7/23/2014

Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor

The number of bankruptcy and rehabilitation filings in Korea are on the rise.  The Korean economy may be entering into a recession.  The last creditor to be paid is, typically, the foreign company.

We receive emails, on nearly a daily basis, from companies and individuals attempting to collect a commercial debt in Korea. Many of these creditors are not aware that the debtor has filed for bankruptcy or is experiencing financial difficulties.  

Please follow this basic advice and take a read of other others we wrote on this topic.

Before Engaging in a Relationship with a Korean Company:
1. Before engaging in any work or giving a Korea company money - please do a little due diligence.  Many SMEs and even conglomerates (mainly construction companies) are experiencing serious financial difficulties. Do a little due diligence before wasting your time and money.  If you find that the company is experiencing financial issues, the agreement should be tailored to reflect these realities.

2.  Before continuing work with a company in Korea - please do a little due diligence.  Many companies with no problems paying you in the past - might be experiencing problems now.

After Realizing you Got Yourself in Pickle:
1.  Immediately send a formal demand letter from a Korean law firm.  The demand letter may be answered with a bankruptcy/rehabilitation notification (mandated by law if company is in proceedings); and
2.  Quickly ascertain if the company has any assets.  Law firms can, typically, assist with discovering assets.

In all debt collection matters in Korea - it is necessary to act quick.  Assets disappear quickly and the courts are very efficient in closing cases quickly.  Act fast or you may be left with only an invoice.

___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. 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 is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.