Act No. 7428, Mar. 31, 2005 Amended by Act No. 7895, Mar. 24, 2006 Act No. 7894, Mar. 24, 2006 Act No. 7892, Mar. 24, 2006 Act No. 8138, Dec. 30, 2006 Act No. 8635, Aug. 3, 2007 Act No. 8814, Dec. 27, 2007 Act No. 8829, Dec. 31, 2007 Act No. 8863, Feb. 29, 2008 Act No. 9346, Jan. 30, 2009 Act No. 9804, Oct. 21, 2009 Act No. 10219, Mar. 31, 2010 Act
No. 10281, May 14, 2010 Act No. 10303, May 17, 2010 Act No. 10366, jun. 10, 2010 Act No. 10682, May 19, 2011 Act No. 11828, May 28, 2013 Act No. 12153, Jan. 1, 2014 Act No. 12595, May 20, 2014 Act No. 12591, May 20, 2014 Act No. 12783, Oct. 15, 2014 Act No. 12892, Dec. 30, 2014 Act No. 14177, May 29, 2016 Act No. 14476, Dec. 27, 2016 Act No. 14472, Dec. 27, 2016 Act No. 15158, Dec. 12, 2017 PART I GENERAL PROVISIONS The purpose of this Act is to efficiently rehabilitate debtors facing distress due to financial difficulties, and their businesses through coordination of legal relations among interested persons, including creditors, shareholders and equity holders, etc. and to fairly realize and divide properties of debtors who are deemed difficult to
rehabilitate. Article 2 (Status of Foreigners and Foreign Corporations) In the application of this Act, foreigners and foreign corporations shall have the same status as that of peoples of the Republic of Korea or corporations of the Republic of Korea.
Article 4 (Transfer Aimed at Avoiding Damage or Delay) When it is deemed necessary to avoid any substantial damage or delay, the court may, ex officio, transfer a rehabilitation case, bankruptcy case, or individual rehabilitation case to any of the following rehabilitation court: <Amended by Act No. 12595, May 20, 2014; Act No. 14472, Dec. 27, 2016>
Article 5 (Cooperation Among Courts) In the procedures provided for in this Act, courts may seek legal cooperation among themselves. Article 6 (Declaration of Bankruptcy Following Discontinuation of Rehabilitation Procedures, etc.)
Article 7 (Priority Claims, etc. Where Bankruptcy Procedures Continue)
Article 9 (Public Notice)
Article 10 (Public Notice in Lieu of Service)
Article 11 (Cases Where Both Public Notice and Service are Required)
Article 12 (Optional Argument and Ex Officio Inspection)
Article 13 (Immediate Appeal)
Article 14 (Methods of Raising Objection) Any objection to a judgment made pursuant to the provisions of this Act shall be raised in writing. Article 15 (Establishment of Custodial Committee) The Custodial Committee shall be set up in such rehabilitation courts as prescribed in the rules of the Supreme Court to properly and speedily perform the procedures provided for in this Act. <Amended by Act No. 14472, Dec. 27, 2016> Article 16 (Composition, etc. of Custodial Committee)
Article 17 (Work and Authority of Custodial Committee)
Article 18 (Delegation of Clerical Services Involving Permission to Members of Custodial Committee) From among acts provided for in each subparagraph of Article 61 (1), the court may delegate the clerical services involving permission for ordinary business and the clerical services involving permission for bankruptcy procedures to members of the Custodial Committee. In this case, necessary matters concerning the scope of the commission of the clerical services and the procedures for commissioning the clerical services shall be prescribed by the rules of the Supreme Court. Article 19 (Raising of Objection to Acts by Members of Custodial Committee)
Article 19-2 (Publication of Reports and Reporting to Standing Committees of National Assembly)
[This Article Newly Inserted by Act No. 14472, Dec. 27, 2016] Article 20 (Composition of Creditors' Consultative Council)
Article 21 (Function, etc. of Creditors' Consultative Council)
Article 22 (Provision of Materials to Creditors' Consultative Council)
Article 22-2 (Right of Lenders of New Funds to Propose Opinions and Provision of Materials Thereon)
[This Article Newly Inserted by Act No. 14177, May 29, 2016] Article 23 (Commission of Registers of Corporations)
Article 24 (Commission of Register, etc. of Registered Rights)
Article 25 (Duties of Registry Offices and Exemption of Registration Tax)
Article 26 (Register of Avoidance)
Article 27 (Application Mutatis Mutandis of Registered Rights) The provisions of Articles 24 through 26 shall apply mutatis mutandisonly to registered right over the property of a debtor, a bankruptcy estate or an individual organization undergoing rehabilitation. Article 28 (Perusal, etc. of Case Records)
Article 29 (Inquiry about Property, etc. of Debtor)
Article 30 (Remunerations of Custodians, etc.)
Article 31 (Compensation, etc. for Proxy Commissioners, etc.)
Article 32 (Interruption of Prescription) The interruption of prescription shall be effective in any of the following cases:
Article 32-2 (Prohibition of Discriminatory Treatment) Every person shall not without good cause receive any unfavorable treatment, such as restriction on employment, or dismissal, on the grounds of a pending rehabilitation procedure, bankruptcy procedure, or individual rehabilitation procedure under this Act. [This Article Newly Inserted by Act No. 7892, Mar. 24, 2006] Article 33 (Mutatis Mutandis Application of Civil Procedure Act and Civil Execution Act) In the absence of provisions in this Act with respect to rehabilitation procedures, bankruptcy procedures, individual rehabilitation procedures and international bankruptcy procedures, the Civil Procedure Act and the Civil Execution Act shall apply mutatis mutandisthereto. PART II REHABILITATION PROCEDURES CHAPTER I COMMENCEMENT OF REHABILITATION PROCEDURES SECTION 1 Application for Commencement of Rehabilitation Procedures Article 34 (Application Filed for Commencing Rehabilitation Procedures)
Article 35 (Obligation to File Petition for Bankruptcy and Application for Commencement of Rehabilitation Procedures)
Article 36 (Written Application) An application for commencement of rehabilitation procedures shall be filed in writing stating the following:
Article 37 (Keeping of Documents) Documents concerning the application for commencement of rehabilitation procedures shall be kept in the court for perusal by interested persons. Article 38 (Explanations)
Article 39 (Prepayment, etc. of Expenses)
Article 39-2 (Court Supervision, etc. over Progress of Rehabilitation Procedures)
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 40 (Notifications, etc. to Supervisory Administrative Agency)
Article 42 (Grounds for Dismissing Application Filed for Commencing Rehabilitation Procedures) In any of the following cases, the court shall dismiss any application for commencement of rehabilitation procedures. In this case, the court shall hear the opinion of the Custodial Committee:
Article 43 (Provisional Seizure, Preliminary Injunction and Other Preservative Measures)
Article 44 (Stay Order, etc. of Other Procedures)
Article 45 (General Order Given to Prohibit Compulsory Execution, etc. Based on Rehabilitation Claims and Rehabilitation Security Rights)
Article 46 (Public Notice and Service, etc. of General Prohibition Order)
Article 47 (Exclusion of Application of General Prohibition Order)
Article 48 (Restrictions on Withdrawal of Application for Commencement of Rehabilitation Procedures, etc.)
SECTION 2 Decision on Commencement of Rehabilitation Procedures Article 49 (Decision on Commencement of Rehabilitation Procedures)
Article 50 (Matters that Must Be Prescribed When Decision Made on Commencement of Rehabilitation Procedures)
Article 51 (Public Notification of Commencement of Rehabilitation Procedures and Service of Documents)
Article 52 (Notification of Commencement of Rehabilitation Procedures) A court shall, when deciding the commencement of rehabilitation procedures for a debtor who is a stock company, notify an administrative agency supervising the debtor's business affairs, the Minister of Justice, the Minister of Justice, and the Financial Services Commission of the matters referred to in the subparagraphs of Article 51 (1). The same shall apply where any change is made on the matters referred to in Article 51 (1) 2 and 3. <Amended by Act No. 8863, Feb. 29, 2008> Article 53 (Immediate Appeal Filed against Determination on Application for Commencement of Rehabilitation Procedures)
Article 54 (Cancellation of Decision on Commencement of Rehabilitation Procedures)
Article 55 (Capital Reduction, etc. after Commencement of Rehabilitation Procedures)
Article 56 (Management of Business and Properties after Commencement of Rehabilitation Procedures)
Article 57 (Furnishing of Information, etc.) A custodian shall furnish information and materials pertaining to the debtor's business and enterprise to anyone who intends to perform any of the following acts under the conditions as prescribed by the Supreme Court: Provided, That when any justifiable grounds exist, the custodian may refuse to furnish such information and materials:
Article 58 (Suspension, etc. of Other Procedures)
Article 59 (Suspension, etc. of Litigation Procedures)
Article 61 (Act Needed to Obtain Permission from Court)
Article 62 (Transfer of Business, etc.)
Article 63 (Service, etc. of Decision on Permission to Transfer Business, etc. of Stock Company)
Article 64 (Act of Debtor after Commencement of Rehabilitation Procedures)
Article 65 (Acquisition of Right after Commencement of Rehabilitation Procedures)
Article 66 (Register and Registration after Commencement of Rehabilitation Procedures)
Article 67 (Repayment Made to Debtor after Commencement of Rehabilitation Procedures)
Article 68 (Presumption of Good Faith or Bad Faith) In applying the provisions of Articles 66 and 67, it shall be presumed that the fact of the commencement of rehabilitation procedures is not known before the rehabilitation procedures are publicly notified and it shall be presumed that the fact thereof is known after the rehabilitation procedures are publicly notified. Article 69 (Co-Ownership Relationship)
Article 70 (Repossession Rights) The commencement of rehabilitation procedures shall not affect the right to repossess any properties that do not belong to the debtor from such debtor. Article 71 (Repossession of Sold Goods in Transit)
Article 72 (Repossession Rights of Commission Agents) The provisions of Article 71 (1) shall apply mutatis mutandiswhere any commission agent, who is entrusted with the purchase of goods, ships out such goods to the entrusting person. Article 73 (Alternative Repossession Rights)
CHAPTER II INSTITUTIONS IN CHARGE OF REHABILITATION PROCEDURES Article 74 (Selection and Appointment of Custodians)
Article 75 (Performance of Duties by Multiple Custodians)
Article 76 (Acting Custodians)
Custodians may, when it is deemed necessary, appoint legal and corporate governance experts as their advisers after obtaining permission therefor from the court. Article 78 (Standing to Sue) Every custodian shall be a party to the lawsuit involving the debtor's properties. Article 79 (Inspection, etc. by Custodians)
Article 80 (Management of Mails and Cessation of their Management)
Article 81 (Supervision of Custodians)
Article 82 (Obligations, etc. of Custodians)
Article 83 (Resignation and Dismissal of Custodians)
Article 84 (Duty to Report Upon Completion of Duties)
SECTION 2 Protective Custodians Article 85 (Authority of Protective Custodians) When the preservation and the management orders provided for in the provisions of Article 43 (3) are given, the debtor's authority to run his/her business, manage his/her properties and take any disposition shall be exclusively vested in the protective custodian until the time it is decided to commence the rehabilitation procedures. Article 86 (Mutatis Mutandis Application of Provisions Governing Custodians)
Article 88 (Mutatis Mutandis Application of Provisions Governing Inspectors) The provisions of Articles 79, and 81 through 83 (1) shall apply mutatis mutandisto the inspectors. CHAPTER III INSPECTION AND SECURING OF DEBTOR'S PROPERTIES SECTION 1 Inspection on Current Status of Debtor's Properties Article 89 (Management of Debtor's Business and Property) Every custodian shall attend to the tasks of managing the debtor's business and properties immediately after he/she assumes his/her post.
