he/she is declared bankrupt on the bankruptcy
foundation.
Article 433 (Bankruptcy of Partners with Limited Liability)
When any partner who has limited liability for the obligations of any
corporation or such corporation is declared bankrupt, the creditors of such
corporation shall not exercise their rights on the
partner who has limited
liability for the obligations of the corporation: Provided, That the corporation
may exercise a claim to
its investment as a bankruptcy claim.
Article 434 (Bankruptcy of Inheritors)
In case where any inheritor is declared bankrupt, even when his/her assets
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-79(Supp. 33)
are divided out, inheritance creditors and persons who take the legacy may
exercise their rights as bankruptcy creditors on the
total amount of their
claims to the bankruptcy foundation.
Article 435 (Bankruptcy against Inherited Assets and of Inheritors)
When any inherited assets and its inheritor are each subject
to declaration
of bankruptcy, inheritance creditors and persons who take the legacy may
exercise their rights as bankruptcy creditors
on the total amount of their
claims to the bankruptcy foundation.
Article 436 (Qualified Acceptance of Inheritors)
In cases under the provisions of Articles 434 and 435, when any inheritor
who is declared bankrupt receives qualified acceptance,
inheritance
creditors and persons who take the legacy shall not exercise their rights
as bankruptcy creditors on the inheritance
assets of such inheritor. The
same shall apply to cases where the effect of the qualified acceptance exists
pursuant to the provisions
of Articles 385 or 386 (1).
Article 437 (Claims, etc. of Inheritors on Predecessors)
When any inherited assets are subject to a
declaration of bankruptcy, the
inheritor thereof shall have the same rights as those of inheritance creditors
on claims on the
predecessor and any investment that is made in order
to extinguish claims on the predecessor and obligations of the predecessor.
Article 438 (Creditors of Inheritor)
When any inherited assets are subject to a declaration of bankruptcy, the
creditors of the inheritors thereof shall be prohibited
from exercising
their rights as bankruptcy creditors on the bankruptcy foundation.
Article 439 (Expenses Incurred from Participation
in Bankruptcy
Procedures)
Expenses incurred from participation in bankruptcy procedures shall be
covered by bankruptcy claims.
Article 440 (Equal Repayments to Persons on Same Order)
Claims for which repayments have to be made on the same order shall
be
repaid according to the ratio of the amount of such claims.
Article 441 (Priority Bankruptcy Claims)
Bankruptcy claims of general priority over the assets that belong to the
bankruptcy foundation shall take precedence over other
claims.
Article 442 (Calculation of Priority Right Period)
In cases where priority rights exist on the amount of claims during
a certain
period, such period shall be calculated retroactively from the time
10
(Supp. 33)779-80
bankruptcy is declared.
Article 443 (Superiority of Inheritance Creditors)
When inherited assets are made subject to a declaration of bankruptcy,
the claims
of inheritance creditors shall take precedence over the claims
of persons who take the legacy.
Article 444 (Ranking of Creditors Where Inheritor Declared Bankrupt)
When any inheritor is declared bankrupt on the grounds of a
petition for
bankruptcy filed within the period during which the petition of bankruptcy
is filed on the inherited assets, the claims
of the inheritor as a creditor
shall take precedence over claims of inheritance creditors and the person
who takes the legacy on
the inherited assets. The claims of the inheritance
creditors and the claim of the person who takes the legacy shall take
precedence
over the claims of the creditors of the inheritor on the inherited
assets.
Article 445 (Ranking of Inherited Assets and Bankruptcy Foundation of
Inheritors)
When inherited assets and any inheritor are subject to a declaration of
bankruptcy, the claims of the creditors of the inheritor
shall take precedence
over the claims of inheritance creditors and the person who takes the legacy
with respect to the bankruptcy
foundation of the inheritor.
Article 446 (Subordinate Bankruptcy Claims)
(1) Claims falling under any of the following items shall be made subordinate
bankruptcy claims compared with other bankruptcy claims:
1. The interest that accrues after bankruptcy is declared;
2. The amount of compensation for loss and the penalties for failure to
pay such amount after bankruptcy is declared;
3. Expenses incurred from participating in bankruptcy procedures;
4. Fines, penalties, expenses for criminal litigation costs, additional levies,
and the fines for negligence;
5. In cases of interest-free claims, the deadline for which arrives after
bankruptcy is declared, the portion equivalent to the interest
calculated
by the account that makes the total amount of the principal calculated
based the statutory interest from the time bankruptcy
is declared until
the deadline of the claim;
6. In the case of interest-free claims the deadline for which is not confirmed,
the portion equivalent to the difference between
the claim amount
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-81(Supp. 33)
and the amount appraised at the time bankruptcy is declared; and
7. In cases of periodic payment claims, the claim amount and period of
existence of which are confirmed, when the portion equivalent
to the
total amount of interest calculated according to the provisions of
subparagraph 5 concerning the periodic payments and the
total principal
calculated according to the provisions of the same subparagraph
concerning the periodic payments exceeds the principal
from which
statutory interest equivalent accrues on the periodic payments.
(2) Any claim on which the debtor agrees with creditors
to rank lower
than that of other claims shall be ranked lower than that of other claims,
as agreed.
SECTION 2 Report on, and Inspection of
Bankruptcy Claims
Article 447 (Means of Reporting Claims)
(1) Every bankruptcy creditor shall report the matters falling under each
of the following subparagraphs to the court within the
period set by the
court (hereinafter referred to as the reporting period ) and submit
evidential documents or certified copies
and abridged copies thereof to
the court:
1. The amount of claims and the grounds thereof;
2. When claims carry general priority rights, the rights thereof; and
3. When the claims falling under any subparagraph of Article 446 (1)
are included, the categorization thereof.
(2) The holder of the right to separate settlement shall report the amount
of claims that cannot be repaid according to the purpose
and exercise of
such rights.
(3) When a lawsuit is pending bankruptcy claims at the time bankruptcy
is declared, bankruptcy creditors shall report to the Court
the parties,
the name and the number of cases other than the matters referred to in
each subparagraph of paragraph (1).
Article 448 (Preparation of Table of Bankruptcy Creditors)
(1) The clerk, etc. of the court shall prepare a table of bankruptcy
creditors
in which the matters falling under each of the following subparagraphs
are entered:
10
(Supp. 33)779-82
1. Names and domiciles of creditors;
2. The amount of claims and the grounds thereof;
3. General priority rights, if any;
4. When claims falling under any of the subparagraphs of Article 446 (1)
are included, the categorization thereof; and
5. The amount of claims reported by the holder of the right to separate
settlement.
(2) The clerk, etc. of the court shall deliver a certified copy of the table
of bankruptcy creditors to the trustee in bankruptcy.
Article 449 (Maintaining Table of Bankruptcy Creditors and Documents
Concerning Claim Reports)
(1) The court shall maintain a table of bankruptcy creditors and documents
concerning claim reports in order for interested persons
to inspect them.
(2) The clerk, etc. of the court shall, upon receiving an application filed
by any creditor deliver to him/her
an abridged copy of the table of bankruptcy
creditors concerning the claims of creditors.
Article 450 (Inspection of Claims)
The matters provided for in each subparagraph of Article 448 (1) with
respect to reported claims shall be inspected on the date
for claim inspection.
Article 451 (Presence of Persons Concerned)
(1) The debtor and the bankruptcy creditors who make the report or their
agents may be present to state their opinions on the claim
inspection date.
(2) The agents referred to in the provisions of paragraph (1) shall each
submit to the court a written statement
attesting to his/her agency
authority.
Article 452 (Presence of Trustees in Bankruptcy)
No claims shall be inspected without the trustee in bankruptcy.
Article 453 (Inspection of Claims Reported After Expiration of Report
Period)
(1) Claims that are reported after the expiration of the reporting period
may be inspected on the general claim inspection date
except when an
objection is raised thereto by the trustee in bankruptcy and any bankruptcy
creditor.
(2) When the trustee in bankruptcy or any bankruptcy creditor raises an
objection, the court shall set a special date in order to
conduct the claim
inspection referred to in the provisions of paragraph (1). In this case,
DEBTOR REHABILITATION AND BANKRUPTCY
ACT
779-83(Supp. 33)
expenses necessary for the claim inspection shall be borne by bankruptcy
creditors who report after the reporting period.
Article 454 (Changes Causing Loss of Profits of Bankruptcy Creditors)
The provisions of Article 453 shall apply mutatis mutandis
to cases where
the matters reported by bankruptcy creditors cause any changes that result
in losses to the profits of other bankruptcy
creditors after the reporting
period.
Article 455 (Report of Claims after General Date)
The provisions of Article 453 (2) shall apply mutatis mutandis to a case
where
any bankruptcy creditor reports claims after the general date on
which the inspection of claims is conducted.
Article 456 (Publication and Notification of Special Date)
Any decision to set a special date on which claims are inspected shall
be
published and the trustees in bankruptcy, the debtor and the bankruptcy
creditors who report their claims shall be notified
of such special date.
Article 457 (Change, etc. in Claim Inspection Date)
The provisions of Article 456 shall apply mutatis mutandis
to any change
in a claim inspection date, the extension of a claim inspection and the
continuation of claim inspection: Provided,
That when the claim inspection
date is declared, the notification and the publication therof need not be
made.
Article 458 (Confirmation of Claims)
When the trustee in bankruptcy or any bankruptcy creditor does not raise
any objection on the claim inspection date, the matters
falling under each
of the following subparagraphs shall be confirmed:
1. The amount of claims;
2. Priority rights; and
3. The categorization of the claims that fall under any of the subparagraphs
of Article 446 (1).
Article 459 (Entry of Inspection Results in Table of Bankruptcy Creditors)
(1) The clerk, etc. of the court shall enter the result
of the claim inspection
and any objections stated by the debtor in the table of bankruptcy creditors.
(2) The clerk, etc. of the
court shall enter the gist of the confirmation
in the documents evidencing the claims and affix the court seal thereto.
Article
460 (Effect of Entry of Confirmed Claims in Table of Bankruptcy
Creditors on Bankruptcy Creditors)
10
(Supp. 33)779-84
When confirmed claims are entered in the table of bankruptcy creditors,
the entries thereof shall have the same effect as that of
a confirmed judgment
on all of the bankruptcy creditors.
Article 461 (Notification of Objection Raised to Bankruptcy Claims)
(1) In cases where any bankruptcy creditor fails to be present
on the
claim inspection date, when an objection is raised to claims, the court
shall notify such bankruptcy creditor of the fact.
(2) The notification referred to in the provisions of paragraph (1) may
be made by means of the mailing of the document.
Article 462 (Judgment on Inspection Confirmation of Bankruptcy Claims)
(1) When the trustee in bankruptcy or any bankruptcy creditor
raises an
objection to the contents of any bankruptcy claim reported in the course
of bankruptcy claim inspection, the bankruptcy
creditor who holds such
bankruptcy claim (hereinafter referred to as an objection to claim ) may
file an application with the court
for a final claim inspection judgment
(hereinafter referred to as the final claim inspection judgment in this
Part) with all objectors
as other parties: Provided, That the same shall
not apply to cases under Articles 464 and 466.
(2) Whether any bankruptcy claim to which an objection is raised exists
and the contents thereof shall be prescribed in the final
claim inspection
judgment.
(3) The court shall, when it gives the final claim inspection judgment,
examine each person who raises an objection thereto.
(4)
The court shall deliver the written decision of the final claim inspection
judgment to each of the parties.
(5) The application referred to in the provisions of paragraph (1) shall
be filed within one month from the general inspection date
or the special
inspection date set for the inspection of any bankruptcy claim to which
an objection is raised.
Article 463 (Appeal against Objection Raised to Final Claim Inspection
Judgment)
(1) Anyone who is dissatisfied with a final claim inspection judgment
may file an appeal against such judgment within one month
from the date
on which he/she receives delivery of the written decision.
(2) The lawsuit referred to in the provisions of paragraph
(1) shall be
placed under the exclusive jurisdiction of the bankruptcy court.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-85(Supp. 33)
(3) When the person who files the appeal referred to in the provisions
of paragraph (1) is a bankruptcy creditor who holds claims
to which an
objection is raised, all of the objectors shall be adjoined as defendants
and when the bankruptcy creditor is an objector,
the bankruptcy creditor
shall be adjoined as a defendant.
(4) When multiple lawsuits are pending on the same claim, the court shall
merge the arguments therein.
(5) The judgment on the lawsuit referred to in the provisions of paragraph
(1) shall authorize or amend the judgment referred to
in the same paragraph
except when the court dismisses the lawsuit on the grounds of unlawfulness.
Article 464 (Takeover of Lawsuit
on Claims to Which Objection Is Raised)
In cases where any lawsuit is pending on the claims to which an objection
is raised at
the time bankruptcy is declared, when the creditor thereof
seeks to have his/her right thereon confirmed, such creditor shall take
over the lawsuit and ajoin all objectors as other parties.
Article 465 (Restrictions on Grounds of Claims)
Any bankruptcy creditor may file an application for a final claim inspection
judgement on the matters entered in the table of the
bankruptcy creditors
pursuant to the provisions of Article 459 (1), may file the lawsuit provided
for in the provisions of Article
463 (1) or may take over a lawsuit pursuant
to the provisions of Article 464.
Article 466 (Ways to Raise Objections to Claims with Right of Execution
in Title)
(1) Anyone who has an objection to the title of the execution right with
the executory power and any claim on which a final judgment
is given
may raise an objection only by resorting to the same litigation procedures
that the debtor can take.
(2) In cases where a lawsuit on the bankruptcy claim as provided for in
the provisions of paragraph (1) is pending in the court
at the time bankruptcy
is declared, when any objector intends to raise the objection referred to
in the same paragraph, such objector
shall take over the litigation procedures
with the bankruptcy creditor who holds the bankruptcy claim as other
party.
(3) The provisions of Articles 463 (4) and 465 shall apply mutatis mutandis
to the provisions of paragraphs (1) and (2).
Article 467 (Entry of Lawsuit Result Confirming Bankruptcy Claim)
The clerk, etc. of the court shall, upon receiving an application
filed by
10
(Supp. 33)779-86
the trustee in bankruptcy or any bankruptcy creditor, enter the results
of the lawsuit confirming a bankruptcy claim (when the lawsuit
filed against
the final claim inspection judgment is not filed, or is dismissed within
the period provided for in the provisions
of Article 463 (1), this refers
to the contents of such judgment) in the table of bankruptcy creditors.
Article 468 (Effect of
Judgment, etc. on Lawsuit on Confirmation of
Bankruptcy Claims)
(1) The judgment on the lawsuit filed to seek the confirmation of bankruptcy
claims shall take effect on all bankruptcy creditors.
(2) When any lawsuit against the final claim inspection judgment is not
filed, or is dismissed within the period provided for in
the provisions of
Article 463 (1), such judgment shall have the same effect on all bankruptcy
creditors as that of a final judgment.
Article 469 (Refund of Litigation Costs)
When the bankruptcy foundation receives any award from the lawsuit
(including a final claim inspection judgment) that results in
confirming
any bankruptcy claim, any bankruptcy creditor who claims an objection
may claim a refund of litigation costs as a foundation
creditor within the
limits of such award.
Article 470 (Value of Purpose of Bankruptcy Claim Confirmation Lawsuit)
The value of the subject matter of a lawsuit filed to confirm
a bankruptcy
claim shall be determined by the bankruptcy court on the basis of the
amount scheduled for distribution.
Article 471 (Report on Fines, etc.)
(1) Anyone who holds a claim provided for in the provisons of Article
446 (1) 4 shall promptly report the amount and the grounds
of such claim
to the court.
(2) The provisions of Article 459 (1) shall apply mutatis mutandis to the
claim that is reported pursuant to the provisions of paragraph
(1).
Article 472 (Administrative Trial or Administrative Litigation)
(1) When the grounds of a claim reported pursuant to the provisions
of
Article 471 (1) is a disposition subject to administrative trial or
administrative litigation, the court shall promptly notify
the trustee in
bankruptcy of the amount and the grounds of such claim.
