• Journal of Arbitration Studies
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• v.15 no.1
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• pp.113-146
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• 2005

Bankruptcy proceedings serve the purpose of the collective satisfaction of the debtor's creditors through the realisation of the debtor's assets and the distribution of the proceeds therefrom. Upon the adjudication bankruptcy, the debtor's right to administer and dispose of the property belonging to the bankruptcy estate shall be vested in the administrator. If a mutual contract was not or not completely fulfilled by the debtor and the other party at the time of the adjudication of bankruptcy, the administrator has right to choose wether to fulfil or terminate the contractual relation. Legal acts that have been conducted prior to the adjudication of bankruptcy and that are detrimental to the debtor's creditors may be contested by the administrator. However, these effects of bankruptcy will have not great influence on the arbitration agreement between the debtor and another party. An arbitration agreement that has been conducted prior to the adjudication of bankruptcy is binding the administrator as an universal legal successor of debtor. Only the arbitration agreement directly disadvantageous to the debtor's creditors may be contested by the administrator. Furthermore, it is not at the discretion of administrator whether or not to submit the dispute to arbitration because an arbitration agreement does not belong under the category of Art. 50 Korean bankruptcy Act which demands a mutual contract. Arbitral proceeding upon the property of the bankruptcy estate and pending for the debtor as plaintiff or against the debtor as defendant at the date of the adjudication of bankruptcy may be taken up at the given status by the administrator. This leads to a change of the party. If a duly summoned party fails to appear in arbitration court, the arbitrator, if satisfied there is no valid excuse, may continue the proceedings and make the award as if all the parties were present. This may be disadvantagious to the debtor's creditors because the arbitral award have the same effects on the participants as the final and conclusive judgement of the court. Even if there is a change of party on side of debtor to the administrator in bankruptcy, the arbitral proceedings will not be automatically postponed or suspended. The matter of how to proceed is at discretion of administrator, when the parties haven't agree on the arbitral proceedings. He can continue the arbitral proceedings without to grant an adjournment of hearing. However, an arbitration award may be challenged by a party dissatisfied and set aside by the court based upon the misconduct that violates the basic rights of the parties to a fair hearing. The arbitrator must treat the parties equally in the arbitral proceedings and give each party a full opportunity to present his case. The arbitrator, therefore, will carefully exercise his discretion in determining whether to continue the arbitral proceedings or to grant a postponing. In the practice, the arbitral proceedings may be usually postponed to grant due process.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.70
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• pp.21-38
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• 2016

The trend of payment terms of an international trade has been changed from letter of credit to open account. In this regard factoring has come out to support SMEs in terms of financing on a without recourse basis. However, factoring is in Korea is not workable softly due mainly to legal system affecting smooth assignment of receivables. Therefore this study suggest the following solutions : Korean Civil Law shall be modified to protect factor's position as a right creditor to debtor and protect factor's position when perfection among several creditors are incurred. However, formal modification to this end would not be easy in short run and it is suggested that a special law be established in case a commercial receivable assignment both domestic and internationally happens between seller and factor.

• The Korean Journal of Air & Space Law and Policy
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• v.30 no.2
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• pp.83-153
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• 2015