Article 90 (Appraisal of Property Value) Every custodian shall appraise without delay the value of all of the properties that belong to the debtor at the time that rehabilitation procedures commence after he/she takes up his/her post. In this case, the relevant custodian shall allow the debtor to participate in the appraisal thereof, save when his/her participation is likely to delay the appraisal of such value. Article 91 (Preparation of Properties List and Balance Sheet) Every custodian shall prepare a list of the debtor's properties and balance sheet at the time that the rehabilitation procedures commence and then submit them to the court immediately after assuming their posts. Article 92 (Inspection and Report by Custodians)
<Newly Inserted by Act No. 12892, Dec. 30, 2014> Article 93 (Other Reports, etc.) Every custodian shall report the current state of the management of the debtor's business and properties in addition to the matters provided for in the provisions of Articles 90 through 92 and other matters that are ordered by the court under the conditions as prescribed by the court and prepare the debtor's properties list and balance sheet as of the date on which the rehabilitation plan is authorized and as of the time that is set by the court, and submit a certified copy of the debtor's properties list and balance sheet to the court. Article 94 (Appraisal of Fixed Properties Used for Business)
Article 95 (Keeping of Documents) The documents that are submitted to the court pursuant to the provisions of Articles 87, and 91 through 93 shall be retained by the court for the purpose of offering them for inspection by interested persons. Article 96 (Suspension of Business) Where the continuation of the debtor's business is recognized as being inappropriate on the grounds of special circumstances, any custodian may suspend the debtor's business after obtaining permission therefor from the court. Article 97 (Means, etc. to Keep Properties) The court may prescribe means to keep money and other properties and matters necessary for receipt and payment of money. Article 98 (Assembly of Related Persons for Custodian’s Report)
[This Article Wholly Amended by Act No. 12892, Dec. 30, 2014] Article 98-2 (Explanatory Meeting for Interested Persons)
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 99 (Court's Hearing of Opinions) At the assembly of related persons for the custodian’s report under Article 98 (1), the court shall hear the opinions of following persons with respect to the appointment of custodians, inspection commissioners and simplified inspection commissioners, the management of the debtor's business and properties, and whether the continuation of rehabilitation procedures is appropriate: <Amended by Act No. 12892, Dec. 30, 2014>
SECTION 2 Avoidance Power Article 100 (Avoidable Acts)
Article 101 (Special Rules Governing Act Performed for Specially Related Persons as Other Party)
Article 102 (Exception of Payment of Obligations of Bill)
Article 103 (Avoidance of Requirements for Establishing Alteration of Right and Requirements for Setting Up Against)
Article 104 (Avoidance of Execution Act) The avoidance power may be exercised when a person holds the title of execution with power to execute the act subject to avoidance, or when the act is based on an act of execution. Article 105 (Methods of Exercising Avoidance Power)
Article 106 (Claims Filed for Avoidance)
Article 107 (Lawsuit Objecting to Decision to Cite Claim for Avoidance)
Article 108 (Effect, etc. of Exercise of Avoidance Power)
Article 109 (Restoration of Claims of Other Parties)
Article 110 (Avoidance Power against Subsequent Purchasers)
Article 111 (Restrictions on Avoidance Effected on Grounds of Knowledge of Payment Suspension) Any act that is performed one year prior to the date on which an application is filed for commencement of rehabilitation procedures shall not be avoided on the grounds of knowing that the payment is suspended.
Article 112 (Period for Exercise of Avoidance Power) The avoidance power shall not be exercised when two years lapse from the date on which rehabilitation procedures commence. The same shall apply where ten years lapse from the date on which an act provided for in any subparagraph of Article 100 (1) is performed. Article 113 (Stay of Proceedings Filed by Creditors for Revocation)
Article 113-2 (Special Rules concerning Avoidance of Act of Trust)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] SECTION 3 Responsibilities of Directors, etc. of Corporations Article 114 (Preservative Measure on Property of Corporate Directors, etc.)
Article 115 (Judgment in Claim Allowance Proceedings on Right to Seek Damages, etc.)
Article 116 (Lawsuit Filed in Objection)
Article 117 (Effect of Judgment in Claim Allowance Proceedings) When the lawsuit provided for in the provisions of Article 116 (1) is not filed within the period provided for in the provisions of the same paragraph, is withdrawn or is dismissed without prejudice, the judgment on the inspection confirmation shall have the same effect as the effect of a final and conclusive judgment ordering execution. CHAPTER IV REHABILITATION CREDITORS, REHABILITATION SECURED CREDITORS, SHAREHOLDERS AND EQUITY RIGHT HOLDERS SECTION 1 Rights of Rehabilitation Creditors, Rehabilitation Secured Creditors, Shareholders and Equity Right Holders Article 118 (Rehabilitation Claims) Claims falling under any of the following subparagraphs shall constitute rehabilitation claims:
Article 119 (Options when Both Parties Fail to Fulfill Bilateral Contract)
Article 120 (Special Rules concerning Payment and Settlement System, etc.)
Article 121 (Cancellation and Termination of Bilateral Contracts Unfulfilled by Both Parties)
Article 122 (Bilateral Contract Aimed at Continued Payments)
Article 123 (Takeover of Bills of Exchange, etc. After Commencement)
Article 124 (Lease Agreements, etc)
Article 125 (Mutual Accounts)
Article 126 (Where Debtor Is Jointly and Severally Liable for an Obligation with Other Persons)
Article 127 (Obligations for Guarantee Borne By Debtor) When rehabilitation procedures commence for a debtor who is a guarantor, any creditor may exercise his/her right over the total amount of the claim that he/she holds at the time that such rehabilitation procedures commence in the capacity of a rehabilitation creditor. Article 128 (Participation in Rehabilitation Procedures for Persons Who Hold Unlimited Liabilities for Corporation's Obligations Where Rehabilitation Procedures Commence) Where it is decided to commence rehabilitation procedures for persons who hold unlimited liabilities for a corporation's obligations, the creditors of the relevant corporation may participate in the rehabilitation procedures for the total amount of claims that they hold at the time that the rehabilitation procedures commence. Article 129 (Participation in Rehabilitation Procedures by Persons Who Hold Limited Liabilities for Corporation's Obligations Where Rehabilitation Procedures Commence)
Article 130 (In Cases of Partial Guarantee) Where multiple guarantors each bear part of the obligations, the provisions of Articles 126 and 127 shall apply mutatis mutandisto the part of the obligations they bear.
Article 131 (Prohibition on Repayment of Rehabilitation Claims) The act (excluding any exemption) of extinguishing rehabilitation claims by repaying them, receiving the repayment thereof, etc. without following the provisions of the rehabilitation plan shall not be performed after the rehabilitation procedures have commenced, save when the provisions of this Act especially prescribe otherwise: Provided, That the same shall not apply where any custodian makes repayment after obtaining permission therefor from the court, and to a case that falls under the claim provided for in the provisons of Article 140 (2) and falls under any of the following subparagraphs:
Article 132 (Permission to Repay Rehabilitation Claims)
Article 133 (Rights of Rehabilitation Creditors)
Article 134 (Interest-Free Claim with Time Limit) An interest-free claim, the deadline of which arrives after rehabilitation procedures commence shall be the amount obtained by deducting the interest from the amount of the claim after the total amount of the interest, based on the statutory interest and the principal are calculated to be the amount of the claim at the time that the deadline arrives during the period ranging from the time the rehabilitation procedures commence to the deadline. Article 135 (Claim For Money Payable by Periodic Installments) The provisions of Article 134 shall apply mutatis mutandisto any claim for money payable by periodic installments, the amount and the period of which are not confirmed. Article 136 (Interest-Free Claims of Indefinite Time Limit, etc.) Interest-free claims, the time limits of which are indefinite shall be the amount that is appraised at the time that rehabilitation procedures commence. The same shall apply where the amount of the claim for money payable by periodic installment or the period, for which are indefinite. Article 137 (Non-Monetary Claims, etc.) When the purpose of any claim is not monetary, the amount of any claim is indeterminate and any claim is set in foreign currency, such claim shall be the amount appraised as at the time that rehabilitation procedures commence. Article 138 (Conditional Claims and Future Claims)
Article 139 (Calculation of Period for Preferential Rights) When any preferential rights are held on the amount of claim within a certain period, such certain period shall be calculated retroactively from the time rehabilitation procedures commence. Article 140 (Reduction of and Exemption from Fines and Taxes, etc.)
Article 141 (Rights of Rehabilitation Secured Creditors)
Article 142 (Proxy Commissioners)
Article 143 (Trustee Companies)
Article 144 (Right of Offset)
Article 145 (Prohibition on Offset) In any of the following cases, the offset shall be prohibited from being performed:
Article 146 (Rights of Shareholders and Equity Right Holders)
SECTION 2 Preparation of List of Rehabilitation Creditors, Rehabilitation Secured Creditors, Shareholders, and Equity Right Holders and Reporting thereof Article 147 (List of Rehabilitation Creditors, Rehabilitation Secured Creditors, Shareholders and Equity Right Holders)
Article 148 (Report on Rehabilitation Claims)
Article 149 (Report on Rehabilitation Security Rights)
Article 150 (Report on Shares and Equity Shares)
Article 151 (Legal Fiction of Reporting) Rehabilitation claims, rehabilitation security rights, shares or equity shares that are noted on the list shall be deemed to have been reported pursuant to the provisions of Articles 148 through 150. Article 152 (Post-Reporting Supplementations)
Article 153 (Report on Rehabilitation Claims, etc. after Lapse of Reporting Period)
Article 154 (Change of Names)
Article 155 (Additional Report on Shares and Equity Shares)
Article 156 (Report on Fines and Taxes, etc.)