(2) The provisions of Articles 466 through 468 shall apply
mutatis mutandis
to cases where the trustee in bankruptcy claims an objection.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-87(Supp. 33)
SECTION 3 Foundation Claims
Article 473 (Scope of Foundation Claims)
Claim falling under any of the following subparagraphs shall be made
foundation claim:
1. A claim for trial costs brought against the joint interests of bankruptcy
creditors;
2. A claim that is collectable pursuant to the National Tax Collection Act
or the Local Tax Act (including a claim that is collectable
according
to the example of a disposition taken to collect the national tax and
its collection ranking takes precedence over the
collection ranking of
the general bankruptcy claims, subordinate claims provided for in the
provisions of Article 446 shall be
excluded): Provided, That claims on
grounds arising after bankruptcy is declared shall be limited to claims
that accrue to the
bankruptcy foundation;
3. Expenses necessary for the management, the conversion and the
distribution of the bankruptcy foundation;
4. Claims arising from acts performed by the trustee in bankruptcy for
the bankruptcy foundation;
5. Claims that accrue to the bankruptcy foundation after bankruptcy is
declared on the grounds of clerical work or unlawful profits;
6. Claims that accrue to the bankruptcy foundation on the grounds of
acts performed out of the need to deal with emergencies after
the
commission is terminated or the agency authority is terminated;
7. Claims held by the other party where the trustee in bankruptcy fulfills
any obligation pursuant to the provisions of Article 335
(1);
8. Claims that accrue by the time when a bilateral contract is terminated
on grounds of a declaration of bankruptcy;
9. The relief money for the debtor and persons who are financially supported
by the debtor;
10. The wages, severance pay and disaster compensation for the debtor s
workers; and
11. The right to claim a redemption of the bailment money and the personal
identity guarantee money of the debtor s workers, which
accrue before
bankruptcy is declared.
Article 474 (Claim for Share of Legacy that is Sharable)
When a trustee in bankruptcy claims the implementation of any shareable
10
(Supp. 33)779-88
legacy, a claim that is entitled to any profit from any share of the legacy
shall be made a foundation claim within the limits of
not exceeding the value
of the subject matter of the legacy.
Article 475 (Repayment of Foundation Claims)
Foundation claims shall be met frequently without resorting to bankruptcy
procedures.
Article 476 (Preferential Repayments of Foundation Claims)
Foundation claims shall be treated with greater preference than bankruptcy
claims.
Article 477 (Ways to Make Repayments Where Bankruptcy Foundation
Unable to Make Full Payments)
(1) When it is evidnetly clear that the bankruptcy foundation is unable
to fully repay the total amount of the foundation claims,
the repayment
of the foundation claims shall be made according to the ratio of the unrepaid
claim amount, notwithstanding the priority
right provided for in other
Acts and subordinate statutes: Provided, That the lien rights, pledge rights,
mortgages and rental
rights included in the foundation claims shall not
be affected.
(2) The foundation claims provided for in the provisions of subparagraphs
1 through 7 and 10 of Article 473 shall take precedence
over other foundation
claims.
Article 478 (Mutatis Mutandis Application of Provisions Governing
Bankruptcy Claims)
(1) The provisions of Articles 425, 426 and 427 (1) shall apply mutatis
mutandis to the foundation claims provided for in the provisions
of
subparagraph 7 of Articles 473 and 474.
(2) When the foundation claims provided for in the provisions of paragraph
(1) are interest-free claims or the claims for cash payable
by periodic
installments, if such claims are the bankruptcy claims, the amount obtained
by deducting the amount falling under the
portion ranked lower than that
of other bankruptcy claims pursuant to the provisions of Article 446 (1)
5 through 7 shall be made
the value thereof.
CHAPTER MANAGEMENT, CONVERSION
AND DISTRIBUTION
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-89(Supp. 33)
SECTION 1 Management and Conversion of Bankruptcy
Foundation
Article 479 (Possession and Management of Bankruptcy Foundation)
The trustee in bankruptcy shall commence possession and management
of the assets that belong to the bankruptcy foundation immediately after
he/she takes office.
Article 480 (Seal)
(1) When it is deemed necessary, the trustee in bankruptcy may cause
the clerk, etc. of the court, the executor or the notary public
to place the
assets that belongs to the bankruptcy foundation under seal. In this case,
anyone who performs the sealing shall prepare
an investigation record.
(2) The provisions of paragraph (1) shall apply mutatis mutandis to cases
where the seal is removed.
Article 481 (Closure of Assets Book)
The trustee in bankruptcy shall promptly close the book of the debtor s
property after he/she is declared bankrupt and enter the
gist of such
closure on the book and subscribe his/her name and affix his/her seal to
the book.
Article 482 (Appraisal of Property s Value)
The trustee in bankruptcy shall appraise the value of all assets belonging
to the bankruptcy foundation at the time bankruptcy is
declared. In this
case, the debtor may be allowed to participate in the value appraisal.
Article 483 (Preparation of Property Assets
Inventory and Balance Sheet)
(1) The trustee in bankruptcy shall prepare an asset inventory and a
balance sheet.
(2) The trustee in bankruptcy shall subscribe his/her name and affix his/
her seal to certified copies of the asset inventory and
the balance sheet
and submit them to the court. The same shall apply to the inspection record
concerning the seal.
(3) Interested persons may request an inspection of documents referred
to in the provisions of paragraph (2).
Article 484 (Management of Postal Items)
(1) The court may commission any postal administrative agency, transporter
and other person to deliver postal items, telegrams and
other goods in
transit, each of which are destined for the debtor to the trustee in bankruptcy.
10
(Supp. 33)779-90
(2) The trustee in bankruptcy may open the postal items, telegrams and
other goods referred to in the provisions of paragraph (1)
after receiving
them.
(3) The debtor may request for an inspection of the postal items, telegrams
and other goods that the trustee in bankruptcy receives
and request for
delivery to him/her of any thing that is unrelated with the bankruptcy
foundation.
Article 485 (Cancellation of Management of Postal Items)
(1) The court may, upon receiving an application filed by the debtor or
the trustee in bankruptcy, cancel or change the commission provided for
in the provisions of Article 484 (1).
(2) When a decision to revoke or terminate the bankruptcy is confirmed
or it is decided to discontinue the bankruptcy, the court
shall cancel the
commission provided for in the provisions of Article 484 (1).
Article 486 (Continuation of Business)
A trustee in bankruptcy may cause the debtor to continue his/her business
after obtaining permission therefor from the court.
Article
487 (Means of Safekeeping Valuable Goods)
Means of safekeeping currency, securities and other valuable goods shall
be prescribed
by the court.
Article 488 (Report on History of Bankruptcy)
A trustee in bankruptcy shall report on circumstances that lead to the
declaration of bankruptcy and the past and current status
of the debtors
and the bankruptcy foundations at the first meeting of creditors.
Article 489 (Matters on which Meeting of Creditors
Resolves)
The meeting of creditors may resolve upon matters falling under eather
of the following subparagraphs:
1. The discontinuation and the continuation of business; and
2. Means of safekeeping valuable goods.
Article 490 (Presentation of Assets Subject to Right to Separate Settlement)
(1) A trustee
in bankruptcy may request the holder of the right to separate
settlement to present the assets subject to his/her right.
(2) When
the trustee in bankruptcy intends to appraise the property referred
to in the provisions of paragraph (1), the holder of the right
to separate
settlement may refuse the former s wishes.
Article 491 (Restrictions on Timing of Liquidation)
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-91(Supp. 33)
A trustee in bankruptcy shall be prohibited from liquidating assets belonging
to the bankruptcy foundation before the claim inspection
date provided
for in the provisions of Article 312 (1) 3 expires: Provided, That the same
shall not apply to cases where an agreement
is obtained from any audit
committee member or permission therefor is obtained from the court.
Article 492 (Acts Requiring Court
Permission)
In cases where any trustee in bankruptcy intends to perform the act falling
under any of the following subpragraphs, he/she shall
obtain permission
therefor from the court and when the audit committee is set up, he/she
shall obtain agreement from any member
of the audit committee: Provided,
That the same shall not apply to cases where the value is not more than
10 million won and that
it falls short of the amount set by the court among
the cases falling under subparagraphs 7 through 15:
1. The voluntary sale of goods concerning the real estate, any domestic
ship and any foreign ship, the sale of which is required
to be registered;
2. The voluntary sale of the mining concession, fishing rights, patent rights,
utility model rights, design rights, trade mark rights,
service mark
rights and copyrights;
3. The transfer of a business;
4. The comprehensive sale of goods;
5. The borrowing of assets including funds;
6. The approval granted for renouncing inheritance provided for in the
provisions of Article 386 (2), the approval granted for renouncing
the
general legacy provided for in the provisions of Article 387 and the
renunciation of the specific legacy provided for in the
provisions of
Article 388 (1);
7. The voluntary sale of movable assets;
8. The transfer of bonds and securities;
9. A claim for the performance provided for in the provisions of Article
335 (1);
10. The filing of lawsuits (excluding any application filed for provisional
disposition and provisional seizure);
11. A compromise;
12. The renunciation of rights;
13. Approval granted for foundation claims, reacquisition rights and the
right to separate settlement;
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(Supp. 33)779-92
14. The retrieval of subject matter of the right to separate settlement;
15. The conclusion of any contract that results in burdening the bankruptcy
foundation; and
16. Other acts prescribed by the court.
Article 493 (Hearing of Debtor s Opinions)
In cases under Article 492, the debtor may state his/her opinion to the
trustee in bankruptcy.
Article 494 (Order Given By Court to Suspend)
Even when a trustee in bankruptcy performs acts provided for in the
provisions of any subparagraph of Article 492 after obtaining
agreement
thereon from any member of the audit committee, the court may order
the trustee in bankruptcy to discontinue performing
any of such acts upon
receiving an application field by the debtor or call a meeting of the creditors
for a resolution on any of
such acts.
Article 495 (Protection of Bona Fide Third Persons)
Even when a trustee in bankruptcy violates the provisions of Article 491
or
492 or an order given to suspend his/her performance of any act pursuant
to the provisions of Article 494, he/she cannot counter
any bona fide third
person.
Article 496 (Means of Liquidation)
(1) The conversion of rights to cash, the means of which are prescribed
in the Civil Execution Act shall be governed by the Civil
Execution Act.
(2) Notwithstanding the provisions of paragraph (1), a trustee in bankruptcy
may perform the conversion to cash
by other means including the transfer
of a business after obtaining permission therefor from the court.
Article 497 (Liquidation
of Goods Subject to Right to Separate Settlement)
(1) A trustee in bankruptcy may liquidate assets, which are subject to
the right
to separate settlement pursuant to the Civil Execution Act. In
this case, the holder of the right to separate settlement shall not
oppose
such liquidation.
(2) In cases under paragraph (1), when the amount to be paid to the
holder of the right to separate settlement is not yet confirmed,
a trustee
in bankruptcy shall deposit the sum thereof separately. In this case, the
right to separate settlement shall prevail
over the sum.
Article 498 (Designation of Disposal Period by Holder of Right to Separate
Settlement)
(1) When the holder of the right to separate settlement holds the right
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-93(Supp. 33)
to dispose of good subject to the right to separate settlement without resorting
to the matters that are prescribed by Acts, upon
receiving an application
filed by the trustee in bankruptcy, the court shall fix a period during which
the holder of the right
to separate settlement has to dispose of the subject
matter.
(2) When the holder of the right to separate settlement fails to dispose
of the subject matter during the period referred to in
the provisions of
paragraph (1), he/she shall lose the right referred to in the provisions
of paragraph (1).
Article 499 (Report on Current Status by Trustee in Bankruptcy)
A trustee in bankruptcy shall report on the current status of the
bankruptcy
foundation to the meeting of creditors or members of the audit committee
under the conditions prescribed by the meeting
of creditors.
Article 500 (Claim for Return of Bailed Goods)
(1) When the trustee in bankruptcy intends to request for the return of
currency, securities and valuable goods, each of which are
bailed, he/she
shall obtain agreement thereon from member of the audit committee and
when such member of the audit committee is
absent, he/she shall obtain
permission therefor from the court: Provided, That when any other
resolution is passed at the meeting
of creditors, their return shall be gov-
erned by such resolution.
(2) In cases where the trustee in bankruptcy violates the provisons of
paragraph (1), when the depositee is bona fide and is not
negligent, the
repayment shall carry its effect.
(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis
to cases where the trustees in bankruptcy issue securities
in order to cause
the depositee to make payments or pay benefits.
Article 501 (Liquidation of Corporate Bankruptcy Foundation)
The provisons of Article 258 of the Commercial Act shall apply mutatis
mutandis to cases where any corporation is declared bankrupt.
Article 502 (Claim for Investments made by Anonymous Partners)
Where
the contract of an anonymous association is terminated on the
grounds that any business operator is declared bankrupt, the trustee
in
bankruptcy may cause the members of such association to make fresh
investment within the limitation of the amount of loss to
be borne by the
members of the anonymous association.
10
(Supp. 33)779-94
Article 503 (Inheritor s Bankruptcy and Disposal of Inherited Assets)
(1) When any inheritor makes a qualified acceptance or his/her
assets
are separated after he/she is declared bankrupt, the trustee in bankruptcy
shall dispose of such inherited assets. The same
shall apply to cases where
the inheritor is declared bankrupt after the qualified acceptance is made
and his/her assets are divided.
(2) When the trustee in bankruptcy completes the disposal referred to
in the provisions of paragraph (1), any residual assets shall
be entered
in the asset inventory and the balance sheet of the bankruptcy foundation.
(3) The provisions of paragraphs (1) and
(2) shall apply mutatis mutandis
to cases where anyone who takes a general legacy is declared bankrupt.
Article 504 (Mutatis Mutandis
Provisions)
The provisions of Article 503 shall apply mutatis mutandis to cases where
the effect of the qualified acceptance accrues pursuant
to the provisions
of Article 385 or 386.
SECTION 2 Dividends
Article 505 (Timing of Distributing Dividends)
The trustee in bankruptcy shall distribute dividends without delay whenever
the money therefor is available after the claim inspection
date provided
for in the provisions of Article 312 (1) 3 expires.
Article 506 (Permission Necessary for Distributing Dividends)
When the trustee in bankruptcy intends to distribute dividends, he/she
shall obtain permission therefor from the court: Provided,
That agreement
thereon shall be obtained from a member of the audit committee, when
he/she is accessible.
Article 507 (Preparation of Dividend Table)
(1) The trustee in bankruptcy shall prepare a dividend table in which
the matters falling under each of the following subparagraphs
are entered:
1. The names and domiciles of creditors who are entitled to the dividends;
2. The amount of claims included in the dividends; and
3. The amount available for distributing dividends.
(2) The claims that are available for distributing dividends shall be
categorized
according to their priority rights. In this case, the claims with
priority rights shall be entered in the dividend table according
to their
priority right ranking and the claims without priority rights shall be arranged
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-95(Supp. 33)
into a ranking lower than that of other claims and then entered in the
table.
Article 508 (Submission of Dividend Tables)
The trustee in bankruptcy shall submit the dividend table to the court
in order for interested persons to inspect them.
Article 509 (Publication of Amount of Dividends)
The trustee in bankruptcy shall publish the total amount of claims included
in the dividends and the amount of the dividends: Provided,
That the same
shall not apply to cases where the dividend table is corrected pursuant
to the provisions of Articles 513 and 527.
Article 510 (Publication of Discontinuation of Distributing Dividends)
When the court orders the discontinuation of a distribution
of dividends
pursuant to the provisions of Article 44 (1) on the grounds that an application
is filed for commencing rehabilitation
procedures, the court shall publish
the gist thereof.
Article 511 (Continuation of Procedures for Distributing Dividends and
Publication Thereof)
In case where an order is given to discontinue the distribution of dividends
pursuant to the provisions of Article 44 (1) 1, when
a decision falling
under any of the following subparagraphs is confirmed, the court shall
continue the procedures for distributing
dividends and publish the gist
thereof.
1. A decision made to dismiss an application filed for commencing the
rehabilitation procedures;
2. A decision made to discontinue rehabilitation procedures pursuant to
the procedures under Articles 285 through 287; and
3. A decision made not to grant authorization for a rehabilitation plan.
Article 512 (Exclusion of Creditors and Holders of Rights
to Separate
Settlement with Objection to Dividends)
(1) With respect to any claim to which an objection is raised, when any
creditor fails to file an application with a trustee in
bankruptcy for a final
claim inspection judgment and a lawsuit pursuant to the provisions of
Article 463 (1) or to attest the takeover
of any lawsuit within 14 days
from the date on which the dividends are published, he/she shall be excluded
from receiving the dividends.
(2) When the holder of the right to separate settlement fails to attest
10
(Supp. 33)779-96
to the commencement of a disposition of the objective of the right and
to substantiate the amount of a claim that cannot be repaid
on the grounds
of such disposition, he/she shall be excluded from receiving dividends.
