Korea Credit Guarantee Fund Defers Insolvency Processing and Legal Procedures for Companies Affected by Torrential Rain

[Financial News] The Korea Credit Guarantee Fund (KODIT) will support the business normalization of companies affected by torrential rain. Under the special measure, insolvency processing and legal procedures will be deferred for a certain period.
KODIT announced on the 2nd that it would implement special measures for managing insolvency related to torrential-rain disasters. The measure was designed to give companies facing temporary business difficulties due to the recent torrential rain time to restore normal operations.
The areas covered by the special measure include Iljik-myeon, Namseon-myeon and Imha-myeon in Andong-si, Danchon-myeon in Uiseong County, all of Geoje, and Sanyang-eup and Bongpyeong-dong in Tongyeong-si. These areas were designated as special disaster zones on the 7th and 21st of last month.
Support will be provided for six months from the date each area was declared a disaster. Eligible companies include those whose disaster damage has been verified by the central or local government, those approved for disaster recovery funding, and those whose direct damage KODIT has confirmed through on-site inspections or other means.
Normally, when a company using KODIT credit guarantees becomes insolvent due to reasons such as delinquency, KODIT processes the insolvency and takes measures to preserve its claims. Under this special measure, however, insolvency processing and claim-preservation measures will be deferred for a certain period even if an eligible company experiences a cause of insolvency.
However, companies will be excluded from support if they are effectively unable to restore normal operations. This includes companies that have received notification from a creditor that a cause of insolvency has occurred or a claim for performance of guarantee obligations, as well as companies that have closed or applied to begin rehabilitation or bankruptcy proceedings.
A KODIT official said, "We hope these special measures will give companies struggling because of the torrential rain an opportunity to overcome the crisis." The official added, "We will continue providing support as a policy financial institution to help disaster-affected companies quickly restore normal operations."

[email protected] Park Moon-soo Reporter