Does a Korean court have the power to issue a preliminary attachment on Korean assets stemming from a foreign court claim?

A situation often arises when a plaintiff is suing a Korean debtor in a foreign court and the non-Korean plaintiff wishes to attach the Korean-based assets of the Korean defendant in Korea.  Typically, the plaintiff found no assets of the defendant abroad and fears the disposal of the assets in Korea.  Thus, typically, the plaintiff wishes to file to a Korean court a request for a provisional attachment of the assets of the prospective defendant.  While, provisional attachments of assets of Korean defendants in lawsuits pending in Korea courts is common – this situation is not common and few courts, or Korean law firms, have handled these type matters. Thus, the question is, in short, does a Korean court have the power to issue provisional/preliminary attachment of Korean-based assets based on a claim stemming from a pending or future foreign lawsuit against the owner of these Korean-based assets?   Yes.  Korean courts may

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English-speaking Korean lawyers and International Lawyers at International Law Firm in Korea discussing issues of Korean Law

IPG Legal is a leading client-focused international law firm with offices in Korea that is, often, selected over the ubiquitous Korean Law Firms when success is essential and success depends on nuanced street-smart advice, proactive  and unconflicted representation. Our attorneys are, intentionally. different from the crowd.  From our retired judge partners to our junior associates, we are all trained with an intense focus on client success, lawyer proactivity, and to understand the nexus between your commercial and legal needs. Our attorneys shall never push to you useless memos, non-nuanced legal advice or get you into litigation without an honest assessment of the merits and shortcomings of the matter. We are  – intentionally different from the crowd.  Globally Experienced – Locally Connected.  We are IPG.  Korean Legal Practices Korean Antitrust, Competition & FTC Arbitration, Int’l & Domestic Korean Civil Litigation Korean Criminal Defense Korean Corporate Law & Compliance Korean Employment, Labor &

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Korean Bankruptcy Court in Seoul, Korea Established

Korea, in March 2017, established the Seoul Bankruptcy Court.  The Seoul Bankruptcy Court replaces the Seoul Central District Court’s Bankruptcy Division.  The establishment of the Seoul Bankruptcy Court is welcome news for most Seoul-based practitioners. Seoul Bankruptcy Court The Seoul Bankruptcy Court is the first separate bankruptcy court in Korea.  The Seoul Bankruptcy Court was established because of a drastic increase in bankruptcy/insolvency filings over the last few years and a perceived need to have more efficient handling of bankruptcy cases. The major law governing bankruptcies, in Korea, is the Debtor Rehabilitation & Bankruptcy Act of Korea.  This Bankruptcy Act, in short, provides that any company, in Korea, with debt of KRW 50 billion or more that has 300 or more creditors may file for bankruptcy at the Seoul Bankruptcy Court, notwithstanding the location of the company. We shall update the reader on more news concerning this Korean bankruptcy court as

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Restructuring of Korean SMEs a Potential Lucrative Business in Korea

Bloomberg has an interesting article on “Zombie” companies in Korea.  Many of these companies have decent cash flow, but because of Korean corporate realities many have been less than capable of controlling costs. The Bloomberg article, in part,  notes: “One of the biggest concerns is so-called “marginal” or “zombie” companies, usually defined in Korea as businesses that haven’t been able to make payments on interest from operating profit for three years. A prolonged period of low interest rates has led to an increase in marginal companies and there is an “urgent” need for restructuring, Bank of Korea Governor Lee Ju Yeol said this month. Financial Services Commission Chairman Yim Jong Yong has warned that unless the problems at these companies are addressed, they will become a burden to the economy. The number of marginal companies jumped to 3,295 last year, from 2,698 in 2009, according to the central bank. They

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Korea New Exchange (KONEX) Basics

The Korean Exchange (KRX) established, on July 1, 2013, an SME only-listed securities market with the, facial, purpose of providing a new avenue for SMEs in obtaining assets for investments.  A KONEX-listed firm with capabilities to list, at a later date, on the KOSDAQ or KOSPI may, also, benefit from a stream-lined procedure to list on the KOSDAQ or KOSPI.   Korea’s capital markets have been, strongly, criticized for not providing adequate funding sources for small companies.  Most funding for companies either comes from the banks or via modest government grants and loans.  With the banks becoming more conservative in funding ventures, because of the recent Korean banking crisis, the KRX launched the KRX, partially, to assist in resolving this issue.   The listing of a company on the Korea New Exchange (KONEX) is much easier than on the KOSPI or KOSDAQ. However, investing on the exchange may be difficult for

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Merger/Acquisition Opportunities in Korea: Lotte Korea Buys KT Car Rental from KT Corp.