Article 513 (Correction of Dividend Table)
In events falling under any of the following subparagraphs. the trustee
in bankruptcy shall immediately correct the dividend table:
1. When the grounds for correcting the table of bankruptcy creditors accrues
within the period during which the dividends are excluded;
2. When the attestant and the substantiation provided for in the provisions
of Article 512 are made; and
3. When the holder of the right to separate settlement expresses to the
trustee in bankruptcy an intention to renounce his/her right
and attests
to the amount of claims that cannot not be repaid by the exercise of
his/her right within the period during which dividends
are excluded.
Article 514 (Objection Raised to Dividend Table)
(1) Any creditor may raise objections to the court with respect to the dividend
table only within 7 days after the lapse of the
dividend exclusion period.
(2) When the court orders any correction of the dividend table, it shall
retain the written decision
in order for interested persons to inspect it.
In this case, the appeal period shall be calculated from the date on which
such
written decision is retained in the court.
(3) An immediate appeal may be filed against the decision made by the
court upon the application referred to in the provisions of
paragraph (1).
In this case, the appeal period when the court orders the correction of
the dividend table shall be calculated from
the date on which the written
decision is retained in the court.
Article 515 (Notification of Decision on Dividend Rates)
(1) When an objection is raised after the lapse of the period provided
for
in the provisions of Article 514 (1), the trustee in bankruptcy shall promptly
set the dividend rates after a decision is made
on such objection and notify
creditors who are entitled to the dividends of such dividend rates.
(2) When the dividend rates are
set, approval thereof shall be obtained
from the court: Provided, That agreement thereon shall be obtained from
a member of the
audit committee when he/she is accessible.
Article 516 (Distribution of Dividends to Creditors with Condition for
Recession)
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-97(Supp. 33)
Anyone who holds the claims subject to recession shall not be entitled
to the distribution of dividends unless he/she furnishes
substantial
security.
Article 517 (Means of Distributing Dividends)
(1) Bankruptcy creditors shall receive the distribution of their dividends
at the place in which the trustee in bankruptcy performs
his/her duties:
Provided, That the same shall not apply to cases where any agreement
is reached between the trustee in bankruptcy
and the bankruptcy creditors
with respect to the place in which they receive the distribution of such
dividends.
(2) The trustee in bankruptcy shall, when he/she distributes dividends,
enter the amount of dividends that are distributed in the
table of bankruptcy
creditors and the evidential document of claims and ascribe his/ her name
on, and affix his/her seal to such
table and such evidential document.
Article 518 (Preferential Distribution of Dividends to Persons Excluded
from Previous Distribution
of Dividends)
When any creditor excluded from a previous distribution of dividends on
the grounds of his/her failure to make the attestant and
substantiation
provided for in the provisions of Article 512 makes such attestant and
substantiation within the dividend exclusion
period in which he/she is
excluded, he/she shall be preferentially entitled to the distribution of
the same amount of dividends
as that of the dividends that he/she was
to take on the same order.
Article 519 (Bailment of Proceeds of Dividends)
The trustee in bankruptcy shall bail the dividend proceeds for claims falling
under any of the following subparagraphs:
1. Claims to which an objection is raised pursuant to the provisions of
Articles 462 through 464 or 466 and for which an application
is filed
for the final claim inspection judgment and a lawsuit is filed and the
lawsuit is taken over;
2. Claims for which any administrative trial, lawsuit and objection
procedures are pending before the notification of the dividend
rates
are made;
3. Claim amounts that are substantiated by the holder of the right to
separate settlement pursuant to the provisions of Article 512
(2);
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(Supp. 33)779-98
4. Condition precedent claims and future claims; and
5. Claims subject to recession for which no security is offered pursuant
to the provisions of Article 516.
Article 520 (Permission for Final Dividends)
In cases where the trustee in bankruptcy distributes final dividends, he/
she shall obtain permission therefor from the court even
if agreement is
obtained form a member of the audit committee.
Article 521 (Period During which Distribution of Final Dividends is
Excluded)
The period during which the distribution of final dividends must be excluded
shall be set by the court within not less than 14 days
to not more than
30 days from the date on which the distribution of dividends is published.
Article 522 (Decision on Amount of
Final Dividends and Notification
Thereof)
In the final dividends, the trustee in bankruptcy shall promptly set the
amount of dividends for each of the creditors and notify
the creditors of
the amount of such dividends after any objections raised to the dividend
table are settled.
Article 523 (Exclusion of Condition-Precedent Creditors)
When condition precedent claims or future claims cannot be exercised
within
the dividend exclusion period for the final dividends, the relevant
creditors shall be excluded from the distribution of dividends.
Article 524 (Payments to Creditors Subject to Recession)
When conditions on the claims subject to recession are not met within
the dividend exclusion period for the final dividends, any security provided
pursuant to the provisions of Article 516 shall lose
its effect and the sum
bailed pursuant to the provisons of subparagraph 5 of Article 519 shall
be paid to creditors. The same shall
apply to the security furnished and
the sum bailed pursuant to the provisions of Article 419.
Article 525 (Exclusion of Holder
of Right to Separate Settlement)
When a holder of the right to separate settlement fails to express his/
her intention to renounce
his/her right to the trustee in bankruptcy and
to attest of the amount of claims that cannot be repaid by the exercise
of his/her
right within the dividend exclusion period, he/she shall be
excluded from the distribution of dividends.
Article 526 (Distribution of Bailment Funds)
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-99(Supp. 33)
The sum bailed for creditors who are excluded from the distribution of
dividends pursuant to the provisions of Article 523 or 525
shall be distributed
to other creditors. The same shall apply to the sum bailed pursuant to
the provisions of Article 418.
Article 527 (Correction of Dividend Table if New Assets)
When any assets are found to exist, which are to be appropriated for new
dividends, before the notification of the dividend amount is mailed out,
the trustee in bankruptcy shall correct the dividend table
without delay.
Article 528 (Deposit of Dividend Sum)
The trustee in bankruptcy shall deposit the dividend amount falling under
any of the following subparagraphs for creditors:
1. A dividend sum bailed pursuant to the provisions of subparagraph 1
or 2 of Article 519;
2. A dividend sum on any claim for which an administrative trial, lawsuit
or objection procedures are still pending before the notification
of the
dividend amount is mailed out; and
3. A dividend sum that remains unpaid to creditors.
Article 529 (Accounting Report at Meeting of Creditors)
A meeting of creditors
called to deliberate on the accounting report shall
pass a resolution concerning the disposal of the assets that are not liquidated
after the trustee in bankruptcy recognizes it as being valueless.
Article 530 (Decision and Publication of Bankruptcy Termination)
When the meeting of creditors is closed, the court shall decide on the
termination of bankruptcy and publish the main passage of
such decision
and the summary of the grounds thereof.
Article 531 (Publication of Additional Dividends and Notification of
Dividend Sum)
(1) When any new assets are found to be appropriated for dividends after
the dividend sum is notified, the trustee in bankruptcy
shall further
distribute dividends after obtaining permission therefor from the court.
The same shall apply to cases where any
new assets are found to be
appropriated to dividends after the termination of bankruptcy.
(2) When the trustee in bankruptcy obtains
permission to make additional
dividends, he/she shall promptly publish the dividend sum and then set
the dividend sum for each
creditor and notify such creditors thereof.
Article 532 (Standards for Additional Dividends)
The additional dividends shall be made according to the dividend table
10
(Supp. 33)779-100
prepared for final dividends.
Article 533 (Accounting Report)
(1) When the trustee in bankruptcy distributes additional dividends, he/
she shall promptly prepare an accounting report and obtain
authorization
thereon from the court.
(2) An immediate appeal may be filed against the authorization referred
to in the provisions of paragraph (1).
Article 534 (Foundation Creditors Unknown to Trustees in Bankruptcy)
Any foundation creditor who is not known to the trustee in
bankruptcy
before the dividend rates or dividend amounts are notified is not entitled
to the repayment of any dividends.
Article 535 (Effect On Confirmed Claims of Debtor Declared Bankrupt and
Entered in Table of Bankruptcy Creditors)
(1) When the debtor fails to state any objection to confirmed claims on
the claim inspection date, his/her entry in the table of
bankruptcy creditors
shall have the same effect as that of final judgment on a debtor who is
declared bankrupt.
(2) Any creditor may perform the compulsory execution according to entry
in the table of bankruptcy creditors after the termination
of bankruptcy.
In this case, the provisions of Articles 2 through 18, 29, and 28 through
55 of the Civil Execution Act shall apply
mutatis mutandis to such creditor.
Article 536 (Application Filed for Restoration)
(1) When the debtor fails to be present on the claim inspection date on
grounds for which he/she is not responsible, he/she may
file an application
with the bankruptcy court for his/her restoration in order to supplement
his/her objection later within 7 days
from the date on which such grounds
cease to arise.
(2) The court shall deliver the application for restoration to the creditor
of claims to which the debtor raises an objection by
its authority.
(3) When the court permits the restoration, the court s act shall have
the same effect as that of an objection that
is stated by the debtor on
the claim inspection date. In this case, the clerk, etc. of the court shall
enter the objection in the
table of bankruptcy creditors.
(4) An immediate appeal may be filed against any judgment on the
application filed for restoration
provided for in the provisions of paragraph
(1).
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-101(Supp. 33)
Article 537 (Residual Inherited Assets)
When inherited property are subject to a declaration of bankruptcy, any
inheritance creditor and any person who takes the legacy
who are excluded
from final dividends may exercise their rights on any residual assets.
CHAPTER DISCONTINUATION OF
BANKRUPTCY
Article 538 (Application Filed for Discontinuation of Bankruptcy by Way
of Agreement)
(1) In an event falling under either of the following subparagraphs, the
court may decide to discontinue a bankruptcy upon receiving
an application
therefor from the debtor; When:
1. The debtor obtains an agreement from all bankruptcy creditors who
report their claims within the claim report period provided
for in the
provisions of Article 447; and
2. If the debtor fails to obtain the agreement referred to in the provisions
of subparagraph 1, he/she takes security from the bankruptcy
foundation
after obtaining an agreement thereon from other bankruptcy creditors.
(2) The court shall determine whether the agreement
of creditors is necessary
for unconfirmed claims. The same shall apply to cases whether any security
offered to any bankruptcy
creditor is substantial.
(3) An immediate appeal may be filed against the determination referred
to in the provisions of paragraph
(1).
Article 539 (Application Filed by Corporation, etc for Discontinuing
Bankruptcy)
(1) The application filed by any corporation for discontinuing the bankruptcy
thereof shall require agreement from all of its directors.
(2) The application for discontinuing the bankruptcy regarding any inherited
assets shall be filed by the inheritor. In this case,
where there are multiple
inheritors, agreement from each of them is required.
Article 540 (Application Filed for Discontinuing
Bankruptcy and Corporate
Continuation)
When any corporation that has been declared bankrupt intends to file
an application for discontinuing its bankruptcy, any incorporated
association shall take the same procedures for its continuation as those
10
(Supp. 33)779-102
for making an amendment in the articles of association. Any incorporated
foundation shall take the procedures for its continuation
after obtaining
permission therefor from the competent administrative agency,
respectively.
Article 541 (Submission of Written Verification)
When an application is filed for discontinuing a bankruptcy, a written
statement attesting to the fulfillment of application requirements
shall
be submitted.
Article 542 (Publication of Applications for Discontinuing Bankruptcies
and Keeping of Documents)
The court shall publish the gist of the applications filed for discontinuing
bankruptcies and keep documents concerning the applications
in order
for interested persons to peruse them.
Article 543 (Objections Raised by Creditors)
(1) Any bankruptcy creditor may raise objections to the court with respect
to any application filed for discontinuing the bankruptcy
within 14 days
from the date on which the publication provided for in the provisions of
Article 542 is made.
(2) Any bankruptcy creditor who makes a report before the period referred
to in the provisions of paragraph (1) lapses may file
an application with
the court for objecting to any application filed for discontinuing the
bankruptcy.
Article 544 (Hearing of Opinions of Persons Concerned)
The court shall hear the opinions of the debtor, the trustee in bankruptcy
and the bankruptcy creditor who raises an objection about whether the
requirements necessary for a decision to discontinue the
bankruptcy are
met after the lapse of the period provided for in the provisions of Article
543 (1).
Article 545 (Discontinuation of Bankruptcy for Lack of Funding)
(1) When the bankruptcy foundation is recognized as being unable
to
appropriate funds incurred in the bankruptcy procedures after it is declared
bankrupt, the court shall decide to discontinue
its bankruptcy by its inherent
jurisdiction or upon receiving an application filed by the trustee in
bankruptcy. In this case,
the court shall hear the opinion of the meeting
of creditors.
(2) The provisions of paragraph (1) shall not apply to cases where a prepaid
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779-103(Supp. 33)
amount is sufficient to appropriate funds for expenses incurred in the
bankruptcy procedures.
(3) An immediate appeal may be filed against the decision referred to in
the provisions of paragraph (1).
Article 546 (Publication of Decision to Discontinue Bankruptcy)
When the court decides to discontinue any bankruptcy, it shall publish
the main passage of the decision and the summary of reasons thereof.
Article 547 (Repayment and Deposit of Foundation Claims)
When a decision to discontinue the bankruptcy is confirmed, the trustee
in bankruptcy shall repay the foundation claims and with
respect to any
claim to which an objection is raised, the trustee in bankruptcy shall deposit
such claim for creditors.
Article 548 (Mutatis Mutandis Provisions)
(1) The provisions of Article 535 shall apply mutatis mutandis to cases
where a decision to discontinue the bankruptcy is confirmed.
(2) The provisions of Article 567 shall apply mutatis mutandis to cases
where a corporate debtor is dissolved on the grounds of
a decision to terminate
or discontinue the bankruptcy.
CHAPTER SUMMARY BANKRUPTCY
Article 549 (Requirements for Summary Bankruptcy)
(1) When the amount of assets that belong to the bankruptcy foundation
are recognized
as being 500 million won or less, the court shall declare
the bankruptcy foundation bankrupt and determine the summary
bankruptcy
thereof.
(2) In cases under paragraph (1), the court shall publish the main passage
of the summary bankruptcy decision in addition to the
matters referred
to in each subparagraph of Article 313 (1) and enter it in the written
statement referred to in the provisions
of paragraph (2) of the same Article.
Article 550 (Decision on Summary Bankruptcy in Course of Bankruptcy
Procedures)
(1) When the amount of assets belonging to the bankruptcy foundation
in the process of the bankruptcy are found to be 500 million
won or less,
the court may decide on a summary bankruptcy for it by its inherent
jurisdiction or upon receiving an application
filed by interested persons.
(2) When the court decides on summary bankruptcy pursuant to the
10
(Supp. 33)779-104
provisions of paragraph (1), it shall publish the main passage of the decision
and deliver a written statement in which the main
passage of such decision
is entered to the trustee in bankruptcy, any member of the audit committee,
each creditors and the debtor
each of whom is known.
Article 551 (Cancellation of Summary Bankruptcy)
When the amount of the assets belonging to the bankruptcy foundation
are found to be, or to exceed 500 million in the process of
summary bankruptcy
procedures, the court may decide to cancel the summary bankruptcy by its
inherent jurisdiction or upon receiving
an application filed by interested
persons. In this case, the provisions of Article 550 (2) shall apply mutatis
mutandis thereto.
Article 552 (Combination of Date of Meeting of Creditors and Claim
Inspection Date)
In cases of summary bankruptcy procedures, the date on which the first
meeting of creditors is held and the date on which claims
are inspected
shall be combined, except when there are circumstances that make this
impracticable.
Article 553 (Nonestablishment of Audit Committee)
In cases of summary bankruptcy, no audit committee shall be established.
Article
554 (Decision in Lieu of Resolution of Meeting of Creditors)
In cases of summary bankruptcy procedures, the decision made by the
court shall be substituted for the resolution passed at the meeting of
creditors, except for the resolution passed at the first
meeting of creditors
and the resolution passed at the meeting of creditors on the claim inspection
and the accounting report.
Article 555 (One-Time Dividends)
In cases of summary bankruptcy procedures, the distribution of dividends
shall be made once and the final distribution of dividends
shall be governed
by the regulations concerning dividends. Provided. That additional
dividends may be distributed.
CHAPTER IMMUNITY AND RESTORATION
SECTION 1 Immunity
Article 556 (Application for Immunity)
(1) An individual debtor may file an application with the court for his/her
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-105(Supp. 33)
immunity within one month after the date on which the declaration of
his/her bankruptcy is confirmed from the date on which a petition
of his/
her bankruptcy is filed.