Article 157 (Dissatisfaction with Fine, etc. Prior to Commencement of Rehabilitation Procedures)
SECTION 3 Inspection and Confirmation of Rehabilitation Claims, Rehabilitation Security Rights, etc. Article 158 (Table of Rehabilitation Creditors, Rehabilitation Secured Creditors and Shareholders and Equity Right Holders) The clerk, etc, of the court shall prepare a table of rehabilitation creditors, a table of rehabilitation secured creditors and a table of shareholders and equity right holders based on rehabilitation claims, rehabilitation security rights, shares or equity shares that are recorded on the list or reported, categorize them according to the nature of their rights and then record the matters falling under each of the following subparagraphs in such tables:
Article 159 (Delivery of Certified Copies) The court official of Grade V, etc. shall deliver to custodians the certified copies of the table of rehabilitation creditors, the table of rehabilitation secured creditors and the table of shareholders and equity right holders. Article 160 (Perusal of Documents During Inspection Period) The documents falling under each of the following subparagraphs shall be held in the court for inspection by interested persons during the inspection period:
Article 161 (Objections, etc. Raised to Rehabilitation Claims and Rehabilitation Security Rights)
Article 162 (Inspection of Rehabilitation Claims and Rehabilitation Security Rights Reported after Reporting Period) The court shall set a special date (hereinafter referred to as "special inspection date") for inspecting any rehabilitation claim and any rehabilitation security right that are all reported pursuant to the provisions of Articles 152 (1) and 153 (1). In this case, expenses incurred to conduct such inspection shall be borne by the relevant rehabilitation creditor or the relevant rehabilitation secured creditor. Article 163 (Delivering Notification of Special Inspection Date) When the court decides to set a special inspection date, it shall serve a written decision on any of the following persons:
Article 164 (Presence of Persons Concerned)
Article 165 (Presence of Custodians) The inspection of any rehabilitation claim and any rehabilitation security right shall not be conducted without the presence of the relevant custodian on the special inspection date. Article 166 (Allowance of Rehabilitation Claims and Rehabilitation Security Rights, etc.) When no objection is raised by any custodian, any rehabilitation creditor, any rehabilitation secured creditor, any shareholder and any equity right holder during the inspection period or on the special inspection date, the features of the rights and the amount of the voting rights falling under both of the following subparagraphs shall be confirmed, and with respect to any claim with the preferential rights, its preferential right shall be confirmed:
Article 167 (Register on Table of Rehabilitation Creditors and Table of Rehabilitation Secured Creditors)
Article 168 (Effect of Entries) When any rehabilitation claim and any rehabilitation security right that are confirmed are recorded in the table of rehabilitation creditors and the table of rehabilitation secured creditors, such entries shall have the same effect as the effect of a final and conclusive judgment on all of them recorded on the tables. Article 169 (Notification of Objection) When an objection to any rehabilitation claim or any rehabilitation security right is raised, the court shall notify the holder of the relevant claim or right of such objection. Article 170 (Judgment in Claim Allowance Proceedings for Rehabilitation Claims and Rehabilitation Security Rights)
Article 171 (Lawsuit Objecting to Judgment in Claim Allowance Proceedings)
Article 172 (Taking Over Lawsuit Involving Disputed Claims)
Article 173 (Restrictions on Assertions) Rehabilitation creditors or rehabilitation secured creditors may only assert matters that are recorded in the table of rehabilitation creditors and the table of rehabilitation secured creditors, which are pertain to the grounds and details of disputed claims in the judgment in claim allowance proceedings, in the lawsuit objecting to the judgment in claim allowance proceedings provided for in the provisions of Article 171 (1) and the litigation procedures assignment of which is taken pursuant to the provisions of Article 172 (1). Article 174 (Objections Raised to Claims, etc. with Title of Execution)
Article 175 (Record of Result of Judgment in Claim Allowance Proceedings on Allowing Rehabilitation Claims and Rehabilitation Security Rights) The court official of Grade V, etc. shall, at the request of any custodian, any rehabilitation creditor, or any rehabilitation secured creditor, record the results of the lawsuit (when a lawsuit objecting to the judgment in claim allowance proceedings is not filed or is dismissed without prejudice within the period provided for in the provisions of Article 171 (1), this refers to the contents of the judgment) of the confirmation of the rehabilitation claim or the rehabilitation security right in the table of rehabilitation creditors and the table of rehabilitation secured creditors. Article 176 (Effect of Judgment, etc. in Lawsuit Filed for Confirmation of Rehabilitation Claims and Rehabilitation Security Rights)
Article 177 (Reimbursement of Legal Costs) When any gain is accrued to the debtor's property from the lawsuit (including the judgment in claim allowance proceedings) on allowance of rehabilitation claims or rehabilitation security rights, any rehabilitation creditor, any rehabilitation secured creditors, any shareholder, any equity right holder may claim for reimbursement of the legal costs as priority creditors within the scope of such gain. Article 178 (Value of Subject Matter of Lawsuit Filed for Confirmation of Rehabilitation Claims or Rehabilitation Security Rights) The value of the subject matter of a lawsuit filed for the confirmation of any rehabilitation claim or any rehabilitation security right shall be determined by the court with pending rehabilitation cases taking into account the estimated amount of gains to be made from the rehabilitation plan. <Amended by Act No. 14472, Dec. 27, 2016> SECTION 4 Priority Claims and Other Claims after Rehabilitation Procedures Commence Article 179 (Claims Constituting Priority Claims)
Article 179 (Claims Constituting Priority Claims)
<<Enforcement Date: Jan. 1, 2019>> Article 179 Article 180 (Repayment, etc. of Priority Claims)
Article 181 (Other Claims after Commencement)
CHAPTER V Assembly of Related Persons Article 182 (Notification of Date)
Article 183 (Notification of Date) A court shall notify an administrative agency supervising the business affairs of the debtor who is a stock company, the Minster of Justice, and the Financial Services Commission, of the date on which the assembly of related persons is to be held. <Amended by Act No. 8863, Feb. 29, 2008> Article 184 (Presiding over by Court) The court shall preside over assemblies of related persons. Article 185 (Announcement of Date and Purposes)
Article 186 (Combination of Date for Assembly of Related Persons and Special Inspection Date) When it is deemed appropriate, the court may combine the date of the assembly of related persons and the special inspection date, at the request of the custodian therefor or ex officio. Article 187 (Objection to Voting Rights) Anyone falling under following subparagraphs may raise an objection to voting right of any rehabilitation creditor, rehabilitation secured creditor, shareholder and any equity right holder at the assembly of related persons: Provided, That the same shall not apply to the voting right of any rehabilitation creditor or any rehabilitation secured creditor who holds the rehabilitation claim or the rehabilitation security right confirmed in the inspection procedures provided for in the provisions of Section 3 of Chapter IV of this Part:
Article 188 (Exercise of Voting Rights)
Article 189 (Split Voting)
Article 190 (Exclusion of Unjust Voting Right Holders)
Article 191 (Persons Prohibited from Exercising his/her Voting Rights) Anyone falling under any of the following subparagraphs shall be prohibited from exercising his/her voting rights:
Article 192 (Exercise of Voting Rights by Proxy)
CHAPTER VI REHABILITATION PLAN SECTION 1 Contents of Rehabilitation Plan Article 193 (Contents of Rehabilitation Plan)
Article 194 (Rights of Rehabilitation Creditors, etc.)
Article 195 (Deadline for Obligations) Where any obligations are borne and the deadline for any obligations are postponed according to the rehabilitation plan, the time limit of such obligations, when such obligations are secured, shall not exceed the period of the existence of the collateral. When no collateral exists or it is not possible to determine on the period of the existence of such collateral, the period of existence thereof shall not exceed 10 years: Provided, That the same shall not apply to cases where bonds are issued under the conditions prescribed by the rehabilitation plan. Article 196 (Furnishing of Security and Bearing of Obligations)
Article 197 (Unconfirmed Rehabilitation Claims, etc.)
Article 198 (Repaid Rehabilitation Claims, etc.) Any rehabilitation claim and any rehabilitation security right that are repaid pursuant to the provisions of the proviso to Articles 131 and 132 (1) and (2) among the rehabilitation claims and the rehabilitation security rights shall be expressly stated in the rehabilitation plan. Article 199 (Priority Claims) Any priority claims that are already repaid shall be expressly indicated in the rehabilitation plan, and priority claims that are scheduled to be repaid in the future shall also be prescribed in the rehabilitation plan. Article 200 (Transfer, etc. of Business or Properties)
Article 201 (Rights on Which Dispute Is Not Settled) When any dispute on the rights that belong to the debtor are not settled, matters concerning the acceptance of the compromise or the mediation or custodians’ performance of lawsuit and methods of exercising other rights shall be prescribed in the rehabilitation plan. Article 202 (Amendment to Articles of Incorporation) When the articles of incorporation of the debtor are amended, the details of the change in the articles of incorporation shall be prescribed in the rehabilitation plan. Article 203 (Change in Directors, etc.)
Article 204 (Matters Concerning Appointment of Directors, etc.) The rehabilitation plan concerning methods of selection, appointment or the manner of retention of office of directors, the chief executive officer or auditors of corporate debtors or any new company (excluding any new company incorporated by merger or resulting from merger after divestiture shall be excluded) shall conform to the principle of equity and also conform to the overall interests of rehabilitation creditors, rehabilitation secured creditors, shareholders and equity right holders. Article 205 (Capital Reductions of Stock Companies or Limited-Liability Companies)
Article 206 (Issuance of New Shares by Stock Companies and Limited-Liability Companies)
Article 207 (All-Inclusive Share Swap of Stock Companies) When the debtor who is a stock company performs an all-inclusive share swap with another company, the matters falling under any of the following subparagraphs shall be prescribed in the rehabilitation plan:
Article 208 (Comprehensive Transfer of Shares of Stock Companies) When the debtor who is a stock company incorporates a new company that is a wholly owning parent company through a comprehensive transfer of shares, the matters falling under each of the following subparagraphs shall be prescribed in the rehabilitation plan:
Article 209 (Issuance of Bonds by Stock Companies) When a debtor who is a stock company issues bonds, the matters falling under each of the following subparagraphs shall be prescribed in the rehabilitation plan:
Article 210 (Mergers of Stock Companies) When a debtor, who is a stock company, merges with any other company and a party to the merger survives the merger, the matters falling under each of the following subparagraphs shall be prescribed in the rehabilitation plan:
Article 211 (Consolidation of Companies) When the debtor, who is a company, incorporates a new company as a result of consolidation with another company, the matters falling under each of the following subparagraphs shall be prescribed in the rehabilitation plan:
Article 212 (Splits of Stock Companies)
Article 213 (Merger after Divestiture of Stock Companies)
Article 214 (Physical Division of Stock Companies) The provisions of Articles 212 and 213 shall apply mutatis mutandisto cases where the debtor, who is a stock company to be split, acquires all of the shares of any company that is incorporated by split or merger after divestiture. Article 215 (Incorporation of New Company by Stock Companies or Limited- Liability Companies)
Article 216 (Dissolution) When the debtor dissolves his/her company without resorting to any merger, any split or any merger after divestiture. the gist thereof and the time of the dissolution of his/her company shall be prescribed in the rehabilitation plan. Article 217 (Fair and Equal Differentiation)
Article 218 (Principles of Equality)
Article 219 (Voidance of Act of Giving Special Profits) The act of giving special benefits to any rehabilitation creditor, rehabilitation secured creditor, shareholder and equity right holder in his/her name or in the name of any third person, without resorting to the rehabilitation plan, shall be null and void. SECTION 2 Submission of Rehabilitation Proposal Article 220 (Submission of Rehabilitation Proposal)
[This Article Wholly Amended by Act No. 12892, Dec. 30, 2014] Article 221 (Submission of Rehabilitation Proposal by Rehabilitation Creditors, etc.) A person falling under any of the following subparagraphs may prepare and present a rehabilitation proposal to the court within the period under Article 220 (1):
[This Article Wholly Amended by Act No. 12892, Dec. 30, 2014] Article 222 (Rehabilitation Proposal Whose Details Aim for Liquidation or Business Transfer, etc.)