In a sign of changing times in Korea, KT Corp., a company best known for its telecom business, has sold its car rental business to the unlisted Hotel Lotte Co. Ltd., a company controlled by Lotte Group. The publicly reported acquisition price is over US$900 million. Lotte is a leading Korean-Japanese hotel company with its hands into about everything imaginable including construction, retail, textile, food products, beverages, oil & gas and entertainment.  However, it competitive advantage is in retail shopping and the hotel business.  KT is the former national telecom and, now, a leading player in both fixed and mobile telecommunication.  Yes, I also question why a telephone company would own a car rental company.  The answer lies, often, in the excessive need for conglomerates to grow their ranks of buildings, employees and news headlines.  Often the reason for business lines being formed outside of the competitive advantage of the

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Corporate Bankruptcy/Restructuring in Korea: The Line Begins Here (Korea’s Chapter 7 & 11 Bankruptcy)

Corporate bankruptcy/insolvency procedure in Korea is similar, in many respects, to the U.S. Chapter 7 & Chapter 11 bankruptcy procedures with some significant differences. Korean corporate insolvency structure is legislated via the Korean Debtor Rehabilitation and Bankruptcy Law (KDBRB).  The KDBRB replaced a convoluted and often conflicting myriad of laws in the form of the Corporate Rehabilitation, Composition and Bankruptcy Act.  On April 1, 2006 this new law became effective. Bankruptcy Basics in Korea (Chapter 3 of Korean Debtor Rehabilitation and Bankruptcy Law)Bankruptcy, in Korea, is a court-managed liquidation procedure.  The procedure is governed by Chapter 3 of the KDBRB.  The basic salient aspects of bankruptcy in Korea are: The bankruptcy procedure commences after a filing by either a debtor, creditor or group of creditors and determination by the court that a company is “bankrupt.”   The holding of the court that a company is “bankrupt” suspends any execution actions based

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014Korean Legal News Reported by the Media on the Week of July 28, 2014 IMC may blacklist Korean builders over collusion Prosecutors continue probe into ferry owner’s driver Foreign workers upset by severance pay formula Restructuring urgent for big Korean companies Relocation of USFK Headquarters to Go Ahead Most Recent Posts from the Korean Law Blog This slot is reserved for the new article Korean Franchise Law Basics for Franchisors “Samsung’s First Family Struggles to Keep Grip on Company” Report by Bloomberg Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies ___ 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

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 21, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 21, 2014Korean Legal News Reported by the Media on the Week of July 21, 2014 South Korea Plans $40 Billion Stimulus to Tackle Weakening Growth Seoul to push tax on corporate cash reserves U.S. Chamber of Commerce chief urges FTA implemantation Workers in Their 60s Outnumber 20-Somethings Mortgage deregulation raises concerns Most Recent Posts from the Korean Law Blog Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies Korean Fugitives on the Run: Getting more Difficult with Change of Law Distribution Agreements in Korea: Crawl before you Walk Is Samsung Doomed? No Innovation Price Trap ___ 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

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Witholdings Taxes on Transactions between Korean & Hong Kong Companies

The Republic of Korea and Hong Kong signed a double taxation treaty on July of 2014.  The treaty will come into force, if ratified, by the respective assemblies.  Under Korea Tax Law, the, normal, withholding tax is 22%.  The main purpose of the treaty is to reduce this rate and, also, allow the governments to share information on potential tax evaders.  This double taxation treaty, among other things, includes provisions for: A 15% Withholding Tax on dividends and a 10% Withholding Tax if the company receiving the funds owns a minimum 25% interest in the company remitting the dividends;  A 10% Withholding Tax on most interest and royalties;  A cooperation mechanism to share tax information in order to apprehend Korean tax evaders; and  Taxation on capital gains, only, in the country where the income was earned.  ___Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea

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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

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Guide to Winding-Up/Permanetly Closing a Korea-based Company

Any business in Korea that are registered at a corporation must wind-up their company to legally close their business.  Many companies, however, choose to forgo this step thinking that no repercussions will be felt.  This belief is far from the reality.  I know a pending case that has lead to prosecutions, a lawsuit of a related company and a tax audit of an individual shareholder. The following is the procedure to close a company in Korea.  Please note that this is not intended as an exhaustive explanation of the procedure. Step 1First, execute a special resolution to dissolve the Korea-based company at a general shareholder meeting.  The special resolution, in most cases, must be adopted with an affirmative vote of 2/3 of the shareholders present with 1/3 of the shareholders in attendance. Step 2Then, unless the articles of incorporation of the Korean company notes a different procedure, the directors may

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