In 2009, a certain savings bank (“S Savings Bank”) issued subordinated bonds (the “Subordinated Bonds”).  Subsequently, the Financial Services Commission designated it as an insolvent financial institution and issued a management reform order, which included the suspension of its business.  Eventually, bankruptcy proceedings were commenced against S Savings Bank in around 2011, and the representative director of S Savings Bank was indicted for financial statement fraud and eventually found guilty.

Since the inauguration of electronic litigation or e-litigation (hereinafter “e-litigation”) services for patent cases in April 2010, the  Korean Supreme Court has gradually expanded the scope of availability of e-litigation services to civil, family law and  administrative cases, and provisional attachment and injunction cases. With the completion of the e-litigation system for  rehabilitation and bankruptcy cases, those proceedings and their ancillary proceedings can be administered electronically from  April 28, 2014, as described below.

The Debtor Rehabilitation and Bankruptcy Act (“DRBA”) amended on October 15, 2014 for the purpose of prohibiting business owners responsible for the bankruptcy of a company from reacquiring such company under reorganization through individual(s) who have aligned economic interests after the company receives a large amount of debt relief though rehabilitation proceedings, will be enacted on January 16, 2015.

1. Implications of Supreme Court 2012Do1283 (rendered June 14, 2012)

Regarding the acquisition of a company under reorganization according to the Debtor Rehabilitation and Bankruptcy Act, the Supreme Court ruled on June 14, 2012 that the general principles of a leverage buy-out ("LBO") should apply.

On October 11, 2012, the Seoul Central District Court (“Court”) commenced reorganization proceedings against Woongjin Holdings, a holding company of Woongjin Group, under the Debtor Rehabilitation and Bankruptcy Act (“Bankruptcy Act”).  As a result, various issues under the Bankruptcy Act related to the reorganization proceedings of Woongjin Holdings surfaced.

On October 11, 2012, the Seoul Central District Court ("Court") commenced reorganization proceedings against Kukdong Engineering & Construction Co., Ltd. ("Kukdong") under the Debtor Rehabilitation and Bankruptcy Act ("Bankruptcy Act").

Under the current Debtor Rehabilitation and Bankruptcy Act (“Debtor Rehabilitation Act”), even if a debtor’s debt is reduced or exempted when a rehabilitation plan is approved, this does not affect the debt of a guarantor who jointly bears certain obligations with such debtor (“Joint Guarantor”) (Debtor Rehabilitation Act, §250(2)).

1. Commencement of Rehabilitation Proceedings by Hanjin Shipping Co., Ltd. (“Hanjin Shipping”) On August 31, 2016 Hanjin Shipping filed a rehabilitation petition with the Seoul Central District Court. The Case number is Seoul Central District Court 2016 HoeHap 100211. On August 31, 2016, the Bankruptcy Division of the Seoul Central District Court issued a comprehensive prohibition order, as a provisional measure, to all creditors.