Article 223 (Prior Submission of Rehabilitation Proposal)
Article 224 (Assembly of Related Persons Held to Examine Rehabilitation Proposal) When the rehabilitation proposal is submitted, the court shall call an assembly of related persons to examine such rehabilitation proposal on a fixed date: Provided, That the same shall not apply to cases where it is placed on a written resolution provided for in the provisions of Article 240. Article 225 (Hearing of Opinions with Respect to Rehabilitation Proposal) The court shall hear the opinions of any of the following persons concerning the rehabilitation proposal after hearing an explanation of the rehabilitation proposal from the submitters of such rehabilitation proposal at the assembly of related persons provided for in the provisions of Article 224:
Article 226 (Opinions of Supervisory Administrative Agencies, etc.)
Article 227 (Opinions of Debtor's Union, etc.) The court shall hear the opinion of the person falling under each of the following subparagraphs with respect to a rehabilitation proposal:
Article 228 (Revision of Rehabilitation Proposals) Any submitter of a rehabilitation proposal may revise the rehabilitation proposal after obtaining permission from the court therefor by the date on which an assembly of related persons is held to examine a rehabilitation proposal or by the date on which it is decided to place a rehabilitation proposal on a written resolution pursuant to the provisions of Article 240. Article 229 (Order Given to Revise Rehabilitation Proposals)
Article 230 (Resumption of Assembly of Related Persons)
Article 231 (Exclusion of Rehabilitation Proposal) Where the rehabilitation proposal falls under any of the following subparagraphs, the court may elect not to place the rehabilitation proposal under the examination or on the resolution of the assembly of related persons:
Article 231-2 (Exceptional Provisions concerning Preclusion of Rehabilitation Plan)
[This Article Newly Inserted by Act No.12783, Oct. 15, 2014] Article 232 (Assembly of Related Persons Called to Resolve on Rehabilitation Proposal)
Article 233 (Presence of Persons who Bear Obligations for Rehabilitation)
Article 234 (Amendment to Rehabilitation Proposal) Any submitter of the rehabilitation proposal may amend such rehabilitation proposal at the assembly of related persons provided for in the provisions of Article 232 (1) after obtaining permission therefor from the court only when such change is not prejudicial to rehabilitation creditors, rehabilitation secured creditors, shareholders and equity right holders. SECTION 3 Resolution on Rehabilitation Proposal Article 235 (Timing of Resolution) The rehabilitation proposal shall not be presented for resolution before the inspection period expires. Article 236 (Methods of Resolution and Categorization of Rehabilitation Creditors, etc.)
Article 237 (Requirements for Adoption) A rehabilitation proposal shall be adopted at an assembly of related persons, according to each of the following groups:
Consent shall be obtained from the persons holding the voting rights equivalent to at least 2/3 of the total amount of the voting rights of the rehabilitation creditors who are entitled to excercise their voting rights;
Consent shall be obtained from the persons holding the voting rights equivalent to at least 1/2 of the total number of the voting rights of shareholders or equity right holders who are entitled to excercise their voting rights at an assembly of related persons to approve the rehabilitation proposal. Article 238 (Designation of Hearing Continuation Date) Where an assembly of related persons fails to resolve on the rehabilitation proposal, when persons falling under the following subparagraphs agree on continuation, the court may set a hearing continuation date, ex officioor at the request of the custodian or the debtor and any rehabilitation creditor, any rehabilitation secured creditor, any shareholder and any equity right holder who are entitled to exercise their voting rights: <Amended by Act No. 12892, Dec. 30, 2014>
Article 239 (Timing of Resolution)
Article 240 (Resolutions in Writing)
Article 241 (Survival of Corporation If Rehabilitation Proposal Adopted) When rehabilitation procedures commence and the rehabilitation proposal is resolved upon for a debtor who is an incorporated association or an incorporated foundation that is under liquidation or is declared bankrupt, such incorporated association may continue to exist according to the regulations governing the amendment of its articles of association and such incorporated foundation may continue to exist after obtaining an authorization therefor from the administrative agency in charge of incorporated foundations. SECTION 4 Authorization, etc. of Rehabilitation Plans Article 242 (Whether or Not to Grant Authorization of Rehabilitation Plans)
Article 242-2 (Authorization or Non-Authorization of Rehabilitation Plans When They Have Undergone a Written Resolution)
[This Article Newly Inserted by Act No. 14177, May 29, 2016] Article 243 (Requirements for Authorizing Rehabilitation Plans)
Article 243-2 (Non-Authorization of Rehabilitation Plan)
[This Article Newly Inserted by Act No.12783, Oct. 15, 2014] Article 244 (Authorization in Cases of Group in Disagreement)
Article 245 (Declaration, etc. of Determination on Whether to Grant Authorization of Rehabilitation Plan)
Article 246 (Timing when Rehabilitation Plans Take Effect) The rehabilitation plan shall take effect from the time a decision is made to grant authorization thereof.
Article 248 (Where Decision Not to Grant Authorization for Rehabilitation Plan Becomes Final and Conclusive) The provisions of Articles 291 and 292 shall apply mutatis mutandisto cases where a decision not to grant authorization for the rehabilitation plan becomes final and conclusive. Article 249 (Entires in Table of Rehabilitation Creditors, etc.) When a decision to grant authorization for the rehabilitation plan becomes final and conclusive, the court official of Grade V, etc. shall enter the rights recognized in the rehabilitation plan in the table of rehabilitation creditors and in the table of rehabilitation secured creditors and in the table of shareholders and equity right holders. Article 250 (Scope of Effect of Rehabilitation Plan)
Article 251 (Immunity of Rehabilitation Claims, etc.) When it is decided to grant authorization for the rehabilitation plan, the debtor shall be exempted from his/her responsibilities under all of the rehabilitation claims and rehabilitation security rights, with the exception of rights recognized pursuant to the rehabilitation plan or the provisions of this Act and the rights of shareholders and equity right holders, and all security rights over the debtor's properties shall cease to exist: Provided, That the same shall not apply to claims provided for in the provisions of Article 140 (1). Article 252 (Alteration of Rights)
Article 253 (Rights of Rehabilitation Creditors and Rehabilitation Secured Creditors) The rights of rehabilitation creditors and rehabilitation secured creditors that are prescribed according to the rehabilitation plan shall be recognized only for persons who hold rehabilitation claims or rehabilitation security rights that are all confirmed. Article 254 (Rights of Shareholders and Equity Right Holders who are Not Reported) The rights of shareholders and equity right holders that are recognized according to the rehabilitation plan shall also apply to the rights of shareholders and equity right holders who fail to report their shares and equity shares. Article 255 (Effect of Entries in Table of Rehabilitation Creditors, etc.)
Article 256 (Invalidation of Suspended Procedures)
CHAPTER VII PROCEDURES AFTER REHABILITATION PLAN AUTHORIZED Article 257 (Implementation of Rehabilitation Plan)
Article 258 (Court's Order Given to Implement Rehabilitation Plan)
Article 259 (Inspection of Debtor) In any of the following cases, the court may order any inspection commissioner or simplified inspection commissioner to inspect properties and the current business of the debtor, at the request of the creditors' consultative council or ex officio: <Amended by Act No. 12892, Dec. 30, 2014>
Article 260 (Exclusion of Provisions of Statutes Governing Resolutions, etc. of General Meetings) In the implementation of the rehabilitation plan, notwithstanding the provisions of statutes or the articles of incorporation, a general meeting of an incorporation, a general meeting of shareholders, a general meeting of members (including a general meeting of specific class of shareholders and a general meeting of members equivalent thereto) or a meeting of the board of directors of the debtor who is a corporation need not resolve on anything. Article 261 (Special Cases Concerning Business Transfer, etc.)
Article 262 (Special Cases Concerning Amendment to Articles of Incorporation) Where any amendments to the articles of incorporation of the debtor are prescribed in the rehabilitation plan pursuant to the provisions of Article 202, such articles of incorporation shall be amended according to the rehabilitation plan when it is decided to grant authorization for the rehabilitation plan. Article 263 (Special Case Concerning Change in Directors, etc.)
Article 264 (Special Cases Concerning Decrease in Capital)
Article 265 (Special Cases Concerning Issuance of New Shares without Payment, etc. therefor)
Article 266 (Special Cases concerning Issuance of New Shares for which Payments, etc. are Made)
Article 267 (Special Cases concerning Issuance of Bonds without Payments, etc. by Stock Companies)
Article 268 (Special Cases Concerning Issuance of Bonds with Payments, etc. by Stock Companies)
Article 269 (Special Cases concerning All-Inclusive Share Swap of Stock Companies)
Article 270 (Special Cases concerning Comprehensive Transfer of Shares of Stock Companies)
Article 271 (Special Cases concerning Mergers and Consolidations)
Article 272 (Special Cases concerning Merger or Merger after Divestiture)
Article 273 (Special Cases Concerning Incorporations of New Companies without New Investments)
Article 274 (Other Special Cases concerning Incorporation of New Companies)
Article 275 (Special Cases concerning Dissolution)
Article 276 (Transfer of Rights to Underwrite Shares, etc.) When rehabilitation creditors, rehabilitation secured creditors, shareholders and equity right holders hold rights to underwrite shares, equity shares or bonds of the debtor or any newly incorporated company according to the rehabilitation plan, they may transfer such rights to any other persons. Article 277 (Exclusion of Application of Financial Investment Services and Capital Markets Act) Article 278 (Special Cases concerning Restrictions on Disposal of Factory Assets, etc.) When the debtor's property is disposed of according to the rehabilitation plan, statutes governing restrictions on the disposal of factory assets and any other assets or the property that belong to any assets shall not apply thereto. Article 279 (Succession of Rights by Means of Permission and Authorization, etc.) When it is prescribed in the rehabilitation plan that the debtor is to transfer any rights and any obligations that accrue from any permission, authorization, license and any other disposition that he/she has acquired from administrative agencies, the newly incorporated company shall succeed to such rights and such obligations, notwithstanding the provisions of other statutes. Article 280 (Succession to Tax Liabilities) When it is prescribed in the rehabilitation plan that any newly incorporated company succeeds to the debtor's tax liabilities, the newly incorporated company shall bear responsibility for paying such tax liabilities and the debtor's tax liabilities shall be extinguished thereafter. Article 281 (Severance Pays, etc.)