(2) When the debtor is unable to file an application for his/her immunity
referred to in the provisions of paragraph (1) on grounds
for which he/
she is not responsible, he/she may file an application for his/her immunity
within 30 days from the date on which
such grounds cease to arise.
(3) In cases where the debtor files a petition for bankruptcy, the debtor
shall be deemed to file
an application for his/her immunity and also to
file the petition for bankruptcy, excepting cases where he/she expresses
his/her
intention to oppose such petition and such application.
(4) When an application is filed for any immunity, no application may
also
be filed for discontinuing the bankruptcy pursuant to the provisions
of Article 538.
(5) When an application is filed for discontinuing the bankruptcy pursuant
to the provisions of Article 538, no application for
immunity may be filed
before a decision to dismiss the application filed for discontinuing the
bankruptcy is confirmed.
(6) The application for immunity shall be accompanied by the list of creditors:
Provided, That when it is not possible to submit
the list of creditors with
the application for immunity, the grounds therefor shall be substantiated
and then the list of creditors
shall be promptly submitted.
(7) In cases where it is deemed that the application for the immunity has
been filed pursuant to the
provisions of paragraph (3), the list of creditors
that is submitted pursuant to the provisions of Article 302 (2) 1 shall
be deemed
the list of creditors referred to in the provisions of paragraph (6).
Article 557 (Suspension of Compulsory Execution)
(1) When an application is filed for immunity, a decision to discontinue
bankruptcy is confirmed or it is decided to terminate bankruptcy,
any
compulsory execution based on bankruptcy claims, any provisional seizure
or any provisional disposition on the debtor s assets
shall be barred until
a judgment on the application filed for immunity is confirmed and the
compulsory execution, provisional seizure
or provisional disposition on
the debtor s assets, which have already been performed before the debtor
is declared bankrupt, shall
be suspended.
(2) When a decision for immunity is confirmed, the procedures suspended
10
(Supp. 33)779-106
pursuant to the provisions of paragraph (1) shall lose their effect.
Article 558 (Examination of Debtor)
(1) When anyone who files an application for immunity is declared bankrupt,
the court may examine the debtor on the date that it
has set.
(2) When the court decides to set the date pursuant to the provisions of
paragraph (1), it shall publish such date and
notify such decision to the
trustee in bankruptcy and bankruptcy creditors, eahc of whom are scheduled
to receive the immunity
and are known to the court.
(3) The provisions of paragraph (2) shall apply mutatis mutandis to any
change in the date as well
as the extension and the continuation of the
questioning referred to in the provisions of paragraph (1).
(4) The provisions of
the proviso to Article 457 shall apply mutatis mutandis
to the decision referred to in the provisions of paragraphs (2) and (3).
(5) The date referred to in the provisions of paragraph (1) and the date
on which the meeting of creditors is held and on which
the claims are
inspected may be combined.
Article 559 (Grounds for Dismissing Application Filed for Immunity)
(1) In the events falling under any of the following subparagraphs,
the
court may dismiss any application filed for immunity:
1. When the debtor fails to qualify himself as entitled to file any application;
2. When an application filed for bankruptcy procedures for the debtor is
dismissed;
3. When the debtor fails to prepay for expenses for the bankruptcy
procedures; and
4. When the application is not bona fide.
(2) The debtor whose application for immunity is declined pursuant to
the provisions of
paragraph (1) shall be prohibited from re-filing an
application for immunity underthe same bankruptcy.
(3) An immediate appeal
may be filed against the decision referred to in
the provisions of paragraph (1).
Article 560 (Inspection Report by Trustees in Bankruptcy)
The court may order the trustee in bankruptcy to inspect whether grounds
for refusing to permit immunity exist and to report the results thereof
on the examination date provided for in the provisions
of Article 558.
Article 561 (Keeping of Documents, etc, Concerning Application for
Immunity)
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779-107(Supp. 33)
The court shall keep documents falling under both of the following
subparagraphs in order for inspection by interested persons to
peruse them:
1. Documents concerning application for immunity; and
2. Documents concerning the reports of trustees in bankruptcy.
Article 562 (Objection to Application for Immunity)
(1) Any prosecutor,
trustee in bankruptcy or bankruptcy creditor who is
entitled to the effect of immunity may raise any objections to the court
regarding
the application for immunity within 30 days (in cases where
the examination date is not set, the date that is set by the court)
from
the examination date provided for in the provisions of Article 558; Provided,
That when any justifiable grounds exist, the
court may extend the period
upon receiving an application therefor.
(2) When an objection is raised pursuant to the provisions of paragraph (1),
the grounds for not permitting the immunity provided
for in the provisions
of each subparagraph of Article 564 (1) must be substantiated.
Article 563 (Hearing of Opinion about Objections)
When an objection is raised pursuant to the provisions of Article 562 (1),
the court shall hear the opinions of the debtor and
the person who has
raised such objection.
Article 564 (Immunity Granted)
(1) The court shall grant immunity except in the events falling under
any of the following subparagraphs:
1. When it is recognized that an act falling under the offense of Articles
650, 651, 653, 656 or 685 is perpetrated by the debtor;
2. When the debtor, notwithstanding the grounds of his/her bankruptcy
within one year before he/she is declared, acquires any assets
through
credit transaction by deceit, and concealing the fact in order to prevent
other persons from recognizing such fact;
3. When the debtor submits a falsified list of creditors and other falsified
application documents to the court or falsely states
the current holding
of his/her assets to the court;
4. When 7 years have yet to lapse for the debtor from the date on which
a decision to grant him/her immunity is confirmed in cases
where he/
she receives immunity pursuant to this Article before he/she files an
application for the immunity, or when 5 hears have
yet to lapse for
the debtor from the date on which a decision to grant him/her immunity
10
(Supp. 33)779-108
is confirmed in cases where he/she receives immunity pursuant to the
provisons of Article 624;
5. When the debtor violates his/her duties prescribed by this Act; and
6. When the debtor is found to drastically decrease the value of his assets
by excessive waste money, gambling or speculation or
to incur excessive
indebtedness.
(2) Even in cases where the grounds for not granting immunity referred
to in any subparagraph of paragraph (1) exist, the court
may grant immunity
taking into account the circumstances and other situations that result in
the debtor s bankruptcy.
(3) The court shall, when it decides to grant immunity, publish the main
passage of the decision and the gist of the grounds therefor.
In this case,
no delivery need be made.
(4) An immediate appeal may be filed against any decision on regarding
grant immunity.
Article 565 (Timing of Effect of Decision to Grant Immunity)
The effect of immunity shall arise only after a decision to grant such
immunity
is confirmed.
Article 566 (Effect of Immunity)
A debtor who is granted immunity shall be exempted from responsibility
for the whole of his/her obligations to bankruptcy creditors
except the
dividends that are distributed according to bankruptcy procedures:
Provided, That his/her responsibility shall not be
exempted from the
claims falling under each of the following subparagraphs:
1. Taxes;
2. Fines, penalties, criminal litigation, costs, additional levies and fines
for negligence;
3. Compensation for loss incurred by the intentional, illegal conduct of
the debtor;
4. Compensation for loss incurred by grossly negligent, illegal conduct
of the debtor, which inflicts harm on the life and body of
any other
person;
5. The wages, severance pay and disaster compensation of the debtor s
workers;
6. The bailment funds and personal identity guarantee funds of the
debtor s workers;
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-109(Supp. 33)
7. Claims that are bad faith excluded from entry in the list of creditors
by the debtor: Provided, That the same shall not apply
to cases where
any such creditor learns of the fact that the debtor is declared bankrupt;
and
8. Expenses that the debtor has to bear in raising his/her children or
a person under obligation to support his/her family.
Article
567 (Effect on Guarantor, etc.)
The immunity shall not affect the rights that are held by creditors on
guarantors of the debtor and any other persons who bear obligations
together with the debtor and any security that is furnished for any
bankruptcy creditor.
Article 568 (Entry of Decision to Grant Immunity)
The clerk, etc, of the court shall, when a decision to grant immunity is
confirmed,
enter the gist of the confirmation of such decision in the table
of bankruptcy creditors if such table is in existence.
Article
569 (Revocation of Immunity)
(1) When the debtor is convicted of fraudulent bankruptcy and is given
a final verdict provided for in the provisions of Article
650, the court may
decide to revoke his/her immunity by its authority or upon receiving an
application filed by bankruptcy creditors.
The same shall apply to cases
where the debtor receives immunity by means of illegality, and so bankruptcy
creditors file an application
for the revocation of his/her immunity within
one year after the debtor is granted such immunity.
(2) An immediate appeal may be
filed against the decision referred to in
the provisions of paragraph (1).
Article 570 (Hearing of Opinions about Revocation of Immunity)
The court shall hear opinions of the debtor and applicants before
it grants
a judgment on the revocation of the debtor s immunity.
Article 571 (Timing for Effect of Decision to Revoke Immunity)
The effect of a decision to revoke immunity shall accrue after such decision
is confirmed.
Article 572 (Priority Rights of New Creditors)
When immunity is revoked, anyone who holds claims on grounds that
accrue from between the time immunity is granted and the time
such
immunity is revoked shall entitled to greater preference for repayments
than other creditors.
10
(Supp. 33)779-110
Article 573 (Entry of Decision to Revoke Immunity)
In cases where a decision to revoke immunity is confirmed. the clerk, etc.
of
the court shall, if they have the table of bankruptcy creditors, enter
the gist of the confirmation of the decision to cancel the
immunity in such
table.
SECTION 2 Restoration
Article 574 (Obligatorily Restoration)
(1) A debtor who is declared bankrupt shall be restored, when he/she falls
under any of the following subparagraphs:
1. When a decision to grant immunity is confirmed;
2. When a decision to discontinue the bankruptcy based on the application
filed pursuant to the provisions of Article 538 is confirmed;
and
3. When the debtor for whom 10 years have lapsed without being convicted
of fraudulent bankruptcy and being given a final verdict
pursuant to
the provisions of Article 650 after he/she is declared bankrupt.
(2) When a decision to cancel immunity is confirmed,
the restoration referred
to in the provisions of paragraph (1) 1 shall lose its effect in the future.
Article 575 (Restoration
by Application)
(1) When the debtor who is subject to a declaration of bankruptcy that
cannot be restored pursuant to the provisions of Article
574 is exempted
from his/her responsibility for the whole of his/her obligations by means
of repayments and other methods, the
bankruptcy court shall decide to
restore the debtor upon receiving an application filed by the debtor who
is declared bankrupt.
(2) When the debtor who is declared bankrupt files an application for his/
her restoration, he shall submit a written statement
attesting to the
exemption of his/her responsibility.
(3) An immediate appeal may be filed against the decision referred to in
the provisions of paragraph (1).
Article 576 (Publication of Application for Restoration)
Upon receiving an application for restoration, the court shall publish
the
gist thereof and retain documents concerning the application in it in order
for interested persons to inspection.
Article 577 (Objection Raised to Application for Restoration)
(1) Any bankruptcy creditor may file with the court an objection to
the
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-111(Supp. 33)
application for restoration within 3 months from the date on which the
publication provided for in the provisions of Article 576
is made.
(2) When the objection is filed pursuant to the provisions of paragraph (1),
the court shall hear the opinions of the
debtor who is declared bankrupt
and the bankruptcy creditor who files such objection.
Article 578 (Timing of Effect of Decision
on Restoration)
A decision on the restoration shall take effect after such decision is confirmed.
PART INDIVIDUAL REHABILITATION
PROCEDURES
CHAPTER GENERAL RULES
Article 579 (Definition of Terms)
The definition of terms that are used in this Section shall be as follows:
1. The term individual debtor means a person to whom a fact pertains
that is grounds for bankruptcy or it is apprehended that such
fact
pertains and is a wage income earner or a business income earner,
either of whom bears obligations the amount of which is
less than the
amount falling under either of the following subpargraphs:
(a) An individual rehabilitation amount secured by any
kindergarten,
pledge rights, security by transfer, provisional registration security,
rental rights or any special priority right
of 1 billion won; and
(b) An individual rehabilitation claim, other than item (a) for 500 million
won;
2. The term wage income earner means an individual who can earn the
wage, the pension and other periodically and certain income similar
to the former;
3. The term business income earner means an individual who can earn
and expects to earn in the future real estate rental income,
business
income, agricultural income, forestry income or other continuously and
repeatedly paid income or similar to the former;
and
4. The term disposable income means an amount obtained by deducting
the amount referred to in items (b) through (d) below, from the
amount
referred to in item (a):
10
(Supp. 33)779-112
(a) Total amount of wage income, pension income, real estate rental,
business income, agricultural income, forestry income and all
other
categories of reasonably anticipated income earned by the debtor;
(b) Income tax, resident tax, health insurance premiums
and other
amounts corresponding thereto, the amount of which is prescribed
by the Presidential Decree;
(c) Living costs being the minimum living costs published pursuant
to the provisions of Article 6 of the National Basic Living Security
Act, which are incurred to maintain a dignified lifestyle for the
debtor and his/her dependent family, the amount of which is set
by the court, taking into account the ages and number of the debtor
and his/her dependent family members, their residental area,
commodity prices and other necessary matters; and
(d) In cases where the debtor runs a business, costs incurred to manage,
preserve
and continue such business.
Article 580 (Individual Rehabilitation Foundation)
(1) The assets falling under both of the following subparagraphs shall
belong
to the individual foundation:
1. All assets held by the debtor at the time that it is decided to commence
individual rehabilitation procedures for him/her and
the claims to be
exercised by the debtor in the future on the grounds that arise before
it is decided to commence such individual
rehabilitation procedures;
and
2. The assets and income acquired by the debtor in the process of the
individual rehabilitation procedures.
(2) The debtor shall be entitled to manage and dispose of the individual
foundation: Provided, That the same shall not apply to
cases where it
is prescribed otherwise in the authorized repayment plan.
(3) The provisions of Article 383 shall apply mutatis
mutandis to the
individual rehabilitation foundation referred to in the provisions of
paragraph (1) 1. In this case, bankruptcy
foundation shall be deemed
individual rehabilitation foundation, bankruptcy declaration shall be
deemed decision to commence individual
rehabilitation procedures, and
bankruptcy procedures shall be deemed individual rehabilitation
procedures, respectively.
(4) With respect to assets exempted pursuant to the provisions of paragraph
10
(Supp. 39)779-114
(3), the compulsory execution, provisional seizure or provisional disposition
based on individual rehabilitation claims shall not
be performed until a
decision to discontinue the individual rehabilitation procedures or a decision
on immunity is confirmed.
Article 581 (Individual Rehabilitation Claims)
(1) Any claim on assets that accrue from causes due to the debtor before
it is decided to commence individual rehabilitation procedures
shall be
made individual rehabilitation claims.
(2) The provisions of Articles 425 through 433, 439, 442 and 446 shall
apply mutatis mutandis to individual rehabilitation claims.
In this case,
bankruptcy declaration shall be deemed decision to commence individual
rehabilitation procedures, bankruptcy foundation
shall be deemed
individual rehabilitation foundation, bankruptcy claims shall be
individual rehabilitation claims, bankruptcy creditors
shall be deemed
individual rehabilitation creditors, amount of bankruptcy claims shall
be deemed amount of individual rehabilitation
claims and bankruptcy
procedures shall be deemed individual rehabilitation procedures,
respectively.
Article 582 (Repayment of Individual Rehabilitation Claims)
With respect to individual rehabilitation claims that are entered in
the
list of individual rehabilitation creditors, any act extinguishing such
claims by repaying for them or being repaid for them
shall be prohibited
from being performed without resorting to the repayment plan.
Article 583 (Claims of Individual Rehabilitation
Foundation)
(1) Claims falling under any of the following subparagraphs shall be made
claims of the individual rehabilitation foundation:
1. Claims for the remuneration and reimbursement of expenses of
rehabilitation commissioners;
2. Claims falling under any of the following items, which can be collected
pursuant to the National Tax Collection Act and the Local
Tax Act:
Provided, That such claims are limited to claims, the payment deadline
for which time-limit has yet to arrive at the time
individual rehabilitation
procedures commence:
(a) Withholding taxes;
(b) Value-added tax, special consumption tax, liquor tax, and traffic,
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-115(Supp. 39)
energy and environment tax;
(c) Local taxes that must be collected and paid by the specially designated
tax-collectors; and
(d) Education tax and special tax for agricultural and fishing
communities levied and collected according to the example of
imposing
and collecting taxes referred to in the provisions of items
(a) through (c);
3. Wages, severance pay and disaster compensation of the debtor s
workers;
4. Claims for the redemption of the bailment money and personal identity
guarantee money that accrue from grounds arising before
a decision
is made to commence individual rehabilitation procedures;
5. Claims that accrue from acts necessary for borrowing funds, purchasing
materials and continuing the debtor s business after obtaining
permission therefor from the court before a decision is made to commence
individual rehabilitation procedures after an application
is filed for
commencing such individual rehabilitation procedures; and
6. Inevitable expenses and costs disbursed for the debtor other than the
expenses and costs referred to in subparagraphs 1 through
5.
