Barun Successfully Concludes Webinar on Legal Response Strategies in an Era of Surging Rehabilitation and Bankruptcy Cases [Law Firm News]

[Financial News] Barun Law held a webinar to discuss practical response strategies for debtors and creditors amid the rise in corporate rehabilitation and bankruptcy cases.
Barun Law's rehabilitation and bankruptcy team said on the 17th that it had held a webinar the previous day under the theme "Legal Response Strategies in an Era of Surging Rehabilitation and Bankruptcy Cases—With a Focus on Analysis of the Latest Systems and Practical Cases."
Corporate bankruptcy filings exceeded 2,000 for the first time last year, while corporate rehabilitation filings reached a record high of 1,321. Barun Law emphasized that companies should not wait until they face a financial crisis to seek rehabilitation, but should instead negotiate restructuring with creditors at an early stage. Creditors, too, should promptly complete procedures such as filing claims and exercising setoff.
Lee Eung-gyo, an attorney at Barun Law, introduced the Pre-ARS and hybrid restructuring systems that the Seoul Bankruptcy Court has implemented since last year. Pre-ARS allows debtors to negotiate debt adjustments with creditors through civil mediation before filing for formal rehabilitation. It enables the parties to seek an agreement while reducing the decline in credit standing that can result from a rehabilitation filing.
Hybrid restructuring combines a workout with rehabilitation proceedings. A comprehensive stay order issued in rehabilitation proceedings can block compulsory enforcement while allowing the company to negotiate a corporate improvement plan with its financial creditors.
Park Gyu-hee, an attorney at Barun Law, advised creditors to first check the claim-filing deadline, whether a claim qualifies as a priority claim, and whether setoff is possible during the collection process. She explained that a creditor may lose its rights if a rehabilitation claim is not filed within the prescribed period, and that a notice of intent to exercise setoff must also reach the administrator within the designated time limit.
Jo Dong-hyun, head of Barun Law's rehabilitation and bankruptcy team, introduced Supreme Court precedents concerning avoidance rights and rights to recover property. An avoidance right allows an administrator to reverse a transaction that a debtor made before the rehabilitation proceedings began to favor a particular creditor. A right to recover property allows the owner to reclaim assets that appear to be part of the rehabilitation estate but actually belong to a third party.
A representative of Barun Law's rehabilitation and bankruptcy team emphasized, "Rather than postponing a rehabilitation filing as a last resort, debtors should consider Pre-ARS or hybrid restructuring at an early stage. Creditors, meanwhile, need to improve their chances of recovery by filing claims by the deadline, confirming priority claims, and promptly exercising setoff."
[email protected] Yoo Sun-jun Reporter