Article 282 (Amendment to Rehabilitation Plan)
Article 283 (Discontinuation of Rehabilitation Procedures)
Article 284 (Prohibition on Participation in Corporate Governance by Directors, etc.) Directors or the chief executive officer who fail to retain their positions pursuant to the provisions of the proviso to Article 203 (2) shall be prohibited from being selected or appointed as directors or being selected as the chief executive officer of the debtor even after it is decided to discontinue the rehabilitation procedures. CHAPTER VIII DISCONTINUATION OF REHABILITATION PROCEDURES Article 285 Deleted. <by Act No. 12892, Dec. 30, 2014> Article 286 (Discontinuation before Authorization Granted for Rehabilitation Plan)
Article 287 (Discontinuation by Application)
Article 288 (Discontinuation after Authorization Granted for Rehabilitation Plan)
Article 289 (Public Notice of Discontinuation Decision) When the court it decides to discontinue the rehabilitation procedures, it shall publicly notify the operative part of such decision and the gist of its reasoning thereof. In this case, no service need be made.
Article 291 (Repayment of Priority Claims) When a decision to discontinue the rehabilitation procedures becomes final and conclusive, the custodian shall pay priority claims out of the debtor's properties and with respect to the payment of any priority disputed claim, the payment in question shall be deposited for creditors, except in cases where bankruptcy must be declared pursuant to the provisions of Article 6 (1). Article 292 (Effect of Entires in Tables, etc. of Rehabilitation Creditors)
Article 293 (Provisions Applicable Mutatis Mutandis) The provisions of Article 255 (2) and (3) shall apply mutatis mutandisto cases where a decision to discontinue the rehabilitation procedures becomes final and conclusive pursuant to the provisions of Article 288 (1). CHAPTER IX SIMPLIFIED REHABILITATION PROCEDURES FOR SMALL OPERATING INCOME EARNERS Article 293-2 (Definitions of Terms) The definitions of terms used in this Act shall be as follows:
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 293-3 (Applicable Provisions, etc.)
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 293-4 (Application for Commencement of Simplified Rehabilitation Procedures)
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 293-5 (Determination, etc. of Commencement of Rehabilitation Procedures)
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 293-6 (Non-Appointment of Custodian)
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 293-7 (Simplified Inspection Commissioner, etc.)
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 293-8 (Special Cases Concerning Requirements for Approval of Proposal of Rehabilitation Plan) In an assembly of related persons, a rehabilitation proposal shall, notwithstanding the subparagraph 1 of Article 237, be deemed to be approved by the group of creditors, where any one of the requirements falling under any of the following subparagraphs is satisfied:
[This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] PART III BANKRUPTCY PROCEDURES CHAPTER I COMMENCEMENT, ETC. OF BANKRUPTCY PROCEDURES SECTION 1 Petition for Bankruptcy Article 294 (Holders of Right to File Petition for Bankruptcy)
Article 295 (Holders of Rights to File Petition for Bankruptcy of Corporation)
Article 296 (Petition for Bankruptcy Filed by Directors, Etc.) When no petition for bankruptcy has been filed by any of the directors, general partners or liquidators, the facts leading to bankruptcy shall be explained. Article 297 (Mutatis Mutandis Application to other Corporations) The provisions of Articles 295 and 296 shall apply mutatis mutandisto any corporation, other than the corporations provided for in the provisions of Article 295, any incorporated association or any foundation that is not a corporation, each of which have its representative or custodian. Article 298 (Petition for Bankruptcy Filed after Corporation Dissolution) With respect to any corporation, any petition for bankruptcy shall be filed in any period during which the delivery or the distribution of its residual properties have not been completed even after such corporation is dissolved. Article 299 (Holders of Rights to File Petition for Bankruptcy on Inherited Estate)
Article 300 (Period in Which Petition for Bankruptcy May Be Filed for Inherited Estate) With respect to inherited estate, a petition for bankruptcy may be filed only within the period during which a claim may be filed for dividing up the properties pursuant to the provisions of Article 1045 of the Civil Act. In this case, when the qualified acceptance is made or the properties are divided up during the period, a petition for bankruptcy may be filed with the period during which the repayment to any inheritance creditor and any person who receives the legacy is not completed. Article 301 (Where Bankruptcy Is Declared Overseas) When the debtor has already been declared bankrupt overseas at the time that a petition for bankruptcy is filed against him/her, the facts leading to bankruptcy shall be presumed to exist. Article 302 (Written Petition)
Article 303 (Prepayment of Expenses for Bankruptcy Procedures) When anyone files a petition for bankruptcy, he/she shall prepay the amount as expenses necessary for the bankruptcy procedures, which is recognized as being appropriate by the court. Article 304 (Provisional Payment of Expenses for Bankruptcy Procedures) When anyone who files a petition for bankruptcy is not a creditor, the expenses for the bankruptcy procedures may be provisionally paid from the national treasury. The same shall apply to cases when any prepayment falls short of the fixed amount, when the court declares bankruptcy ex officioand when the petitioner of bankruptcy is the creditor and the court declares the debtor bankrupt, notwithstanding the nonpayment of the expenses. SECTION 2 Declaration of Bankruptcy, etc. Article 305 (Grounds for General Bankruptcy)
Article 306 (Grounds for Corporate Bankruptcy)
Article 307 (Grounds for Bankruptcy regarding Inherited Estate) When it is unable to fully repay the obligations to any inheritance creditor and anyone who receives a legacy with their inherited estate, the court shall by judgment declare bankruptcy if a request therefor is made. Article 308 (Inheritance after Petition for Bankruptcy or Declaration of Bankruptcy) When any inheritance commences after a petition for bankruptcy is filed or the bankruptcy is declared, the bankruptcy procedures continue on the inherited estate. Article 309 (Grounds for Dismissal)
Article 310 (Declaration of Bankruptcy) The year, month, date and time of the declaration of bankruptcy shall be entered in the written bankruptcy decision. Article 311 (Time When Bankruptcy Takes Effect) Bankruptcy shall take effect from the time that such bankruptcy is declared. Article 312 (Matters Needed to be Prescribed at Declaration of Bankruptcy)
Article 313 (Public Notice and Service of Declaration of Bankruptcy)
Article 314 (Notification of Corporate Bankruptcy)
Article 315 (Notification to Prosecutors) If it is deemed necessary, the court may notify prosecutors of the fact of its declaration of bankruptcy. Article 316 (Immediate Appeal Filed against Judgment on Petition for Bankruptcy)
Article 317 (Declaration of Bankruptcy and Simultaneous Discontinuation of Bankruptcy)
Article 318 (Exception to Simultaneous Discontinuation of Bankruptcy Procedures) The provisions of Article 317 shall not apply to cases where the prepayment has been made in an amount sufficient to cover expenses for the bankruptcy procedures. Article 319 (Arrest of Debtor Declared Bankrupt)
Article 320 (Arrest of Legal Representative, etc. of Debtor who is Declared Bankrupt) The provisions of Article 319 shall apply mutatis mutandisto persons falling under any of the following subparagraphs:
Article 321 (Obligation of Debtor, etc. to Explain)
Article 322 (Arrest Before Declaration of Bankruptcy)
Article 323 (Preservative Measure before Declaration of Bankruptcy)
Article 324 (Order Given to Suspend limitation of Liability Procedures)
Article 325 (Public Notice and Service of Revocation of Bankruptcy)
Article 326 (Suspension of Bankruptcy Procedures until Decision to Discontinue Limitation of Liability Procedures Becomes Final and Conclusive) When it is decided to discontinue the limitation of liability procedures that has commenced for a debtor declared bankrupt, the bankruptcy procedures shall be suspended until such decision becomes final and conclusive. Article 327 (Measures in Cases of Discontinuation of Limitation of Liability Procedures)
SECTION 3 Effect of Bankruptcy on Legal Acts Article 328 (Dissolved Corporations) Every corporation that is dissolved shall be deemed to still exist within the scope of the purposes of bankruptcy. Article 329 (Legal Act after Debtor is Declared Bankrupt)
Article 330 (Acquisition of Rights after Declaration of Bankruptcy)
Article 331 (Registration and Register, etc. after Bankruptcy Declaration)
Article 332 (Repayment Made to Debtor after Bankruptcy Declaration)
Article 333 (Underwriting and Paying Bills after Declaration of Bankruptcy)
Article 334 (Presumption of Good Faith or Bad Faith) In applying Articles 331 through 333, bankruptcy shall be presumed unknown until the declaration of bankruptcy is publicly notified. Article 335 (Options concerning Bilateral Contract Unfulfilled by Both Parties)
Article 336 (Special Rules concerning Payment and Settlement System, etc.) The provisions of Article 120 shall apply mutatis mutandiswhere any participant of the payment and settlement system and the liquidation settlement system or any party of the competent financial transaction, each of which are prescribed in the same Article, are declared bankrupt. In such cases, "where rehabilitation procedures commence" in Article 120 (1) through (3) shall be deemed "case where bankruptcy is declared" and "rehabilitation creditors or rehabilitation secured creditors" in the proviso to Article 120 (3) shall be deemed "bankruptcy creditors or the holders of the rights to foreclose outside of bankruptcy". Article 337 (Cancellation and Termination by Trustee in Bankruptcy and Right of Other Parties)
Article 338 (Regular Purchase and Sale of Marketable Goods in Exchange)
Article 339 (Where Civil Acts Prescribe Right to Terminate or Cancel) The provisions of Article 335 (2) shall apply mutatis mutandisto the exercise of the right to terminate or the right to cancel that is held by the other party or the trustee in bankruptcy pursuant to the provisions of Article 637, 663 or 674 of the Civil Act. Article 340 (Lease Agreements)
Article 341 (Contract for Work)
Article 342 (Delegation Contracts) Where a delegating person is declared bankrupt, if the delegated person performs the delegated clerical work without being notified of such bankruptcy and without knowledge thereof, the delegated person may exercise his/her right to any claims arising therefrom against the delegating person in the capacity of a bankruptcy creditor. Article 343 (Mutual Accounting)
Article 344 (Bankruptcy of Co-Owners)
Article 345 (Management of Property of Spouse, etc.) The provisions of Article 829 (3) and (5) of the Civil Act shall apply mutatis mutandisto cases where anyone who manages his/her spouse's properties is declared bankrupt and the provisions of Article 924 of the same Act shall apply mutatis mutandisto cases where anyone who exercises parental authority is declared bankrupt, respectively. Article 346 (Bankruptcy, Qualified Approval and Property Division) Declaration of bankruptcy with regard to any inheritor or any inherited estate shall not affect qualified acceptance or properties division: Provided, That the procedures therefor shall be suspended until a decision to cancel the bankruptcy or to discontinue the bankruptcy becomes final and conclusive or a decision to complete the bankruptcy becomes final and conclusive. Article 347 (Takeover of Lawsuit Involving Properties Belonging to Bankruptcy Estate)
Article 348 (Effects of Compulsory Execution and Preservative Measure)
Article 349 (Effect of Disposition on Default)
Article 350 (Effect on Administrative Cases)
SECTION 4 Responsibilities of Corporate Directors, etc. Article 351 (Preservative Measures on Properties of Corporate Directors)
Article 352 (Judgment in Claim Allowance Proceedings on Right to Seek Damages, etc.)
