Jan 31, 2014

Ssangyong's Korean Bankruptcy/Rehabilitation Proceeding & Many other Korean-based Construction Companies

Ssangyong Engineering & Construction filed for rehabilitation proceeding based on the Korean Debtor Rehabilitation and Bankruptcy Act.  The Act requires, among other things for:

1.  The Receiver to submit to the court a Creditor List;
2.  For the court to determine that the company's "going concern" value is greater than the "liquidation" value of the company;
3.  The Receiver to submit to the court a Rehabilitation Plan;
4.  The Rehabilitation Plan to be approved by 2/3 of the unsecured and 3/4 of the secured claims.

This procedure is similar to Chapter 11 in the United States.  

We have a few cases that are proving to be very difficult to obtain approval of both secured and unsecured creditors.  Often, the Rehab Plan is, only, approved after litigation, prosecutions and/or one creditor gobbling up a good deal of the other debts.   This case will be interesting. 

For the purpose of full disclosure we are working on a few cases related to the rehabilitation of construction and other companies.  My friend over at the Kimchi Law Blog motivated this post.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team.  He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He assists clients in their contentious, non-contentious and business developments needs in Korea and China.