(2) The provisions of Articles 475 and 476 shall apply mutatis mutandis
to individual rehabilitation foundation claims. In this
case, foundation
claims shall be deemed individual rehabilitation foundation claims,
bankruptcy procedures shall be deemed individual
rehabilitation
procedures and bankruptcy claims shall be deemed individual
rehabilitation claims, respectively.
Article 584 (Negation Right)
(1) Section 2 of Chapter , Part shall apply mutatis mutandis to individual
rehabilitation procedures.
(2) The right to set aside shall be exercised by the debtor.
(3) The court may order the debtor to exercise his/her right to set
aside
by its inherent jurisdiction or upon receiving an application filed by any
creditor or any rehabilitation commissioner.
(4) Any rehabilitation commissioner may participate in the exercise of
the right to set aside.
(5) The right to set aside shall not be exercised one year has lapsed from
the date on which it is decided to commence individual
rehabilitation
10
(Supp. 39)779-116
procedures. The same shall apply to cases where 5 years have lapsed
from the date on which an act provided for in any subparagraph
of Article
391 is performed.
Article 585 (Reacquisition Right)
The provisions of Articles 407 through 410 shall apply mutatis mutandis
to individual rehabilitation procedures. In this case, bankruptcy
foundation shall be deemed individual rehabilitation foundation and
bankruptcy declaration shall be deemed decision to commence
individual rehabilitation procedures, respectively.
Article 586 (Right to Foreclose Outside Bankruptcy)
The provisions of Articles
411 through 415 shall apply mutatis mutandis
to individual rehabilitation procedures. In this case, bankruptcy
foundation shall
be deemed individual rehabilitation foundation,
bankruptcy declaration shall be deemed decision to commence individual
rehabilitation
procedures, respectively.
Article 587 (Offset Right)
The provisions of Articles 416 through 422 shall apply mutatis mutandis
to individual rehabilitation procedures. In this case, bankruptcy
petition
shall be deemed application for commencing individual bankruptcy
procedures , bankruptcy foundation shall be deemed individual
rehabilitation foundation and bankruptcy declaration shall be deemed
decision to commence individual rehabilitation procedure.
respectively.
CHAPTER COMMENCEMENT OF INDIVIDUAL
BANKRUPTCY PROCEDURES
Article 588 (Holder of Right to File Application for Commencing Individual
Bankruptcy Procedures)
Any individual debtor may file an application with the court for commencing
individual rehabilitation procedures.
Article 589 (Written Application Filed for Commencing Individual
Rehabilitation Procedures)
(1) An application for commencing individual rehabilitation procedures
shall be filed as a written statement in which the matters
falling under
each of the following subparagraphs are entered:
1. The name, resident registration number and domicile of the debtor;
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-117(Supp. 39)
2. The gist and grounds for the application; and
3. The assets and liabilities of the debtor.
(2) The written statement referred to in the provisions of paragraph (1)
shall be accompanied
by the documents falling under each of the following
subparagraphs:
1. A list of the individual rehabilitation creditors (referring to a list in
which the names and domiciles of creditors and the groudns
for and
amounts of claims are entered);
2. An asset inventory;
3. A list of the debtor s revenues and expenditures;
4. Data attesting to a wage income earner or a business income earner;
5. A written statement;
6. Related documents, where there has been a fact that application was
filed for any for any rehabilitation case, any composition
case or any
individual rehabilitation case for 10 years prior to the date on which
an application is filed; and
7. Other documents that are prescribed by the Rules of the Supreme Court.
(3) The debtor may amend or correct the details that are
entered in the
list of individual rehabilitation creditors until it is decided to commence
the individual rehabilitation procedures.
Article 590 (Prepayment of Expenses)
When an application is filed for commencing individual rehabilitation
procedures, the amount of expenses necessary for such procedures
that
is prescribed by the Rule of the Supreme Court shall be prepaid.
Article 591 (Report on Accounting, etc.)
The court and any rehabilitation commissioner may request the debtor
at any time to report on his/her revenues and expenditure of
funds and
his/her assets work, and if it is deemed necessary, may inspect the current
status of his/her assets, request any correction
and take other appropriate
steps.
Article 592 (Preservation Disposition)
(1) The court may conduct provisional seizure, provisional disposal and
necessary preservation disposition of the debtor s assets
by its inherent
jurisdiction or upon receiving an application filed by interested persons
before a decision is made to commence
individual rehabilitation procedures.
(2) The court may alter or rescind the decision referred to in the provisions
10
(Supp. 39)779-118
of paragraph (1).
(3) An immediate appeal may be filed against the decision referred to in
the provisions of paragraphs (1) and (2).
(4) The immediate appeal referred to in the provisions of paragraph (3)
shall not have the effect of suspending any execution.
Article 593 (Suspension Order)
(1) In cases where an application is filed to commence individual
rehabilitation procedures, if it is deemed necessary, the court
may order
the suspension prohibition of the procedures or acts falling under each
of the following subparagraphs until when a decision
is made on the
application filed for commencing individual rehabilitation procedures by
its inherent jurisdiction or upon receiving
an application filed by interested
persons:
1. Rehabilitation procedures or bankruptcy procedures for the debtor;
2. The compulsory execution, the provisional seizure or the provisional
disposition conducted on, or exercised over the debtor s
business and
property based on individual rehabilitation claims;
3. An auction directed at establishing security rights on the debtor s
business and assets and for exercising such security rights,
etc.;
4. All acts of receiving or demanding the repayment of individual
rehabilitation claims: Provided, That acts involving any lawsuit
shall
be excluded; and
5. A disposition taken for the recovery of arrears, a precedent of the
disposition followed for the collection of national taxes
in arrears
(including a precedent of the disposition followed for the collection of
local taxes in arrears; hereinafter the same
shall apply) and the disposal
of goods furnished as security for tax obligation provided for in the
National Tax Collection Act
and the Local Tax Act. In such cases, the
opinion of anyone who holds the authority to collect taxes shall be heard.
(2) During
the period in which the dispositions referred to in the provisions
of paragraph (1) 5 are suspended, prescriptions shall not proceed.
(3) If an application filed to commence individual rehabilitation procedures
is declined, the procedures suspended pursuant to
the provisions of
paragraph (1) shall resume.
(4) When any justifiable grounds exist, the court may revoke or alter the
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-119(Supp. 39)
suspension order or the prohibition order referred to in the provisions of
paragraph (1) by its inherent jurisdiction or upon receiving
an application
filed by interested persons. In this case, the court may order security to
be provided.
(5) The provisions of Articles 45 through 47 shall apply mutatis mutandis
to individual rehabilitation procedures.
Article 594 (Withdrawal of Application to Commence Individual
Rehabilitation Procedures)
The debtor may withdraw an application for commencing individual
bankruptcy procedures before a decision is made to commence such
individual rehabilitation procedures: Provided. That the debtor may
withdraw his/her application after obtaining permission therefor
from the
court after he/she takes the preservation disposition provided for in the
provisions of Article 592 or the suspension
order provided for in the provisions
of Article 593.
Article 595 (Grounds for Dismissal of Applications Filed to Commence
Individual Rehabilitation Procedures)
In the events falling under any of the following subparagraphs, the court
may dismiss any application filed for commencing individual
rehabilitation
procedures:
1. When the debtor fails to qualify himself/herself as one entitled to file
the application;
2. When the debtor fails to submit any documents falling under any item
of Article 589 (2), prepares and submits a falsified document
and fails
to comply with the deadline for submission as set by the court;
3. When the debtor fails to pay for expenses necessary for the procedures;
4. When the debtor fails to comply with the deadline for submitting a
draft repayment plan;
5. When the debtor receives immunity (including a immunity pursuant
to a bankruptcy procedures) within 5 years before the date on
which
an application is filed for such immunity;
6. When resorting to individual rehabilitation procedures is not compatible
with the general profits of creditors; and
7. When the application is not bona fide and delays the procedures without
justifiable grounds therefor.
Article 596 (Decision To Commence Individual Rehabilitation Procedures)
10
(Supp. 39)779-120
(1) The court shall decide whether to commence individual procedures
within one month from the date on which an application therefor
is filed.
(2) The court shall prescribe the matters falling under each of the following
subparagraphs at the time that it decides
to commence the individual
rehabilitation procedures:
1. The period during which objections may be raised to individual
rehabilitation claims (hereinafter referred to as the objection
period ).
In this case, the period shall range from not less than 2 weeks to not
more than 2 weeks from the date on which it is
decided to commence
the individual rehabilitation procedures; and
2. The date on which the meeting of individual rehabilitation creditors
is to be held. In this case, this shall be a period ranging
from not less
than 2 weeks to not more than one month between such date and the
end of the objection period.
(3) The court may extend the date and the period referred to in each item
of paragraph (2) on the grounds of special circumstance.
(4) When a decision is made pursuant to the provisions of paragraph (1),
the date and time shall be entered in a written decision.
(5) The decision referred to in the provisions of paragraph (1) shall take
effect from the time it is made.
Article 597 (Publication and Delivery of Commencement Publication)
(1) When the court decides to commence individual rehabilitation
procedures, it shall publish without delay the matters falling under each
of the following items:
1. The main passage of the written decision to commence individual
rehabilitation procedures;
2. The objection period is raised to them;
3. The gist that any individual rehabilitation creditor may file an application
for a final claim inspection judgment on the details
of claims that are
held by him/her and other individual rehabilitation creditors within
the objection period; and
4. The date on which the meeting of individual rehabilitation creditors
is held.
(2) The court shall deliver a written statement in which the matters falling
under each of the following items are entered, the
list of individual
rehabilitation creditors and the draft repayment plan:
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-121(Supp. 39)
1. The debtor;
2. The individual rehabilitation creditors who are known; and
3. Persons who hold the debtor s assets or bear obligations for the debtor
for whom the individual rehabilitation procedures commence.
(3) The provisions of paragraphs (1) and (2) shall apply to cases where
any change occurs in the matters referred to in paragraph
(1) 2 and 4
and the provisions of paragraph (2) shall apply to cases where the draft
repayment plan is amended.
Article 598 (Immediate Appeal Filed against Judgment on Commencement
of Individual Rehabilitation Procedures)
(1) An immediate appeal may be filed against any judgment on the
application filed for commencing individual rehabilitation procedures.
(2) The provisions of Articles 592 and 593 shall apply mutatis mutandis
to cases where the immediate appeal referred to in the
provisions of
paragraph (1) is filed against a decision to dismiss the application filed
for commencing individual rehabilitation
procedures.
(3) The immediate appeal referred to in the provisions of paragraph (1)
shall not have the effect of suspending any
execution.
(4) When the procedures of such immediate appeal are in violation of this
Act and it is recognized that the immediate
appeal is groundless, the
appellate court shall dismiss or decline such immediate appeal.
(5) When any such immediate appeal is
deemed justifiable, the appellate
court shall revoke the original decision and remand the case to the court
of origin.
Article 599 (Cancellation of Decision to Commence Individual
Rehabilitation Procedures)
When a decision to cancel the decision to commence individual rehabilitation
procedures is confirmed, the court shall promptly publish
the main passage
of such decision and deliver the purport of such decision to the persons
falling under each of the following subparagraphs:
1. The debtor;
2. Each of the individual rehabilitation creditors who are known; and
3. Persons who hold the debtor s assets or bear obligations for the debtor
for whom the individual rehabilitation procedures commence.
Article 600 (Suspension of Other Procedures, etc.)
(1) When a decision is made to commence individual rehabilitation
10
(Supp. 39)779-122
procedures, the acts and procedures falling under any of the following
subparagraphs shall be suspended or prohibited; Prohibited,
That the
procedures and the acts referred to in subparagraphs 2 throuigh 4 shall
be limited to the claims entered in the list of
creditors:
1. Rhabilitation procedures or bankruptcy procedures for the debtor;
2. Compulsory execution, provisional seizure or provisional disposition
any of each is performed or exercised on the assets that
belong to the
individual rehabilitation foundation based on individual rehabilitation
claims;
3. Acts of receiving or demanding repayment of individual rehabilitation
claims; Provided, That the act of filing any lawsuit shall
be excluded;
and
4. Dispositions taken for the recovery of arrears, dispositions taken for
the collection of national taxes in arrears (including
precedents for
dispositions taken for the collection of national taxes and local taxes
in arrears; hereinafter the same shall apply)
according to the precedent
for of the collection of national taxes and the disposal of goods furnished
as security for tax obligations
provided for in the National Tax Collection
Act and the Local Tax Act.
(2) When it is decided to commence individual rehabilitation procedures,
an auction for establishing and exercising any security
rights on assets
that belong to the individual rehabilitation foundation shall be suspended
or prohibited by the date that arrives
first among the date on which it
is decided to authorize the repayment plan and the date on which a decision
to discontinue the
individual rehabilitation procedures is confirmed.
(3) When justifiable grounds exist, the court may order the continuation
or
cancellation of procedures or dispositions that are suspended pursuant
to the provisions of paragraph (1) or (2) by its inherent
jurisdiction or
upon receiving an application filed by interested persons: Provided, That
in cases where the disposition is revoked,
any security may be furnished.
(4) The prescription shall not continue during the period in which a
disposition cannot be taken
or is suspended pursuant to the provisions
of paragraph (1) or (2).
CHAPTER REHABILITATION
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-123(Supp. 39)
COMMISSIONERS
Article 601 (Selection and Appointment Dismissals)
(1) The court may select and appoint the persons falling under any of
the following
subparagraphs as rehabilitation commissioners by its inherent
jurisdiction or upon receiving an application filed by interested
persons:
1. Commissioners of the Custodial Committee;
2. The clerk, etc. of the court;
3. Qualified attorneys-at-law, certified public accounts or certified judicial
scriveners;
4. Persons who have worked as assistant court clerks and assistant clerks
of the prosecution;
5. Persons who have worked for financial institutions provided for in
the Banking Act and are qualified to work as rehabilitation
commissioners;
6. Persons who have worked or work for institutions that educate and
counsel debtors about credit management and perform the work
of
coordinating obligations for credit recovery and are qualified to work
as rehabilitation commissioners; and
7. Persons who correspond to those referred to in subparagraphs 1 through
6 and are qualified to work as rehabilitation commissioners.
(2) When justifiable grounds exist, the court may dismiss any rehabilitation
commissioner by its inherent jurisdiction or upon
receiving an application
filed by interested persons.
(3) When it is deemed necessary, any rehabilitation commissioner may
select and appoint not less than one proxy rehabilitation commissioner
at his/her own risk in order to perform his/her tasks.
(4) Permission shall be obtained for the selection and appointment of any
proxy rehabilitation commissioner referred to in the provisions of paragraph
(3).
(5) Any proxy rehabilitation commissioner may perform all acts, with the
exception of acts involving any trial on behalf of the
rehabilitation
commissioners.
Article 602 (Work of Rehabilitation Commissioners)
(1) Every rehabilitation commissioner shall perform the work falling
under each
of the following subparagraphs under the court s supervision:
10
(Supp. 39)779-124
1. The inspection of the debtor s assets and income;
2. The application filed for exercising the right to set aside and participation
in the procedures thereof;
3. Holding meetings of individual rehabilitation creditors; and
4. Other work prescribed by Acts and subordinate statutes or the court.
(2) Upon receiving an order issued by the court and a request
from any
rehabilitation commissioner, the debtor shall provide explanation regarding
his/her assets and income, his/her repayment
plan and other necessary
matters.
CHAPTER CONFIRMATION OF
INDIVIDUAL
REHABILITATION CLAMS
Article 603 (Confirmation of Individual Rehabilitation Claims)
(1) In cases falling under either of the following subparagraphs,
claims
entered in the list of individual rehabilitation creditors shall be confirmed
as they are entered therein:
1. Where any creditor who is entered in the list of individual rehabilitation
creditors fails to file an application for a final
judgment on the inspection
of individual rehabilitation claims within the objection period provided
for in the provisions of Article
596 (2) 1; and
2. Where any application filed for a final judgment on the inspection of
individual rehabilitation claims is dismissed.
