Korean Company Restructuring Legislation System

This paper studies the legislation process of Korea's in-court corporate reorganization system, and compares Korea's in-court corporate reorganization system with that of China in terms of structure, contents, and related theories. It starts by explaining the characteristics of an in-court corporate reorganization system, followed by an analysis of the developments of business reorganization system of both countries, and their legal issues. Ultimately, the paper addresses measures to improve the in-court corporate reorganization system of both countries.A company is placed under court receivership when it is on the brink of bankruptcy and yet has the potential for rehabilitation. In-court corporate reorganization, in this regard, is an active way of disposing debt and a protective measure against bankruptcy. Such a system enables an optimal allocation of resources thus enhancing the healthiness of the corporate sector.Amid the rise of China's economy and its reform, academics have been increasingly turning their attention on the in-court corporate reorganization system as a part of preventing companies from going bankrupt. Indeed, China's Draft Bankruptcy Law covers such an in-court corporate reorganization system which previously had been omitted.Legislation of in-court corporate reorganization system of Korea has a history of 40 years The country experienced a massive disposal of companies following the financial crisis in 1997. Since the 1990s, there has been many adjustments to the legislation to an extent that the country is now equipped with relatively detailed rules to the system. Meanwhile, China's in-court corporate reorganization system is in its infancy with the current legislation draft including only the general principles. Korea's legislation experiences offer a good reference to China in this regard. Meanwhile, China, during the recent years of legislation processes, has achieved a broader way of thinking in terms of theories and laws, which could significantly contribute to perfecting Korea's in-court corporate reorganization legislation. However, a legal system exists to solve problems in real world: it should not exist for the sake of itself. Given that foreign industrialized countries have long experiences of handling issues of in-court business reorganization through their long market economy history, it is crucial that both Korea and China refer to...