Article 353 (Lawsuit Filed for Objection)
Article 354 (Effect of Judgment in Claim Allowance Proceedings) When the lawsuit provided for in the provisions of Article 353 (1) is not filed or, is withdrawn or dismissed without prejudice within the period provided for in the provisions of the same paragraph, judgment in a claim allowance proceeding shall have the same effect as that of a final and conclusive judgment ordering the implementation. CHAPTER II INSTITUTIONS IN CHARGE OF BANKRUPTCY PROCEDURES SECTION 1 Trustees in Bankruptcy Article 355 (Appointment of Trustees in Bankruptcy)
Article 356 (Number of Trustees in Bankruptcy) There shall be one trustee in bankruptcy: Provided, that multiple trustees in bankruptcy may be appointed if the court deems it necessary. Article 357 (Qualification Certificates)
Article 358 (Supervision of Court) Every trustee in bankruptcy shall be placed under the supervision of the court. Article 359 (Standing to Sue) The trustee in bankruptcy shall become a party to lawsuit involving the bankruptcy estate. Article 360 (Performance of Duties by Multiple Trustees in Bankruptcy)
Article 361 (Obligations, etc. of Trustees in Bankruptcy)
Article 362 (Agents for Trustees in Bankruptcy)
Article 363 (Resignation of Trustee in Bankruptcy) Any trustee in bankruptcy may resign after obtaining permission therefor from the court when there are justifiable grounds for his/her resignation. Article 364 (Dismissal of Trustee in Bankruptcy)
Article 365 (Obligation to Report Accounting)
Article 366 (Emergency Disposition Upon Completion of Duties) Where the duties of the trustee in bankruptcy are completed, when an emergency situation occurs, the trustee in bankruptcy and the inheritors shall take necessary measures to manage the properties until the time what the successor trustee in bankruptcy and the debtor become able to manage such properties. SECTION 2 Meeting of Creditors Article 367 (Convocation) The court shall call the meeting of creditors, ex officioor at the request of the trustee in bankruptcy or any member of the audit committee. The same shall apply to cases where an application is filed by any bankruptcy creditor who holds not less than 1/5 of the amount of total claims as appraised by the court. Article 368 (Public Notice of Date and Agenda of Meeting)
Article 369 (Presiding Over by Court) The meeting of creditors shall be presided over by the court. Article 370 (Requirements for Passing Resolutions)
Article 371 (Split Voting)
Article 372 (Vote by Proxy)
Article 373 (The Amount of Claims over which Voting Rights Can be Exercised)
Article 374 (Effect in Lieu of Agreement of Members of Audit Committee)
Article 375 (Prohibition on Execution of Resolution)
SECTION 3 Members of Audit Committee Article 376 (Resolution on Establishment of Audit Committee) Where it is proposed at the first meeting of creditors that the audit committee be set up, the first meeting of creditors may resolve on whether to set up the audit committee and the number of its members: Provided, That such resolution may be altered at the meeting of creditors after the first meeting of creditors. Article 377 (Qualifications, etc. for Members of Audit Committee)
Article 378 (Methods of Performing Duties)
Article 379 (Performance of Duties of Members of Audit Committee)
Article 380 (Dismissal of Members of Audit Committee)
Article 381 (Mutatis Mutandis Provisions) The provisions of Articles 30 (1) and 361 shall apply mutatis mutandisto the members of the audit committee. CHAPTER III COMPOSITION AND CONFIRMATION OF BANKRUPTCY ESTATE SECTION 1 Composition of Bankruptcy Estate Article 382 (Bankruptcy Estate)
Article 383 (Properties not Belonging to Bankruptcy Estate)
Article 384 (Authority to Perform Management and Disposal) The authority to manage and dispose of a bankruptcy estate shall be held by the trustees in bankruptcy. Article 385 (Absolute Acceptance after Bankruptcy Declaration) Where any inheritance commences for a debtor before the debtor is declared bankrupt, the debtor's absolute acceptance after he/she is declared bankrupt shall have the effect of performing a qualified acceptance on the bankruptcy estate. Article 386 (Renunciation of Inheritance After Bankruptcy Declaration)
Article 387 (Bankruptcy and General Legacy) The provisions of Articles 385 and 386 shall apply mutatis mutandisto a general legacy. Article 388 (Bankruptcy and Specific Legacy)
Article 389 (Insolvent Estate)
Article 390 (Inheritor's Disposal of Properties)
SECTION 2 Avoidance Power Article 391 (Avoidable Act) Any trustee in bankruptcy may avoid any of the following acts for the bankruptcy estate:
Article 392 (Special Rules Governing Acts Performed with Specially Related Persons as Other Parties)
Article 393 (Exception of Payment on Promissory Notes)
Article 394 (Requirements for Establishing Alteration of Rights or Avoidance of Requirements for Counter)
Article 395 (Avoidance of Act of Execution) The avoidance power may be exercised when a title of execution over an act to be avoided exists or when the act is based on an act of execution. Article 396 (Means of Exercising Avoidance Power)
Article 397 (Effect of Exercise of Avoidance Power)
Article 398 (Status of Other Party)
Article 399 (Restoration of Claim of Other Party) Where the debtor's act is avoided, when the other party returns any payment that he/she has received or refunds its value, the other party's claim shall be restored to its original state. Article 400 (Avoidance Power against Insolvent Estate) Where any inherited estate is declared bankrupt, the provisions of Articles 391, 392, 393, 398 and 399 shall apply mutatis mutandisto an act performed by any predecessor, any inheritor, the administrator of inherited estate and the executor of the will with respect to the inherited estate. Article 401 (Avoidance of Repayment, etc. to Person who Takes Legacy) Where the inherited estate is declared bankrupt, when the act of making any repayment and extinguishing any obligation to the person who takes the legacy is detrimental to any bankruptcy creditor who holds preferential claims, such act may be avoided. Article 402 (Repayment to other Party of Avoidance) Where the inherited estate is declared bankrupt, if the act performed by the predecessor, any inheritor, the administrator of inherited estate and the executor of a will on the inheritance estate is avoided, the residual properties shall be distributed according to the value of the rights to the other party of the act that is avoided after making a repayment to the inheritance creditor. Article 403 (Avoidance Power on Subsequent Purchasers)
Article 404 (Restrictions on Avoidance on Grounds of Awareness of Payment Suspension) Any act that is performed at least one year prior to the date on which bankruptcy is declared may not be avoided on the grounds of awareness of the fact that the payment is suspended. Article 405 (Period During Which Avoidance Power is Exercised) The avoidance power shall not be exercised after two years lapse from the date on which bankruptcy is declared. The same shall apply to cases where ten years lapse from the date on which the act provided for in each subparagraph of Article 391 is performed. Article 406 (Interruption of Revocation Litigation, etc. Filed by Creditors)
Article 406-2 (Special Rules concerning Avoidance of Act of Trust) Where a debtor who is the truster is declared bankrupt, Article 113-2 shall apply mutatis mutandisto the avoidance of any act of trust which has been conducted by the debtor pursuant to the Trust Act. In such cases, "Article 100 (1)," "property of the debtor," and "priority creditor" shall be deemed "Article 391", "bankruptcy estate," and "bankruptcy estate creditor", respectively. [This Article Newly Inserted by Act No. 11828, May 28, 2013] SECTION 3 Repossession Rights Article 407 (Repossession of Properties Not Belonging to Debtor) A declaration of bankruptcy shall not affect rights to repossess from the bankruptcy estate any properties that do not belong to the debtor. Article 407-2 (Special Rules concerning Repossession Rights in Bankruptcy Procedures for Trustee)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 408 (Repossession of Sold Goods in Transit)
Article 409 (Repossession Rights of Commission Agents) The provisions of Article 408 (1) shall apply mutatis mutandisto cases where any commission agent entrusted to purchase goods ships out such goods to any entrusting person. Article 410 (Alternative Repossession Rights)
SECTION 4 Right to Foreclose Outside Bankruptcy Article 411 (Holders of Right to Foreclose Outside Bankruptcy) A person who has any lien, pledge, mortgage, security right prescribed in the Act on Security over Movable Property, Claims, Etc., or right to lease on a deposit basis, over any property that belongs to the bankruptcy estate, shall, regardless of the bankruptcy procedure, have the right to foreclose outside bankruptcy, with respect to the property which is the object of the lien, etc. <Amended by Act No. 10366, Jun. 10, 2010> Article 412 (Exercise of Right to Foreclose Outside Bankruptcy) The right to foreclose outside bankruptcy shall be exercised without resorting to bankruptcy procedures. Article 413 (Exercise of Bankruptcy Claims by Holders of Right to Foreclose Outside Bankruptcy) A person who has the right to foreclose outside bankruptcy may exercise his/her right to foreclose outside bankruptcy as a bankruptcy creditor on the amount of a claim that can not be met by the exercise of the right to foreclose outside bankruptcy: Provided, That this shall not affect the exercise of the right as a bankruptcy creditor on the renounced amount of the claim on which the right to foreclose outside bankruptcy. Article 414 (Holders of Quasi-Right to Foreclosure Outside Bankruptcy)
Article 415 (Residential Lessees, etc.)
Article 415-2 (Wage Creditor, etc.) [This Article Newly Inserted by Act No. 12892, Dec. 30, 2014] Article 416 (Rights of Offset) When any bankruptcy creditor bears obligations for the debtor at the time that the debtor is declared bankrupt, such obligations may be offset without resorting to bankruptcy procedures. Article 417 (Offset of Claims and Obligations Subject to Deadline and Condition Subsequent, etc.) Even when the claim of any bankruptcy creditor is subject to deadline or subject to a condition subsequent at the time that the debtor is declared bankrupt and the claim provided for in the provisions of Article 426, such claims may be offset. The same shall apply to cases where any obligation is subject to deadline and subject to rescission or to future claims. Article 418 (Offset of Condition Precedent Claim and Claim of Future) When anyone holding a condition precedent claim or future claim who fulfill his/her obligations, he/she may claim the depositing of the amount of the repayment within the limit of the amount of offset of the future claim. Article 419 (Offset of Claim Subject to Condition Subsequent) Where anyone holding a claim subject to a condition subsequent offsets such claim, he/she shall furnish security or make a deposit for the amount of offset. Article 420 (Offset Amount of Automatic Claims)
Article 421 (Offset of Rents, Security Deposits and Land Rents)
Article 422 (Prohibition on Offset) Offset shall be prohibited in events falling under any of the following subparagraphs:
CHAPTER IV BANKRUPTCY CLAIMS AND ESTATE CLAIMS SECTION 1 Bankruptcy Claims Article 423 (Bankruptcy Claims) Any property claim that accrues before the debtor is declared bankrupt shall constitute a bankruptcy claim. Article 424 (Exercise of Bankruptcy Claims) No bankruptcy claim shall not be exercised without resorting to bankruptcy procedures. Article 425 (Arrival of Repayment Period for Claims with Maturity) Claims with maturity shall be deemed due and payable when bankruptcy is declared. Article 426 (Amount of Bankruptcy Claim of Non-Monetary Claims, etc.)