(2) When the claims referred to in the provisions of paragraph (1) are
confirmed, the clerk, etc. of the court shall prepare a table
of the individual
rehabilitation claims in which the matters falling under each of the following
subparagraphs are entered:
1. The name and domicile of the debtor; and
2. The details and grounds of the claims.
(3) In cases where the confirmed individual rehabilitation claims are
entered in the table
of individual rehabilitation claims, their entry in the
table shall have the same effect as that of a final judgment on all of the
individual rehabilitation creditors.
(4) When a decision to discontinue individual rehabilitation procedure is
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-125(Supp. 39)
confirmed, the individual rehabilitation creditors may perform compulsory
execution on the debtor based on the table of individual
rehabilitation
creditors.
(5) The provisions of Article 255 (3) shall apply mutatis mutandis to
cases under paragraph (4).
Article 604 (Confirmed Judgment on Inspection of Individual
Rehabilitation Claims)
(1) Any individual rehabilitation creditor who is dissatisfied with the
contents of the list of individual rehabilitation creditors
may raise an
objection in writing thereto within the objection period provided for in the
provisions of Article 596 (2) 1. When
the debtor concedes the details of
such objection, such individual rehabilitation creditor may amend the list
of individual rehabilitation
creditors after obtaining permission therefor
from the court. In this case, the court may not determine any application
for the
final inspection judgment.
(2) In cases where an objection is raised to the right on which a lawsuit
is already pending in the court, a separate application
cannot be filed for
the final inspection judgment and the provisions of the lawsuit that is
already pending shall be amended into
a lawsuit for confirmation of the
individual rehabilitation claim inspection.
(3) In cases under paragraph (1), if any individual rehabilitation creditor
files an application for a final inspection judgment
on an individual
rehabilitation claim, the debtor shall be adjoined as the other party and
if an application is filed for a final
judgment on an individual rehabilitation
claim inspection, the debtor and other individual rehabilitation creditor
shall be adjoined
as other parties.
(4) Anyone who files an application for a final judgment on an individual
rehabilitation claim inspection shall prepay procedural
expenses that are
set by the court. When the procedural expenses are not prepaid, the court
shall dismiss such application.
(5) The court shall make the final judgment on an individual rehabilitation
claim inspection after examining persons concerned and
determine whether
any objection is raised to the final judgment on the rehabilitation claim and
the details of such objection.
(6) When the court makes the final judgment referred to in the provisions
10
(Supp. 39)779-126
of paragraph (5), it shall deliver a written final judgment to each of the
parties.
Article 605 (Appeal against Final Inspection Judgment on Individual
Rehabilitation Claim)
(1) Anyone who is dissatisfied with a final inspection judgment on an
individual rehabilitation claim may file an appeal against
such final
judgment within one month from the date on which he/she receives delivery
of the written final judgment thereon. In
this case, the lawsuit against
such final judgment shall be exclusively put under the jurisdiction of the
individual rehabilitation
court (referring to the district court in which
the individual rehabilitation case is pending; hereinafter the same shall
apply).
(2) Arguments against the lawsuit referred to in the provisions of paragraph
(1) shall be submitted after the lapse of one month
from the date on which
the delivery of the written judgment referred to in the provisions of paragraph
(1) is received. When multiple
appeals are pending on the same claim,
the court may combine the arguments thereon.
(3) The judgment on the appeal referred to in the provisions of paragraph
(1) shall authorize or amend the judgment of the same
paragraph, except
when the appeal is dismissed on the grounds of unlawfulness.
Article 606 (Entry of Result of Appeal on Confirmation
of Individual
Rehabilitation Claims, etc.)
Upon receiving an application filed by the debtor, any rehabilitation
commissioner or any individual rehabilitation creditor, the
clerk, etc. of
the court shall prepare a table of individual rehabilitation creditors in
which the matters falling under each of
the following subparagraphs are entered:
1. The result of the final inspection judgment on the individual
rehabilitation claim;
2. The result of the lawsuit filed against the final inspection judgment
on the individual rehabilitation claim; and
3. The result of the lawsuit filed against the final inspection judgment
on the individual rehabilitation claim, other than the result
of the
final judgment on the individual rehabilitation claim referred to in
the provisions of subparagraphs 1 and 2.
Article 607 (Effect of Judgment in Lawsuit on Confirmation of Individual
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-127(Supp. 39)
Rehabilitation Claims)
(1) A judgment in a lawsuit on confirmation of individual rehabilitation
claims shall have effect on all of individual rehabilitation
creditors.
(2) When any appeal against the final judgment on an individual
rehabilitation claim inspection is not filed within
the period provided for
in the provisions of Article 605 (1) or is dismissed, the judgment shall
have the same effect as that of
the final judgment on all of the individual
rehabilitation creditors.
Article 608 (Refund of Litigation Costs)
When any profit accrue to the debtor s assets on the byway of the lawsuit
filed for the confirmation of individual rehabilitation
claims, any individual
rehabilitation creditor who files such lawsuit may claim a reimbursement
of litigation costs as an individual
rehabilitation creditor within the limit
of the profit that accrues.
Article 609 (Value of Subject Matter of Lawsuit Filed for Confirmation
of Individual Rehabilitation Claims)
The value of the subject matter of a lawsuit filed for the confirmation of
individual rehabilitation claims shall be determined
by the individual
rehabilitation court based on the estimated amount of the profit that accrues
according to the repayment plan.
CHAPTER REPAYMENT PLAN
Article 610 (Submission and Revision of Draft Repayment Plan)
(1) The debtor shall submit a draft repayment plan within 14 days
from
the date on which an application is filed for commencing individual
rehabilitation procedures: Provided, That when the court
recognizes that
justifiable grounds exist, it may extend the period.
(2) The debtor shall be prohibited from revising the draft
repayment plan
before it is authorized.
(3) The court may order the debtor to revise the draft repayment plan
by its inherent jurisdiction or upon receiving an application
filed by
interested persons.
(4) When the revision order is given pursuant to the provisions of paragraph
(3), the debtor shall revise the draft repayment plan
within the deadline
set by the court.
(5) The provisions of Article 597 (2) shall apply mutatis mutandis to
10
(Supp. 39)779-128
cases where the draft repayment plan is revised pursuant to the provisions
of paragraphs (2) and (3).
Article 611 (Contents of Repayment Plan)
(1) The matters falling under each of the following subparagraphs shall
be prescribed in the repayment plan:
1. Matters concerning the assets and income furnished for repaying
obligations;
2. Matters concerning the repayment of the total amount of individual
rehabilitation foundation claims and individual rehabilitation
claims
with general priority rights; and
3. Matters concerning the repayment of all or a part of the individual
rehabilitation claims entered in the list of individual rehabilitation
creditors.
(2) The matters falling under each of the following subparagraphs may
be prescribed in the repayment plan:
1. The categorization of individual rehabilitation claims into groups;
2. The purpose for the use of property that exceed the estimated amount
in the repayment plan;
3. Matters concerning restrictions on the right to manage and dispose
of assets that belong to the individual rehabilitation foundation
after
the repayment plan is authorized; and
4. Other matters necessary to coordinate the debtor s obligations.
(3) When claims are categorized into groups in the repayment plan,
any
claims that are categorized into the same group shall be handled equally:
Provided, That the same shall not apply to cases
where agreement is obtained
from individual rehabilitation creditors who suffer disadvantages or the
amount of the individual rehabilitation
claim is minimal.
(4) The repayment plan shall contain terms that require the commencement
of repayments within one month from
the date on which the repayment
plan is authorized and periodic repayments: Provided, That the same shall
not apply to cases where
permission therefor is obtained from the court.
(5) The repayment period set in the repayment plan shall not exceed 5
years from
the date on which the repayment commences.
(6) When it is deemed necessary, the court may order personal and
impersonal securities
to be furnished in order to implement the repayment
plan.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-129(Supp. 39)
Article 612 (Invalidation of Preferential Benefits)
The act of giving special profits to some individual rehabilitation creditors
without resorting to the repayment plan, in the name of the debtor or
in the name of any third person shall be made invalid.
Article
613 (Meeting of Individual Rehabilitation Creditors)
(1) The court shall notify the debtor, individual rehabilitation creditors
and rehabilitation commissioners of the date on which a meeting of individual
rehabilitation creditors is held and a summary of
the repayment plan.
(2) The debtor shall be present at the meeting of individual rehabilitation
creditors and explain the repayment
plan at the request of any individual
rehabilitation creditor.
(3) The meeting of individual rehabilitation creditors shall be presided
over by the court.
(4) When any rehabilitation commissioner is selected and appointed, the
court may cause such rehabilitation commissioner to preside
over the
meeting of individual rehabilitation creditors.
(5) Any individual rehabilitation creditor may state his/her objection to
the repayment plan at the meeting of individual rehabilitation
creditors.
Article 614 (Whether to Authorize Repayment Plan)
(1) When no individual rehabilitation creditor or no rehabilitation
commissioner states his/her objection to the repayment plan and all of
the requirements falling under each of the following subparagraphs
are
met, the court shall decide to authorize the repayment plan: Provided,
That the same shall not apply to cases where any individual
rehabilitation
creditor or any rehabilitation commissioner does not comply with an order
given to revise the draft repayment plan
pursuant to the provisions of
Article 610 (3):
1. The repayment plan is to conform with the provisions of the Act;
2. The repayment plan is to be fair, equitable and implementable;
3. The payable expenses, fees and other amounts are to be paid before
the repayment plan is authorized; and
4. The total amount to be repaid for the rehabilitation claims that are
appraised as of the date on which the repayment plan is authorized
is to exceed the total amount of dividends that the debtor is to take
at the time that he/she enters into bankruptcy; Provided,
That the
same shall not apply to cases where agreement thereon is obtained
10
(Supp. 39)779-130
from creditors.
(2) When any individual rehabilitation creditor or any rehabilitation
commissioner states an objection, the court may decide to
authorize the
repayment plan only when the requirements falling under each of the
following subparagraphs are met in addition to
the requirements referred
to in each subparagraph of pargraph (1):
1. The total repayment amount for individual rehabilitation creditors
who state their objections, which is appraised as of the date
on which
it is decided to authorize the repayment plan is not to be smaller than
the total amount of dividends that are distributed
to the debtor at
the time the debtor enters into bankruptcy;
2. The whole of the disposable income that the debtor can receive during
the repayment period that is set according to the repayment
plan from
the first repayment date is to be used for repayments according to the
repayment plan; and
3. The total amount of repayments for individual rehabilitation claims,
which is appraised as of the date on which it is decided
to authorize
the repayment plan, is not to be smaller than the amount falling under
each of the following items within the scope
not exceeding 30 million
won:
(a) In cases where the total amount of individual rehabilitation claims
appraised as of the date on which it is decided to authorize
the
repayment plan is not more than 50 million won, the amount obtained
by multiplying 5/100 by the total amount; and
(b) In cases where the total amount of individual rehabilitation claims
appraised as of the date on which it is decided to authorize
the
repayment plan is not less than 50 million won, the amount obtained
by adding one million won to the amount obtained by multiplying
3/100 by the total amount.
(3) The court shall decide on the draft repayment plan and publish the
main passage of such decision, a summary of the grounds and
a summary
of the repayment plan. In this case, the delivery thereof need not be made.
Article 615 (Effect of Authorizing Repayment
Plan)
(1) The repayment plan shall take effect from the time it is decided to
authorize the repayment plan: Provided, That any
change in rights according
to the repayment plan shall not accrue until the immunity decision is
DEBTOR REHABILITATION AND BANKRUPTCY
ACT
779-131(Supp. 39)
confirmed.
(2) When it is decided to authorize the repayment plan, all of the assets
that belong to the individual rehabilitation foundation
shall revert to the
debtor: Provided, That the same shall not apply to cases where the repayment
plan is differently prescribed
in the process of deciding on and authorizing
the repayment plan.
(3) When it is decided to authorize the repayment plan, rehabilitation
procedures and bankruptcy procedures, the compulsory execution,
provisional seizure or provisional disposition, any of which are suspended
pursuant to the provisions of Article 600 shall lose
their effects: Provided,
That the same shall not apply to cases where the repayment plan is prescribed
differently in the process
of deciding to authorize the repayment plan.
Article 616 (Special Rules Concerning Assignment Order)
(1) When it is decided to
authorize the repayment plan, the assignment
order that is confirmed before the individual rehabilitation procedures
commence with
respect to pay, pensions, salary, bonuses and wage claims
the character of which is similar to the former of the debtor shall lose
its effect on the portion of the labor that is provided after it is decided
to authorize the repayment plan.
(2) The amount of claims that cannot be repaid to all creditors on the
grounds of a decision made to authorize the repayment plan
shall be made
individual rehabilitation claims.
Article 617 (Performance of Repayments)
(1) The debtor shall deposit the money for rehabilitation commissioners,
which is to be repaid to individual rehabilitation creditors
according to
the repayment plan authorized.
(2) Individual rehabilitation creditors shall be paid the amount that is
deposited pursuant to the provisions of paragraph (1) by
rehabilitation
commissioners. In cases where any individual rehabilitation creditor is
not paid the amount, rehabilitation commissioners
shall entrust the amount
for such individual rehabilitation creditor.
(3) The provisions of paragraphs (1) and (2) shall not apply to cases where
any rehabilitation commissioner is not selected and
appointed and the
repayment plan is prescribed differently in the process of authorizing the
repayment plan.
Article 618 (Immediate Appeal Filed against Decision on Repayment Plan)
10
(Supp. 39)779-132
(1) An immediate appeal may be filed against a decision on a repayment
plan.
(2) The provisions of Article 247 (3) through 7 shall apply mutatis mutandis
to an immediate appeal filed against a decision on
whether to authorize
the repayment plan.
Article 619 (Revision of Repayment Plan after Authorization Thereof)
(1) The debtor, any rehabilitation commissioner and individual
rehabilitation creditor may submit a draft change for the authorized repayment
plan before the repayment is completed according
to the repayment plan.
(2) The provisions of Articles 597 (2), 611, 613, 614, 615 (1) and 617
shall apply mutatis mutandis to any
draft change in the repayment plan
referred to in the provisions of paragraph (1).
CHAPTER DISCONTINUATION AND
IMMUNITY
Article 620 (Discontinuation of Individual Rehabilitation Procedures
Prior to Authorization of Repayment Plan)
(1) In the events falling under either of the following subparagraphs, the
court shall decide to discontinue individual rehabilitation
procedures by
its inherent jurisdiction or upon receiving an application filed by interested
persons:
1. When the facts falling under subparagraphs 1 and 5 of Article 595 are
obviously disclosed at the time individual rehabilitation
procedures
commence; and
2. When it is impossible to authorize the draft repayment plan submitted
by the debtor.
(2) The court may, In the events falling under either of the following
subparagraphs, the Court may decide to discontinue the individual
rehabilitation procedures by its inherent jurisdiction:
1. When the procedures fall under subparagraph 2 of Article 595; and
2. When the debtor fails to be present or to provide an explanation pursuant
to the provisions of Article 613 (2) without any justifiable
grounds
thereof or provides any false explanation.
Article 621 (Discontinuation of Individual Rehabilitation Procedures
after Repayment Plan Authorized)
(1) In the events falling under any of the following subparagraphs, the
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-133(Supp. 39)
court shall decide to discontinue the individual rehabilitation procedures
by its inherent jurisdiction or upon receiving an application
filed by
interested persons:
1. When a decision not to grant immunity is confirmed;
2. When it is clearly obvious that the debtor is unable to implement the
authorized repayment plan; Provided, That the same shall
not apply
where the debtor is granted decision on immunity under Article 624
(2); and
3. When the debtor fails to implement the authorized repayment plan
by concealing his/her assets and income or by means of illegality.
(2) The discontinuation of the individual rehabilitation procedures referred
to in the provisions of paragraph (1) shall not affect
any repayment that
has already been made and any effect that has accrued pursuant to the
provisions of this Act.
Article 622 (Publication of Decision to Discontinue Individual
Rehabilitation Procedures)
The court shall, when it decides to discontinue the individual rehabilitation
procedures, publish the main passage of such decision
and a summary
of the grounds thereof. In this case, no delivery thereof need be made.
Article 623 (Immediate Appeal Filed Against
Discontinuation of Individual
Rehabilitation Procedures)
(1) An immediate appeal may be filed against the discontinuation of
individual rehabilitation procedures.
(2) The provisions of Articles 247 (4) through (7) shall apply mutatis
mutandis to the immediate appeal filed against the discontinuation
of
individual rehabilitation procedures.