As our economy grows and the number of aircraft increase, the number of civil execution against aircraft cases are likely to increase as well in the future. The purpose of this article is to present the legal theory on the civil execution against aircrafts by drawing on the legal theory on the civil execution against vessels which constitute a relatively large number of cases thus observed. The provisions of the civil execution against immovables or vessel, shall basically apply mutatis mutandis to the civil execution against aircraft or light aircraft. The civil execution against ultra-light flying devices or a foreign aircraft shall be executed in conformity with the civil execution against movables. There are a compulsory auction, an auction to execute a security right to aircraft, and an auction under the right of retention, etc. in the civil execution against an aircraft. A compulsory execution against an aircraft means an execution carried out by a creditor against a debtor's aircraft to obtain satisfaction of claims for the purpose of payment of money. The court of execution of a compulsory execution against an aircraft shall be the district court having jurisdiction over the airport of stoppage or storage of such aircraft at the time of seizure. The forums of execution of a compulsory execution against an aircraft shall be exclusive forums. When a court has rendered an order on commencing an auction, it shall order an execution officer to receive a certificate of the aircraft's registration and other documents as required for its operation, and to submit them to the court. A court may revoke the procedures for a compulsory auction when an execution officer fails to obtain a transfer of the aircraft's registration certificate, etc. and the location of the aircraft is not evident, not later than an elapse of 2 months from the date on which an order on commencing an auction has been rendered. In the case where it is deemed that there exists a business-related need or other based on proper reasoning, the court may permit the aircraft's operation, upon the motion submitted by the debtor. In this case, there shall be a consent from the creditor, the highest bidder, the next highest bidder and successful bidder. A court may, upon a motion submitted by the creditor, make the dispositions required for observing and preserving the aircraft. When a debtor has submitted the documents under subparagraph 2 or 4 of the Article 49 of the Civil Execution Act, and furnished the guarantee equivalent to the claims of the execution creditors and the creditors demanding a distribution and to the costs for execution, before a declaration of bid, the court shall, upon request, revoke other procedures than those for distribution. The provisions of a obligatory auction against vessel or aircraft and an auction to execute a security right to real estate or vessel, shall apply mutatis mutandis to an auction to execute the security right to aircraft. In an auction to execute the security right to aircraft case, an executive title is not necessary. An executory exemplification is not necessary in an application for an auction to execute the security right to aircraft. A court should examine the existence of security right and claim secured. No order on commencing an auction procedure shall be issued with non-existence or invalidity of the security right and absence or extinguishment of the claim secured. Furthermore, these prohibitions are the reason of a decision on non-permit for sale, the court overlooked these prohibitions, and the decision on a permit for sale became final and conclusive, the successful bidder who paid the price and registered of ownership could not acquire ownership of the aircraft sold. A court may render a ruling to put plural aircrafts up for a blanket auction, only when they are in restraint and related matter (Supreme Court Order 2001Ma3688 dated on August 22, 2001). A righter of retention on aircraft may file a request for an auction against the aircraft. The provisions of an auction to execute a security right to aircraft shall apply mutatis mutandis to the formal auction. Airport facility fee and an aircraft are not in restraint and related matter, so an airport management corporation does not hold the right of retention on the aircraft (Supreme Court Decision 2011Da29291 decided on April 10, 2014). In an auction in accordance with the right of retention, all encumbrances (e.g., mortgages) on the sold aircraft shall be extinguished by a sale under the legal conditions for sale. Not only creditors who have claims for preferential payment but also general creditors could demand for distribution. The precedence of the claim of the right of retention on aircraft and that of general creditor's claims are equal.

• KDI Journal of Economic Policy
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• v.13 no.1
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• pp.35-63
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• 1991

Currently, Korea's banking industry holds a sizable amount of non-performing loans which stem from the government-led bailout of many troubled firms in the 1980s. Although this burden was somewhat relieved with the aid of banks' recapitalization in the booming securities market between 1986-88, the insolvent credits still resulted in low profitability in the banking sector and have been detrimental to the progress of financial liberalization and internationalization. This paper surveys the corporate bailout experiences of major advanced countries and Korea in the past and derives a rationale for readjustment measures against non-performing loans, in which rescue plans depend on the nature of the financial system. Considering the features of Korea's financial system and the banking sector's recent performance, it discusses possible means of liquidation in keeping with the rationale. The conflict of interests among parties involved in non-performing loans is widely known as one of the major constraints in writing off the loans. Specifically, in the case of Korea, the government's excessive intervention in allocating credits has preempted the legitimate role of the banking sector, which now only passively manages its past loans, and has implicitly confused private with public risk. This paper argues that to minimize the incidence of insolvent loan readjustment, the government's role should be reduced and that the correspondent banks should be more active in the liquidation process, through the market mechanism, reflecting their access to detailed information on the troubled firms. One solution is that banks, after classifying the insolvent loans by the lateness or possibility of repayment, would swap the relatively sound loans for preferred stock and gradually write off the bad ones by expanding the banks' retained earnings and revaluing the banks' assets. Specifically, the debt-equity swap can benefit both creditors and debtors in the sense that it raises the liquidity and profitability of bank assets and strengthens the debtor's financial structure by easing the debt service burden. Such a creditor-led or market-led solution improves the financial strength and autonomy of the banking sector, thereby fostering more efficient resource allocation and risk sharing.