Article 427 (Bankruptcy Claim Sum of Conditional Claims, etc.)
Article 428 (Sum of Bankruptcy Claims Where Person Liable to Fulfill Total Amount of Obligations Declared Bankrupt) Where multiple debtors are jointly and severally liable for an obligation, if all or some of such debtors are declared bankrupt, creditors may exercise their rights as bankruptcy creditors on the total amount of claims they hold when the debtors are declared bankrupt to each bankruptcy estate. Article 429 (Amount of Bankruptcy Claim Where Guarantor Declared Bankrupt) When any guarantor is declared bankrupt, creditors may exercise their rights as bankruptcy creditors on the total amount of claim that he/she holds at the time that the guarantor is declared bankrupt.
Article 430 (Persons Holding Rights to Claim Reimbursements in Future)
Article 431 (Amount of Bankruptcy Claims When Multiple Persons Stand as Guarantees) The provisions of Articles 428, 429 and 430 (1) and (2) shall apply mutatis mutandisto the portion of the guarantee that multiple guarantors are respectively liable for a part of the same obligation. Article 432 (Bankruptcy of General Partners) When any partner who has unlimited liability for the obligations of any corporation is declared bankrupt, the creditors of such corporation may exercise their rights as bankruptcy creditors on the total amount of claims held by them at the time that he/she is declared bankrupt on the bankruptcy estate. Article 433 (Bankruptcy of Limited Partners) When any partner who has limited liability for the obligations of any corporation or such corporation is declared bankrupt, the creditors of such corporation shall not exercise their rights on the partner who has limited liability for the obligations of the corporation: Provided, That the corporation may exercise a claim to its investment as a bankruptcy claim. Article 434 (Bankruptcy of Inheritors) Where any inheritor is declared bankrupt, even when his/her properties are divided out, inheritance creditors and persons who take the legacy may exercise their rights as bankruptcy creditors on the total amount of their claims to the bankruptcy estate. Article 435 (Insolvent Estate and Insolvent Inheritor) When any inheritance estate and its inheritor are each declared bankrupt, inheritance creditors and persons who take the legacy may exercise their rights as bankruptcy creditors on the total amount of their claims to the bankruptcy estate. Article 436 (Qualified Acceptance of Inheritors) In cases under Articles 434 and 435, when any inheritor who is declared bankrupt receives qualified acceptance, inheritance creditors and persons who take the legacy shall not exercise their rights as bankruptcy creditors on the inherent estate of such inheritor. The same shall apply to cases where the effect of the qualified acceptance exists pursuant to the provisions of Articles 385 or 386 (1). Article 437 (Claims, etc. of Inheritors on Predecessors) When any inherited estate is declared bankrupt, the inheritor thereof shall have the same rights as those of inheritance creditors on claims on the predecessor and any investment that is made in order to extinguish claims on the predecessor and obligations of the predecessor. Article 438 (Creditors of Inheritor) When any inherited estate is declared bankrupt, the creditors of the inheritors thereof shall be prohibited from exercising their rights as bankruptcy creditors on the bankruptcy estate. Article 439 (Expenses Incurred from Participation in Bankruptcy Procedures) Expenses incurred from participation in bankruptcy procedures shall be covered by bankruptcy claims. Article 440 (Equal Repayments to Persons on Same Order) Claims with the same priority shall be repaid in proportion to the amount of each claim. Article 441 (Priority Bankruptcy Claims) Bankruptcy claims with general preferential rights to the properties that belong to the bankruptcy estate shall take precedence over other claims. Article 442 (Calculation of Preferential Right Period) Where preferential rights exist on the amount of claims during a certain period, such period shall be calculated retroactively from the time bankruptcy is declared. Article 443 (Superiority of Inheritance Creditors) When inherited estate is declared bankrupt, the claims of inheritance creditors shall take precedence over the claims of persons who take the legacy. Article 444 (Ranking of Creditors Where Inheritor Declared Bankrupt) Where any inheritor is declared bankrupt on the grounds of a petition for bankruptcy filed within the period during which the petition for bankruptcy is filed on the inheritance estate, the claims of the inheritor’s creditor shall take precedence over claims of inheritance creditors and the person who takes the legacy on the inherent properties of the inheritor. The claims of the inheritance creditors and the claim of the person who takes the legacy shall take precedence over the claims of the creditors of the inheritor on the inheritance estate. Article 445 (Ranking of Inherited Estate and Bankruptcy Estate of Inheritors) When inherited estate and any inheritor are declared bankrupt, the claims of the creditors of the inheritor shall take precedence over the claims of inheritance creditors and the person who takes the legacy with respect to the bankruptcy estate of the inheritor. Article 446 (Subordinate Bankruptcy Claims)
SECTION 2 Reporting and Inspection of Bankruptcy Claims Article 447 (Means of Reporting Claims)
Article 448 (Preparation of Table of Bankruptcy Creditors)
Article 449 (Maintaining Table of Bankruptcy Creditors and Documents Concerning Claim Reports)
Article 450 (Inspection of Claims) The matters provided for in each subparagraph of Article 448 (1) with respect to reported claims shall be inspected on the date for claim inspection. Article 451 (Presence of Persons Concerned)
Article 452 (Presence of Trustees in Bankruptcy) No claims shall be inspected without the presence of the trustee in bankruptcy. Article 453 (Inspection of Claims Reported After Expiration of Report Period)
Article 454 (Changes Prejudicing Interests of Bankruptcy Creditors) The provisions of Article 453 shall apply mutatis mutandisto cases where an amendment is made to the matters reported by bankruptcy creditors to the effect of prejudicing the interests of other bankruptcy creditors after the reporting period. Article 455 (Report of Claims after General Date) The provisions of Article 453 (2) shall apply mutatis mutandiswhere any bankruptcy creditor reports claims after the general date on which the inspection of claims is conducted. Article 456 (Public Notice and Notification of Special Date) Any decision to set a special date on which claims are inspected shall be publicly notified, and the trustees in bankruptcy, the debtor and the bankruptcy creditors who report their claims shall be notified of such special date. Article 457 (Change, etc. in Claim Inspection Date) The provisions of Article 456 shall apply mutatis mutandisto any change in a claim inspection date, the extension of a claim inspection and the continuation of claim inspection: Provided, That when the claim inspection date is declared, the notification and the public notice therof need not be made. Article 458 (Confirmation of Claims) When the trustee in bankruptcy or any bankruptcy creditor does not raise any objection on the claim inspection date, the matters falling under each of the following subparagraphs shall be confirmed:
Article 459 (Entry of Inspection Results in Table of Bankruptcy Creditors)
Article 460 (Effect of Entry of Confirmed Claims in Table of Bankruptcy Creditors on Bankruptcy Creditors) When confirmed claims are entered in the table of bankruptcy creditors, the entries thereof shall have the same effect as that of a confirmed judgment on all of the bankruptcy creditors. Article 461 (Notification of Objection to Bankruptcy Claims)
Article 462 (Judgment in Claim Allowance Proceedings)
Article 463 (Lawsuit Objecting to Judgment in Claim Allowance Proceedings)
Article 464 (Taking Over Lawsuit Involving Disputed Claims) Where any lawsuit is pending on the disputed claims at the time bankruptcy is declared, if a creditor thereof seeks to have his/her right thereon confirmed, such creditor shall take over the lawsuit, naming all objectors as opposing parties.
Article 465 (Restrictions on Grounds of Claims) Any bankruptcy creditor may file an application for a judgment in claim allowance proceedings on the matters entered in the table of the bankruptcy creditors pursuant to the provisions of Article 459 (1), may file the lawsuit provided for in the provisions of Article 463 (1) or may take over a lawsuit pursuant to the provisions of Article 464. Article 466 (Ways to Raise Objections to Claims with Title of Execution)
Article 467 (Entry of Results of Bankruptcy Claim Allowance Proceedings) The court official of Grade V, etc. shall, at the request of the trustee in bankruptcy or any bankruptcy creditor, enter the results of bankruptcy claim allowance proceedings (when the lawsuit objecting to the judgment in claim allowance proceedings is not filed, or is dismissed without prejudice within the period provided for in the provisions of Article 463 (1), this refers to the contents of such judgment) in the table of bankruptcy creditors. Article 468 (Effect of Judgment, etc. in Bankruptcy Claim Allowance Proceedings)
Article 469 (Refund of Litigation Costs) When the bankruptcy estate receives benefits from bankruptcy claim allowance proceedings (including a judgment in claim allowance proceedings), any bankruptcy creditor who claims an objection may claim a refund of litigation costs as an estate creditor within the limits of such benefits. Article 470 (Value of Subject Matter of Bankruptcy Claim Confirmation Lawsuit) The value of the subject matter of bankruptcy claim allowance proceedings shall be determined by the court with pending bankruptcy cases on the basis of the amount scheduled for distribution. <Amended by Act No. 14472, Dec. 27, 2016>
Article 471 (Report on Fines, etc.)
Article 472 (Administrative Trial or Administrative Litigation)
Article 473 (Scope of Estate Claims) Any of the following claims shall constitute an estate claim: <Amended by Act No. 10219, Mar. 31, 2010; Act No. 12595, May 20, 2014; Act No. 14476, Dec. 27, 2016>
Article 474 (Claim of Encumbrance against Encumbered Legacy) When a trustee in bankruptcy claims is provided with an encumbered legacy, a claim that is entitled to benefit from the encumbrance shall constitute an estate claim within the limits of not exceeding the value of the legacy. Article 475 (Repayment of Estate Claims) Estate claims shall be satisfied at any time without going through bankruptcy procedures. Article 476 (Preferential Repayments of Estate Claims) Estate claims shall have priority in repayment over bankruptcy claims. Article 477 (Methods of Reimbursement in Cases of Insufficient Bankruptcy Estate)
Article 478 (Mutatis Mutandis Application of Provisions Governing Bankruptcy Claims)
CHAPTER V MANAGEMENT, REALIZATION AND DISTRIBUTION SECTION 1 Management and Realization of Bankruptcy Estate Article 479 (Possession and Management of Bankruptcy Estate) The trustee in bankruptcy shall commence possession and management of the properties that belong to the bankruptcy estate immediately after he/she takes office.
