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A Critical Study on Legislation of Administrator System in the Insolvency Law

  • DONG-A LAW REVIEW
  • 2011, (53), pp.619-658
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law

JEOM IN LEE 1

1동아대학교

Accredited

ABSTRACT

In Korea since the last financial crisis of IMF we've seen highly increasing number of insolvent enterprises. But old Insolvency Law system, in particular, consisting of the three different types of related acts, i.e., the Corporate Reorganization act, the Composition Act and the Bankruptcy Act didn't handle these bankruptcies well. This situation had very negative impact on our nation and corporate credibility toward outside countries. The Insolvency Law system had been substantially amended post 1997 economic crisis as momentum in 1998, 1999, 2000 and 2001. Finally, Ministry of Justice enacted the Consolidated Insolvency Law in 2005 for the efficient corporate restructuring and for the improvement of the old Insolvency Law system problems. Consolidated Insolvency Law is ruling three type of procedure of reorganization procedure, bankruptcy proceedings, and individual debtor rehabilitation procedure within single law but they are operated through different application procedures that are not operated through one procedure that is going along reorganization procedure, bankruptcy proceedings, and individual debtor rehabilitation procedure. So it may be said that it did not accomplish the unification of a genuine meaning by stopping listing laws about insolvency that is not the objective consolidating substantively of establishing Consolidated Insolvency Law. Consolidated Insolvency Law is ruling like that ; in principle, assigning debtor or the delegate as administrator, and exceptionally, assigning a third party when reaches in financial failure by insolvent operation with own or delegate, property usefulnessㆍconcealment or poor management with a serious responsibility, request of creditor conference with considerable reason, and when need in debtor rehabilitation. But principle and exception will have to be converted as seeing in points like those ; existing management is never right person for the corporate rehabilitation, difficulties of participation in management and administration by creditors, and trouble by debtor's moral laxity. As well as, it may be raised a necessary to put a strong administrator like as a government agency by the reason like those ; position of court, it can subtract business burden which watch and supervises an obligor and make economization of time and expense through derivation of mutual agreements, regarding confines of administrator's responsibility about damage at occurrence of damage by administrator's intentionalityㆍfault, it can hold them responsible infinitely by strong administrator like as a government agency, insolvency of enterprises connects with insolvency of banks, and government inject public funds by that situation, so it can reduce public funds by stopping insolvency of banks in advance, i.e. Also, to protect creditor, it needs power strengthening and certain operation of creditor conference which represents creditor's profit. When seeing for long-term for correct watch and supervisor of rehabilitation procedure, it needs establishment of special bankruptcy courts and specialization of revitalization member.

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