Article 624 (Immunity Decision)
(1) When the debtor completes his/her repayments according to the
repayment plan, the court shall decide to grant immunity to him/her
by
its inherent jurisdiction or upon receiving an application filed by the
parties.
(2) Even if the debtor fails to complete repayments according to the
repayment plan, when the requirements falling under each of
the following
items are met, the court may decide to grant him/her immunity after hearing
the opinions of interested persons:
1. The debtor s failure to complete his/her repayments is to be due to
10
(Supp. 39)779-134
the grounds for which he/she is not responsible;
2. The amount that is repaid to individual rehabilitation creditors by the
date on which it is decided to grant the debtor immunity
is to exceed
the amount of dividends the debtor takes in the bankruptcy procedures
where the debtor files an application for bankruptcy
procedures; and
3. Any change in the repayment plan is to be impossible.
(3) Notwithstanding the provisions of paragraphs (1) and (2), in cases
falling under any of the following subparagraphs, the court may decide
not to grant immunity:
1. Where the debtor holds any individual rehabilitation claim that is not
entered in the list of individual rehabilitation creditors,
due to the
debtor s bad faith, by the time when it is decided to grant him/her
immunity; and
2. Where the debtor fails to fulfill his/her obligations prescribed by this
Act.
(4) The court shall, when it decides to grant immunity, publish the main
passage of such decision and a summary of the grounds thereof.
In this
case, delivery need not be made.
Article 625 (Effect of Decision to Grant Immunity)
(1) The effect of any decision to grant immunity shall accrue only after
such
decision is confirmed.
(2) The debtor who is granted immunity shall be exempted from responsibility
for his/her obligations to individual rehabilitation
creditors, except for the
repayments that are made according to the repayment plan: Provided,
That the debtor shall not be exempted
from his/her responsibility for claims
falling under any of the following subparagraphs:
1. Claims not entered in the list of individual rehabilitation creditors;
2. Claims for tax, etc. as provided for in the provisions of Article 583
(1) 2;
3. Claims for any fines, penalties, any criminal litigation costs, any
additional charges and any fines for negligence;
4. Claims for the compensation for losses caused by the debtor s deliberate
and illegal conduct;
5. Claims for the compensation for losses caused by the debtor s illegal
conduct and gross negligence that combine to result in harm
to the
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-135(Supp. 39)
life and to the body of other persons;
6. Claims for any wages, severance pay and disaster compensation of
the debtor s workers;
7. Claims for any rentals and any personal identity guarantee money of
the debtor s workers; and
8. Claims for reimbursement of expenses the debtor must bear in raising
and supporting his/her family.
(3) The immunity shall not affect the rights held by individual rehabilitation
creditors on the debtor s guarantors and other persons
who bear obligations
jointly with the debtor and security furnished for individual rehabilitation
creditors.
Article 626 (Cancellation of Immunity)
(1) When the debtor is granted immunity by fraudulent and illegal means,
the court may revoke his/her immunity by its inherent jurisdiction
or
upon receiving an application filed by interested persons. In this case,
the court shall examine interested persons.
(2) The application referred to in the provisions of paragraph (1) shall
be filed within one year from the date on which a decision
to grant immunity
is confirmed.
Article 627 (Immediate Appeal Filed against Decision on Immunity)
An immediate appeal may be filed against any decision to grant
immunity
and any decision to cancel immunity.
PART INTERNATIONAL BANKRUPTCY
Article 628 (Definitions)
The definition of terms used in this Part shall be as follows:
1. The term foreign bankruptcy procedures means rehabilitation
procedures, bankruptcy procedures, individual rehabilitation
procedures
and other procedures similar thereto for each of which
applications are filed for any foreign courts (including authorities
corresponding
thereto; hereinafter the same shall apply) and provisional
procedures;
2. The term domestic bankruptcy procedures means rehabilitation
procedures, bankruptcy procedures or individual rehabilitation
procedures
for each of which applications are filed with the courts of
10
(Supp. 39)779-136
the Republic of Korea;
3. The term approval for foreign bankruptcy procedures means approval
for the grounds on which a disposition for support is taken
pursuant
to this Part in the Republic of Korea for foreign bankruptcy procedures;
4. The term support procedures means procedures for a judgment on
an application filed for approval of foreign bankruptcy procedures
and
for the disposition taken to support such foreign bankruptcy procedures
for a debtor s business and assets in the Republic
of Korea;
5. The term representative of foreign bankruptcy procedures means the
person who is recognized by any foreign court as the manager
or
representative of foreign bankruptcy procedures; and
6. The term international bankruptcy custodian means the person who
is given all or a part of the authority by the court to liquidate
a debtor s
assets, to distribute dividends or to manage or dispose of a debtor s
business and assets in support of foreign bankruptcy
procedures.
Article 629 (Scope of Application)
(1) The provisions of this Part shall apply to cases falling under any of
the following items:
1. Where a representative of foreign bankruptcy procedures seeks any
approval or support from a court of the Republic of Korea in
connection
with foreign bankruptcy procedures;
2. Where a representative of a foreign bankruptcy procedures files an
application with a court of the Republic of Korea for domestic
bankruptcy
procedures or participates in domestic bankruptcy procedures that are
in progress;
3. Where any custodian, any trustee in bankruptcy, the debtor and any
other person who obtains permission from the court, etc. participates
in the procedures of any foreign court and seeks approval and support
from any foreign court while carrying out activities overseas;
and
4. Where domestic bankruptcy procedures and foreign bankruptcy
procedures for the same debtor are jointly and simultaneously pending
in a court of the Republic of Korea and any foreign court and coordination
between the two procedures is required.
(2) Matters not prescribed in this Part shall be governed by the provisions
of other Parts of this Act.
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-137(Supp. 39)
Article 630 (Jurisdiction)
Cases concerning approval of, and support for foreign bankruptcy procedures
shall be placed under the exclusive jurisdiction of
the collegiate division
of the Seoul Central District Court: Provided, That when it is deemed
necessary to ensure the efficient
implementation of the procedures and
to protect the rights of interested parties, the Seoul Central District Court
may transfer
such cases to the competent court provided for in the provisions
of Article 3 at the time it decides to approve the foreign bankruptcy
procedures
or after it decides to approve such foreign bankruptcy procedures by its
inherent jurisdiction or upon receiving an
application filed by the parties.
Article 631 (Application Filed for Approving Foreign Bankruptcy
Procedures)
(1) In cases where the debtor has his/her place of business, his/her office
or his/her domicile in a nation in which an application
is filed for foreign
bankruptcy procedures, the representative of such foreign bankruptcy
procedures may file an application accompanied
by a written statements
falling under each of the following subparagraphs with the court for approving
the foreign bankruptcy procedures.
In this case, written statements
prepared in any foreign language shall be accompanied by translations
of such statements:
1. A written statement concerning the legal basis and a summary of the
overall foreign bankruptcy procedures;
2. A written statement attesting to the commencement of the foreign
bankruptcy procedures;
3. A written statement attesting to the qualification and authority of
the representative of the foreign bankruptcy procedures;
4. A written statement concerning the main points of the foreign bankruptcy
procedures for which an application is filed for their
approval (including
statements of creditors, the debtor and interested parties); and
5. A written statement concerning all other foreign bankruptcy procedures
over the debtor, which are known to the representative
of the foreign
bankruptcy procedures.
(2) When the details referred to in each item of paragraph (1) are altered
after an application is filed for approving the foreign
bankruptcy procedures,
the applicant shall promptly submit a written statement in which altered
matters are entered to the court.
10
(Supp. 39)779-138
(3) When the application referred to in the provisions of paragraph (1)
is filed, the court shall promptly publish a summary of
such application.
(4) The provisions of Articles 37 and 39 shall apply mutatis mutandis
to the application referred to in the provisions
of paragraph (1).
Article 632 (Decision to Approve Foreign Bankruptcy Procedures)
(1) Upon receiving an application filed for approving
foreign bankruptcy
procedures, the court shall decide whether to approve them within one
month from the date on which such application
is filed.
(2) In cases falling under any of the following subparagraphs, the court
shall dismiss an application filed for approving
foreign bankruptcy
procedures:
1. Where expenses determined by the court are not prepaid;
2. Where each written statement provided for in each subparagraphs of
Article 631 (1) is not submitted or the establishment and contents
of any such written statement is not bona fide; and
3. Where approving the foreign bankruptcy procedures is contrary to the
good public morals and social order of the Republic of Korea.
(3) When it is decided to approve foreign bankruptcy procedures, the court
shall publish the main passage of such decision and
a summary of the
grounds therefor and deliver a written decision to the applicant.
(4) An immediate appeal may be filed against
a decision on an application
filed for approving foreign bankruptcy procedures.
(5) The immediate appeal referred to in the provisions
of paragraph (4)
shall not have the effect of suspending any execution.
Article 633 (Effect of Approval for Foreign Bankruptcy
Procedures)
A decision to approve foreign bankruptcy procedures shall not affect the
commencement or the proceeding of procedures
pursuant to this Act.
Article 634 (Application by Representative of Foreign Bankruptcy
Procedures for Commencing Domestic Bankruptcy
Procedures, etc.)
When foreign bankruptcy procedures are approved, the representative of
the foreign bankruptcy procedures may
file an application for commencing
domestic bankruptcy procedures or participate in domestic bankruptcy
procedures that are in
progress.
Article 635 (Order, etc. Prior to Approval)
(1) After an application is filed for foreign bankruptcy procedures, the
court may order measures to be taken, as provided for in
the provisions
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-139(Supp. 39)
of Article 636 (1) 1 through 3 up until when a decision is made on the
application for such procedures by its inherent jurisdiction
or upon receiving
an application filed by the representative of foreign bankruptcy procedures.
(2) The provisions of paragraph
(1) shall apply mutatis mutandis to cases
where an immediate appeal is filed against a decision made to dismiss
an application
for commencing foreign bankruptcy procedures.
(3) The court may alter or rescind the disposition referred to in the provisions
of paragraphs (1) and (2).
(4) An immediate appeal may be filed against the decision referred to in
the provisions of paragraphs (1) through (3).
(5) The immediate appeal referred to in the provisions of paragraph (4)
shall not have the effect of suspending any execution.
Article 636 (Support for Foreign Bankruptcy Procedures)
(1) The court may make a decision falling under any of the following
subparagraphs
in order to protect the debtor s business and assets or the
creditors profits at the time that it approves the foreign bankruptcy
procedures or after approving the foreign bankruptcy procedures by its
inherent jurisdiction or upon receiving an application filed
by interested
persons:
1. The suspension of a lawsuit involving the debtor s business and assets
and procedures belonging to any administrative agency;
2. The suspension or prohibition of compulsory execution, an auction for
the exercise of security rights, provisional seizure, provisional
disposition and preservation procedures with respect to the debtor s
business and assets;
3. Prohibition of the debtor s repayment or of the disposal of the debtor s
assets;
4. The selection and appointment of international bankruptcy custodians;
and
5. Other dispositions necessary to preserve the debtor s business and
assets and to protect the profits of creditors.
(2) When the court makes the decision referred to in the provisions of
paragraph (1), it shall take into account the profits of
creditors, the debtor
and other interested persons.
(3) When the support application referred to in the provisions of paragraph
10
(Supp. 39)779-140
(1) is contrary to the good public morals and social order of the Republic
of Korea, the court shall decline such support application.
(4) When the court decides to alter or rescind the prohibition order referred
to in the provisions of paragraph (1) 2, it shall
publish the main passage
of such decision and deliver a written decision to the representative of
the foreign bankruptcy procedures
and the applicant.
(5) When the prohibition order referred to in the provisions of paragraph
(1) is given, the prescription of
the claims to the debtor shall not expire
until the date on which 2 months have lapsed from the day following the
date on which
such prohibition order loses its effect.
(6) The court may, if it is deemed necessary, alter or rescind the decision
referred to
in the provisions of paragraph (1) by its inherent jurisdiction
or upon receiving an application filed by interested persons.
(7)
When it is deemed necessary, the court may order the cancellation
of procedures that are suspended pursuant to the provisions of
paragraph
(1) 2 by its inherent jurisdiction or upon receiving an application filed
by interested persons.
(8) An immediate appeal may be filed against the decision referred to in
the provisions of paragraphs (1), (6) and (7).
(9) The immediate appeal referred to in the provisions of paragraph (8)
shall not have the effect of suspending any execution.
Article 637 (International Bankruptcy Custodians)
(1) In cases where any international bankruptcy custodian is selected and
appointed,
the authority to perform the debtor s business and manage
and dispose of the debtor s assets shall be vested exclusively in such
international bankruptcy custodian.
(2) In cases where any international custodian intends to dispose of the
debtor s assets, or remove the debtor s assets from the
Republic of Korea,
liquidate the debtor s assets, distribute dividends and perform any act
that is prescribed by the court, such
international custodian shall obtain
permission therefor from the court.
(3) The provisions of Section 1 of Chapter of Part and Section 1
of Chapter of Part shall apply mutatis mutandis to every international
custodian.
Article 638 (Simultaneous Proceedings of Domestic Bankruptcy
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-141(Supp. 39)
Procedures and International Bankruptcy Procedures)
(1) In cases where domestic bankruptcy procedures and foreign bankruptcy
procedures
proceed simultaneously for the same debtor, the court may decide
on, alter or revoke the support provided for in the provisions
of Articles
635 and 636, which focuses on domestic bankruptcy procedures.
(2) An immediate appeal may be filed against the decision
referred to in
the provisions of paragraph (1).
(3) The immediate appeal referred to in the provisions of paragraph (2)
shall not have the effect of suspending any execution.
Article 639 (Multiple International Bankruptcy Procedures)
(1) When an application is filed for approving multiple international
bankruptcy procedures for the same debtor, the court shall conduct a
combined hearing thereon.
(2) When approval is granted for multiple international bankruptcy
procedures for the same debtor, the court may decide on which
are to be
the main foreign bankruptcy procedures taking into account the location
of the debtor s principal place of business and
the scope, etc. of measures
taken to protect creditors in order to ensure the efficient progression of
support procedures.
(3) The court may decide on or change the support, provided for in the
provisions of Article 636 for the main foreign bankruptcy
procedures.
(4) If it is deemed necessary, the court may change the main foreign
bankruptcy procedures referred to in the provisions
of paragraph (2).
(5) An immediate appeal may be filed against the decision referred to in
the provisions of paragraphs (2) through
(4).
(6) The immediate appeal referred to in the provisions of paragraph (5)
shall not have the effect of suspending any execution.
Article 640 (Authority for Custodians to Carry Out Activities Overseas)
Any custodian and any trustee in bankruptcy of domestic
bankruptcy
procedures and any other person who obtains permission from the court,
shall have the authority to carry out activities
overseas for domestic
bankruptcy procedures under the conditions prescribed by the relevant
foreign legislation.
Article 641 (Cooperation)
(1) The court shall cooperate with any foreign court and the representative
of foreign bankruptcy procedures with respect to the
matters falling under
10
(Supp. 39)779-142
each of the following subparagraphs in order to ensure the smooth and
fair execution of domestic bankruptcy procedures, foreign
bankruptcy
procedures or between multiple foreign bankruptcy procedures that are
proceeding over the same debtor and other debtors
related with the former:
1. The exchange of opinions;
2. The management and supervision of the debtor s business and assets;
3. The coordination of the progression of multiple procedures; and
4. Other necessary matters.
(2) The court may exchange information and opinions directly with any
foreign court or the representative
of foreign bankruptcy procedures in
order for the cooperation referred to in the provisions of paragraph (1).
(3) Any custodian
and any trustee in bankruptcy who are in charge of
domestic bankruptcy procedures may exchange information and opinions
with any
foreign court or the representative of foreign bankruptcy procedures
under the court s supervision.
(4) Any custodian and any trustee in bankruptcy in charge of domestic
bankruptcy procedures may reach an agreement with any foreign
court
or the representative of foreign bankruptcy procedures on the coordination
of bankruptcy procedures after obtaining permission
therefor from the court.
Article 642 (General Rules Governing Dividends)
In cases where domestic bankruptcy procedures, foreign bankruptcy
procedures or multiple foreign bankruptcy procedures for a common
debtor
are in progress, any creditor who receives repayment from the foreign
bankruptcy procedures or debtor s overseas assets
shall not be entitled
to take any dividend or any repayment from the domestic bankruptcy
procedures until such time as other creditors
who belong to the same group
and the same ranking as the group and the ranking of the former receive
the same percentage of repayment.
PART PENAL PROVISIONS
Article 643 (Offense of Fraudulent Rehabilitation)
(1) In cases where a debtor performs an act falling under any of the following
subparagraphs with the aim of seeking profits for himself/herself or any
other persons and causing loss to creditors, and a decision
to commence
rehabilitation procedures for the debtor is confirmed, the debtor shall be
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-143(Supp. 39)
punished by imprisonment with prison labor for not more than 10 years
or by a fine not exceeding 100 million won:
1. The act of destroying and concealing his/her assets or disposing of
his/her assets in a manner that is disadvantageous to rehabilitation
creditors, rehabilitation secured creditors, shareholders and equity
right holders;
2. The act of falsely increasing the debtor s obligations;
3. The act of failing to prepare the commercial book, the preparation of
which is mandatory under the provisions of relevant Acts,
failing to
enter the current state of the debtor s assets in the commercial book,
falsely entering any matter in the commercial
book and destroying
and concealing the commercial book; and
4. The act of filing an application for commencing the rehabilitation
procedures with the primary aim of evading the punishment provided
for in the Illegal Check Control Act.
(2) In cases where any person falling under any of the following
subparagraphs performs an act falling under any subparagraph of
paragraph (1) with the aim of seeking profit for himself or any other person
and causing loss to creditors, and a decision to commence
rehabilitation
procedures for the debtor is confirmed, the person shall be punished by
imprisonment with prison labor for not more
than 5 years or by a fine
not exceeding 50 million won:
1. The debtor s legal representative;
2. The director of the debtor who is a corporation; and
3. The debtor s manager.
(3) In cases where the debtor performs an act falling under either of the
following subparagraphs with
the aim of seeking profit for himself or any
other person and causing loss to creditors, and a decision to commence
rehabilitation
procedures for the debtor is confirmed, the debtor shall be
punished by imprisonment with prison labor for not more that 5 years
or by a fine not exceeding 50 million won:
1. The act of concealing or destroying assets or disposing of the assets
in a manner that is disadvantageous to creditors; and
2. The act of falsely increasing the debtor s obligations.
Article 644 (Offence of Fraudulent Rehabilitation Committed by Third
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(Supp. 39)779-144
Person)
In cases where any person other than the person provided for in the provisions
of Article 643 performs an act falling under either
of the following
subparagraphs and a decision to commence rehabilitation procedures for
the debtor is confirmed, the former shall
be punished by imprisonment
with prison labor for not more than 5 years or by a fine not exceeding
50 million won:
1. An act provided for in any subparagraph of Article 643 (1); and
2. The act of falsely exercising any right that person does not hold as
a rehabilitation creditor, a rehabilitation secured creditor,
a shareholder
or an equity right holder with the aim of seeking profit for himself
or any other person, or causing loss creditors.
Article 645 (Offense of Rehabilitation Bribery)
(1) In case where any of the Custodial Committee, inspector, rehabilitation
commissioner, preservative custodian, custodian (including
any
international bankruptcy custodian provided for in the provisions of Article
637), adviser, manager, preservative manager or
any agent of the
rehabilitation commissioner gives or accepts, solicits or promises any bribe
in connection with the performance
of his/her duties, he/she shall be
punished by imprisonment with prison labor for not more than 5 years
or by a fine not exceeding
50 million won. The same shall apply to cases
where the person falling under any of the following subparagraphs gives,
accepts,
solicits or promises any bribe in connection with the resolution
of a meeting of persons concerned:
1. A rehabilitation creditor, rehabilitation secured creditor, shareholder
and an equity right holder;
2. A proxy commissioner or an agent of the person referred to in the
provisions of subparagraph 1; and
3. An officer or an employee of the person referred to in the provisions
of subparagraph 1.
(2) In cases where any custodian (including any international bankruptcy
custodian provided for in the provisions of Article 637),
preservative
custodian, inspection commissioner or rehabilitation commissioner is a
corporation, if any officer or any employee
who performs the duties of the
custodian, preservative custodian, inspection commissioner or the
rehabilitation commissioner gives,
accepts, solicits or promises any bribe
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-145(Supp. 39)
in connection with the performance of such duties, such officer and such
employee shall be punished by imprisonment with prison
labor for not
more than 5 years or by a fine not exceeding 50 million won. The same
shall apply to cases where the custodian, preservative
custodian or inspection
commissioner is a corporation, any officer or any employee thereof the custodian,
preservative custodian
or inspection commissioner to give, accept, solicit
or promise any bribe in connection with their duties.
(3) In cases under paragraphs
(1) and (2), any bribe that is given or
accepted by any corporation or any third person with knowledge of its purpose
shall be
confiscated.
Article 646 (Offense of Rehabilitation Bribery)
Any person who promises, gives or expresses the intention of giving the
bribe provided for in the provisions of Article 645 (1)
or (2) shall be punished
by imprisonment with prison labor for not more than 5 years or by a fine
not exceeding 50 million won.
Article 647 (Offense of Violating Prohibition on Management
Participation)
Any person who is selected and appointed as a director or the chief executive
officer of the debtor in violation of the provisions
of Article 284 after the
rehabilitation procedures are completed shall be punished by imprisonment
with prison labor for not more
than 3 years or by a fine not exceeding
30 million won.
Article 648 (Offense of Performing Act without Permission)
(1) In cases where any custodian, trustee in bankruptcy (including any
international bankruptcy custodian provided for in the provisions of Article
637) or any preservative custodian performs an act
the performance of
which requires the court s permission, without obtaining such permission,
the actor shall be punished by imprisonment
with prison labor for not more
than 3 years or by a fine not exceeding 30 million.
(2) In cases where any custodian or any preservative
custodian makes
a false report to the court or fails to make the accounting report provided
for in the provisions of Article 84
(1) without justifiable grounds thereof,
he/she shall be punished by imprisonment with prison labor for not more
than one year
or by a fine not exceeding 10 million won.
Article 649 (Offense of Refusing to Make Reports and Refusing Inspection)
A person falling
under any of the following subparagraphs shall be punished
10
(Supp. 39)779-146
by imprisonment with prison labor for not more than one year or by a
fine not exceeding 10 million won:
1. A custodian or trustee in bankruptcy who refuses, evades or impedes
submitting materials provided for in the provisions of Article
22 (3)
or submits false materials without justifiable grounds thereof;
2. A debtor who refuses, evades or impedes submitting materials provided
for in the provisions of Article 34 (3) without justifiable
grounds thereof;
3. A person who refuses, evades or impedes making the report provided
for in the provisions of Article 79 (1) (including cases where
the provisions
are applied mutatis mutandis under Article 88) or who makes a false
report without justifiable grounds thereof;
4. A debtor who refuses, evades or impedes the inspection provided for
in the provisions of Article 79 (1) (including cases where
the provisions
are applied mutatis mutandis under Article 88) without justifiable
grounds thereof; and
5. A debtor who refuses to comply with a request for a report, inspection
or correction or makes a false report without justifiable
grounds thereof.
Article 650 (Offense of Fraudulent Bankruptcy)
Where a debtor performs an act falling under any of the following
subparagraphs with the aim of seeking his/her profit for himself/herself
or any other person or causing loss to creditors, regardless before or after
he/she is declared bankrupt and a declaration of his/her
bankruptcy is
confirmed, he/she shall be punished by imprisonment with prison labor
for not more than 10 years or by a fine not
exceeding 100 million won:
1. The act of concealing or destroying the assets belonging to the bankruptcy
foundation or disposing assets in a manner that is
disadvantageous
to creditors;
2. The act of falsely increasing the obligations of the bankruptcy foundation;
3. The act of failing to prepare the commercial book required under the
provisions of the Act, failing to enter matters concerning
the current
state of assets in the commercial book, or entering false matters in
the commercial book, concealing and destroying
the commercial book;
and
4. The act of bringing a change to the book that is closed by the clerk,
etc. of the court or concealing and destructing the book.
Article 651 (Offense of Negligent Bankruptcy)
DEBTOR REHABILITATION AND BANKRUPTCY ACT
779-147(Supp. 39)
In cases where a debtor performs an act falling under any of the following
subparagraphs regardless of whether before or after he/she
is declared
bankrupt and a declaration of his/her bankruptcy is confirmed, he/she
shall be punished by imprisonment with prison
labor for not more than
5 years or by a fine not exceeding 50 million won:
1. The act of purchasing goods in a credit transaction and selling them
under a transaction with disadvantageous terms and conditions
with
the aim of delaying the declaration of his/her bankruptcy;
2. The act of furnishing security or extinguishing his/her obligations, which
do not pertain to his/her duties, and the manner and
timing of such
act also do not pertain to his/her duties, with the aim of giving preferential
benefits to creditors with knowledge
of the fact that grounds for his/her
bankruptcy exist;
3. The act of failing to prepare the commercial book, the preparation of
which is required under the provisions of the Act, failing
to enter matters
concerning the current state of assets in the commercial book, entering
false matters in the commercial book,
or concealing or destroying the
commercial book; and
4. The act of making alterations to any book that has been closed by the
clerk, etc. of the court pursuant to the provisions of Article
481 and
concealing or destroying the book.
Article 652 (Offenses of Fraudulent Bankruptcy and Negligence
Bankruptcy by Person in Certain Position)
When a person falling under any of the following subpragraphs performs
an act provided for in the provisions of Articles 650 and
651 and a declaration
of the debtor s bankruptcy is confirmed, he/she shall be governed by the
precedent under Articles 650 and
651. The same shall apply to the inheritor
and his/her legal representative and manager in cases of bankruptcy
effecting inherited
assets:
1. The legal representative of a debtor;
2. The director of a corporate debtor; and
3. The manager of a debtor.
Article 653 (Offense of Resisting Arrest)
When a person who is subject to a warrant of arrest provided for in the
provisions of Articles 319, 320 and 322 absconds with the
aim of delaying
bankruptcy procedures and evading the execution of such arrest with
10
(Supp. 39)779-148
knowledge of such warrant of arrest, he/she shall be punished by
imprisonment with prison labor for not more than one year or by
a fine
not exceeding 10 million won.
Article 654 (Offense of Fraudulent Bankruptcy by Third Person)
In cases where the debtor or a person who is not the person provided
for
in any subparagraph of Article 652 performs an act provided for any
subparagraph of Article 650 with the aim of seeking profit
for himself/
herself or any other person regardless of whether after or before he/she
is declared bankrupt, falsely exercises a
right he does not hold as a
bankruptcy creditor with the aim of seeking benefits for any other person,
and a declaration of the
debtor s bankruptcy is confirmed, the actor shall
be punished by imprisonment with prison labor for not more than 10 years
or by
a fine not exceeding 100 million won.
Article 655 (Offense of Bankruptcy Bribery)
(1) In cases where any trustee in bankruptcy (including any international
bankruptcy custodian provided for in the provisions of
Article 637) or any
audit committee gives, accepts, solicits or promises any bribe in connection
with his/her duties, he/she shall
be punished by imprisonment with prison
labor for not more than 5 years or by a fine not exceeding 50 million won.
The same shall
apply to cases where a person falling under any of the
following subparagraphs gives, accepts, solicits or promises any bribe in
connection with the resolution of a meeting of creditors:
1. A bankruptcy creditor;
2. An agent of the bankruptcy creditor; and
3. A director of the bankruptcy creditor.
(2) In cases under paragraph (1), the bribe that is given or accepted by
the offender
or any third person with knowledge of the fact shall be
confiscated. When the confiscation thereof is not possible, the value thereof
shall be levied in addition thereto.
Article 656 (Offense of Bankruptcy Bribery)
Anyone who promises or gives any bribe, or expresses an intention to give
any bribe to a person falling under any of the following
subparagraphs
shall be punished by imprisonment with prison labor for not more than
3 years or by a fine not exceeding 30 million
won:
1. A trustee in bankruptcy (including any international trustee in
bankruptcy provided for in the provisions of Article 637);
DEBTOR
REHABILITATION AND BANKRUPTCY ACT
779-149(Supp. 39)
2. An audit committee;
3. A bankruptcy creditor;
4. An agent of the bankruptcy creditor; and
5. A director of the bankruptcy creditor.
Article 657 (Offense of Using Results of Assets Inquiry for Other Purpose)
Any person
who uses the results of the assets inquiry provided for in the
provisions of Article 29 (1) for purposes than other that of inspecting
the
debtor s assets for rehabilitation procedures, bankruptcy procedures or
individual rehabilitation procedures shall be punished
by imprisonment
with prison labor for not more than 2 years or by a fine not exceeding
20 million won.
Article 658 (Offense of Breaching Obligation to Provide Explanation)
When any person who is obliged to provide explanations pursuant
to the
provisions of Article 321 fails to provide such explanations or provides
false explantions without justifiable grounds therefor,
he/she shall be
punished by imprisonment with prison labor for not more than one year
or by a fine not exceeding 10 million won.
Article 659 (Overseas Offense)
(1) The provisions of Articles 645 and 655 shall also apply to any person
who commits an offense provided for in the corresponding
provisions in
any country other than the Republic of Korea.
(2) The offense provided for in the provisions of Articles 646 and 656
shall be punished according to the precedent under Article
5 of the Criminal
Act.
Article 660 (Fine for Negligence)
(1) In cases where the head of any public institution, financial institution
or organization, etc. who receives any inquiry pursuant
to the provisions
of Article 29 (1) refuses to submit materials without justifiable grounds
therefor or submits false materials,
he/she shall be punished by a fine
for negligence not exceeding 5 million.
(2) In cases where a person falling under any of the following subparagraphs
performs the act of violating any order given by the
court pursuant to
the provisions of Article 258 (1) or (2), he/she shall be punished by a
fine for negligence not exceeding 5 million
won:
1. A debtor, director or manager of any newly incorporated company; and
2. A rehabilitation creditor, rehabilitation secured creditor, shareholder,
equity right holder and person who bears any obligations
or furnishes
10
(Supp. 39)779-150
any security for rehabilitation.
(3) A person who performs an act of collection on an individual debtor
who has the immunity provided for in the provisions of Article
251, 556
or 625 based on immune claims by means of compulsory execution,
provisional seizure or provisional disposition with knowledge
of his/her
immunity shall be punished by a fine for negligence not exceeding 5 million
won.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force beginning on the date on which one year
lapses after its promulgation.
Article 2 (Repeal of Acts)
The Company Reorganization Act, the Composition Act, the Bankruptcy
Act and the Individual Debtor Rehabilitation Act shall be repealed.
Article 3 (Transitional Measures Following Repeal of Company
Reorganization Act, Composition Act, Bankruptcy Act and Individual
Debtor Rehabilitation Act)
A case of reorganization for which an application is filed for commencing
reorganization procedures pursuant to the former Company
Reorganization
Act, a case of composition for which an application is filed for commencing
composition procedures pursuant to the
former Composition Act, a case
of bankruptcy for which a petition for bankruptcy is filed pursuant to the
former Bankruptcy Act
and a case of individual rehabilitation for which
an application is filed for commencing individual rehabilitation procedures
pursuant
to the former Individual Debtor Rehabilitation Act at the time
this Act enters into force shall be respectively governed by the
former
Company Reorganization Act, the former Composition Act, the former
Bankruptcy Act and the former Individual Debtor Rehabilitation
Act.
Article 4 (Transitional Measure Concerning Penal Provisions)
The application of the penal provisions to any act that is performed
prior
to this Act enters into force shall be governed by the former provisions
and when the commission of any individual offense
across the time committed
before and after this Act enters into force, such offense shall be deemed
committed before this Act enters
into force.
Article 5 Omitted.
Article 6 (Relationship with Other Acts and Subordinate Statutes) Where
DEBTOR REHABILITATION AND BANKRUPTCY ACT
(Supp. 39) 780
other Acts and subordinate statutes cite the previous Company
Reorganization Act, Composition Act, Bankruptcy Act, and Individual
Debtor Rehabilitation Act or their provisions at the time this Act enters
into force and when the provisions falling under the
cited provisions exist
in this Act, this Act or the relevant provisions of this Act shall be deemed
to have been cited in lieu
of the previous provisions.
ADDENDUM
This Act shall enter into force on April 1, 2006.
ADDENDA
(1) (Enforcement Date) This Act shall enter into force on the date of its
promulgation.
(2) Omitted.
ADDENDA
(1) (Enforcement Date) This Act shall enter into force on the date of its
promulgation.
(2) Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007. (Proviso Omitted.)
Articles 2 through 6 Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force one year and six months after the date
of its promulgation. (Proviso Omitted.)
Articles 2 through 44 Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 Omitted.
10
781 (Supp. 39)
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2008.
Articles 2 through 12 Omitted.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
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