Article 481 (Closure of Property Books) The trustee in bankruptcy shall promptly close the books of the debtor's property after he/she is declared bankrupt and enter the gist of such closure on the book and subscribe his/her name and affix his/her seal to the book. Article 482 (Appraisal of Property's Value) The trustee in bankruptcy shall appraise the value of all properties belonging to the bankruptcy estate at the time bankruptcy is declared. In this case, the debtor may be allowed to participate in the value appraisal. Article 483 (Preparation of Properties List and Balance Sheet)
Article 484 (Management of Mails)
Article 485 (Cancellation of Management of Mails)
Article 486 (Continuation of Business) A trustee in bankruptcy may cause the debtor to continue his/her business after obtaining permission therefor from the court. Article 487 (Means of Safekeeping Valuable Goods) Means of safekeeping currency, securities and other valuable goods shall be prescribed by the court. Article 488 (Report on History of Bankruptcy) A trustee in bankruptcy shall report on circumstances leading to the declaration of bankruptcy and the past and current status of the debtors and the bankruptcy estate at the first meeting of creditors. Article 489 (Matters on Which Meeting of Creditors Resolves) The meeting of creditors may resolve upon any of the following matters:
Article 490 (Presentation of Properties Subject to Right to Foreclose Outside Bankruptcy)
Article 491 (Restrictions on Timing of Liquidation) A trustee in bankruptcy shall be prohibited from realizing properties belonging to the bankruptcy estate before the claim inspection date provided for in the provisions of Article 312 (1) 3 expires: Provided, That the same shall not apply to cases where an agreement is obtained from any audit committee member or permission therefor is obtained from the court. Article 492 (Acts Requiring Court Permission) Where any trustee in bankruptcy intends to perform the act falling under any of the following subparagraphs, he/she shall obtain permission therefor from the court and when the audit committee is set up, he/she shall obtain agreement from any member of the audit committee: Provided, That the same shall not apply to cases where the value is not more than ten million won and that it falls short of the amount set by the court among the cases falling under subparagraphs 7 through 15:
Article 493 (Hearing of Debtor's Opinions) In cases under Article 492, the debtor may state his/her opinion to the trustee in bankruptcy. Article 494 (Stay Order Issued By Court) Even when a trustee in bankruptcy performs acts provided for in the provisions of any subparagraph of Article 492 after obtaining agreement thereon from any member of the audit committee, the court may order the trustee in bankruptcy to discontinue performing any of such acts upon receiving an application field by the debtor or call an assembly of the creditors for a resolution on any of such acts. Article 495 (Protection of Bona Fide Third Parties) Even in cases where a trustee in bankruptcy violates either Article 491 or 492 or stay order under Article 494, such violation may not be asserted against bona fidethird parties. Article 496 (Means of Realization)
Article 497 (Realization of Goods Subject to Right to Foreclose Outside Bankruptcy)
Article 498 (Designation of Disposal Period by Holder of Right to Foreclose Outside Bankruptcy)
Article 499 (Report on Current Status by Trustee in Bankruptcy) A trustee in bankruptcy shall report on the current status of the bankruptcy estate to the meeting of creditors or members of the audit committee under the conditions prescribed by the meeting of creditors. Article 500 (Claim for Return of Bailed Goods)
Article 501 (Realization of Corporate Bankruptcy Estate) Article 502 (Claim for Investments made by Anonymous Partners) Where the contract of an anonymous association is terminated on the grounds that any business operator is declared bankrupt, the trustee in bankruptcy may cause the members of such association to make investment up to the amount of loss to be borne by the anonymous partner. Article 503 (Inheritor's Bankruptcy and Disposal of Inherited Estate)
Article 504 (Mutatis Mutandis Provisions) The provisions of Article 503 shall apply mutatis mutandisto cases where the effect of the qualified acceptance accrues pursuant to the provisions of Article 385 or 386 (1). SECTION 2 Distribution of Dividends Article 505 (Timing of Distributing Dividends) The trustee in bankruptcy shall distribute dividends without delay whenever the money therefor is available after the claim inspection date provided for in the provisions of Article 312 (1) 3 expires. Article 506 (Permission Necessary for Distributing Dividends) When the trustee in bankruptcy intends to distribute dividends, he/she shall obtain permission therefor from the court: Provided, That agreement thereon shall be obtained from a member of the audit committee, when he/she is accessible. Article 507 (Preparation of Dividend Table)
Article 508 (Submission of Dividend Tables) The trustee in bankruptcy shall submit the dividend table to the court in order for interested persons to inspect them. Article 509 (Public Notice of Amount of Dividends) The trustee in bankruptcy shall publicly notify the total amount of claims included in the dividends and the amount of the dividends: Provided, That the same shall not apply to cases where the dividend table is corrected pursuant to the provisions of Articles 513 and 527. Article 510 (Public Notice of Discontinuation of Distributing Dividends) When the court orders the discontinuation of a distribution of dividends pursuant to the provisions of Article 44 (1) at the request for commencement of rehabilitation procedures or commencement of simplified rehabilitation procedures, the court shall publicly notify the gist thereof. <Amended by Act No. 12892, Dec. 30, 2014> Article 511 (Continuation of Procedures for Distributing Dividends and Public Notification Thereof) Where an order is given to discontinue the distribution of dividends pursuant to the provisions of Article 44 (1) 1, if a decision falling under any of the following subparagraphs becomes final and conclusive, the court shall continue the procedures for distributing dividends and publicly notify the gist thereof: <Amended by Act No. 12892, Dec. 30, 2014>
Article 512 (Exclusion of Creditors and Holders of Rights to Foreclose Outside Bankruptcy with Objection to Dividends)
Article 513 (Correction of Dividend Table) In any of the following cases, the trustee in bankruptcy shall immediately correct the dividend table:
Article 514 (Objection to Dividend Table)
Article 515 (Notification of Decision on Dividend Rates)
Article 516 (Distribution of Dividends to Creditors Subject to Condition Subsequent) Anyone who holds the claims subject to a condition subsequent shall not be entitled to the distribution of dividends unless he/she furnishes substantial security. Article 517 (Means of Distributing Dividends)
Article 518 (Preferential Distribution of Dividends to Persons Excluded from Previous Distribution of Dividends) When any creditor excluded from a previous distribution of dividends on the grounds of his/her failure to make the attestation and substantiation provided for in the provisions of Article 512 makes such attestation and substantiation within the dividend exclusion period for the subsequent dividend payment, he/she shall have over priority over other creditors of the same rank in respect of the amount that he/she would have received from the previous dividend payment. Article 519 (Bailment of Proceeds of Dividends) The trustee in bankruptcy shall bail the dividend proceeds for claims falling under any of the following subparagraphs:
Article 520 (Permission for Final Dividends) Where the trustee in bankruptcy distributes final dividends, he/she shall obtain permission therefor from the court even if agreement is obtained from a member of the audit committee. Article 521 (Dividend Exclusion Period for Final Dividend) The court shall set the period during which the distribution of the final dividend must be excluded, which shall be not less than 14 nor more than 30 days from the date on which the distribution of dividends is publicly notified. Article 522 (Decision on Amount of Final Dividend and Notification Thereof) In the final dividend, the trustee in bankruptcy shall promptly set the amount of dividends for each of the creditors and notify the creditors of the amount of such dividends after any objections raised to the dividend table are settled. Article 523 (Exclusion of Condition-Precedent Creditors) When condition precedent claims or future claims cannot be exercised within the dividend exclusion period for the final dividends, the relevant creditors shall be excluded from the distribution of dividends. Article 524 (Payments to Creditors Subject to Condition Subsequent) When conditions on the claims subject to a condition subsequent are not met within the dividend exclusion period for the final dividends, any security provided pursuant to the provisions of Article 516 shall lose its effect and the sum bailed pursuant to the provisons of subparagraph 5 of Article 519 shall be paid to creditors. The same shall apply to the security furnished and the sum bailed pursuant to the provisions of Article 419. Article 525 (Exclusion of Holder of Right to Foreclose Outside Bankruptcy) When a holder of the right to foreclose outside bankruptcy fails to express his/her intention to renounce his/her right to the trustee in bankruptcy and to attest of the amount of claims that cannot be repaid by the exercise of his/her right within the dividend exclusion period, he/she shall be excluded from the distribution of dividends. Article 526 (Distribution of Bailment Funds) The sum bailed for creditors who are excluded from the distribution of dividends pursuant to the provisions of Article 523 or 525 shall be distributed to other creditors. The same shall apply to the sum bailed pursuant to the provisions of Article 418. Article 527 (Correction of Dividend Table if New Properties Are Found to Exist) When any properties are found to exist, which are to be appropriated for new dividends, before the notification of the dividend amount is mailed out, the trustee in bankruptcy shall correct the dividend table without delay. Article 528 (Deposit of Dividends) The trustee in bankruptcy shall deposit the dividends falling under any of the following subparagraphs for creditors:
Article 529 (Accounting Report at Meeting of Creditors) An meeting of creditors called to deliberate on the accounting report shall pass a resolution concerning the disposal of the properties that are not realized after the trustee in bankruptcy recognizes it as being valueless. Article 530 (Decision and Public Notice of Bankruptcy Termination) When the meeting of creditors is closed, the court shall decide on the termination of bankruptcy and publicly notify the operative part of such decision and the summary of the grounds thereof. Article 531 (Public Notice of Additional Dividends and Notification of Dividend Amount)
Article 532 (Standards for Additional Dividends) The additional dividends shall be paid according to the dividend table prepared for final dividends. Article 533 (Accounting Report)
Article 534 (Estate Creditors Unknown to Trustees in Bankruptcy) Any estate creditor who is not known to the trustee in bankruptcy before the dividend rates or dividend amounts are notified shall not be repaid with dividends. Article 535 (Effect On Confirmed Claims of Debtor Declared Bankrupt and Entered in Table of Bankruptcy Creditors)
Article 536 (Application Filed for Restitution)
Article 537 (Residual Inherited Estate) When inherited estate is declared bankrupt, any inheritance creditor and any person who takes the legacy who are excluded from final dividends may exercise their rights on any residual properties. CHAPTER VI DISCONTINUATION OF BANKRUPTCY Article 538 (Application Filed for Discontinuation of Bankruptcy by Way of Agreement)
Article 539 (Application Filed by Corporation, etc for Discontinuing Bankruptcy)
Article 540 (Application Filed for Discontinuing Bankruptcy and Corporate Continuation) When any corporation that has been declared bankrupt intends to file an application for discontinuing its bankruptcy, any incorporated association shall take the same procedures for its continuation as those for making an amendment in the articles of association. Any incorporated estate shall take the procedures for its continuation after obtaining permission therefor from the competent administrative agency, respectively. Article 541 (Submission of Written Verification) When an application is filed for discontinuing a bankruptcy, a written statement attesting to the fulfillment of application requirements shall be submitted. Article 542 (Public Notice of Applications for Discontinuing Bankruptcies and Keeping of Documents) The court shall publicly notify the gist of the applications filed for discontinuing bankruptcies and keep documents concerning the applications in order for interested persons to peruse them. Article 543 (Objections Raised by Creditors)
Article 544 (Hearing of Opinions of Persons Concerned) The court shall hear the opinions of the debtor, the trustee in bankruptcy and the bankruptcy creditor who raises an objection about whether the requirements necessary for a decision to discontinue the bankruptcy are met after the lapse of the period provided for in the provisions of Article 543 (1). Article 545 (Discontinuation of Bankruptcy for Lack of Funding)
Article 546 (Public Notice of Decision to Discontinue Bankruptcy) When the court decides to discontinue any bankruptcy, it shall publicly notify the operative part of the decision and the summary of reasons thereof. Article 547 (Repayment and Deposit of Estate Claims) When a decision to discontinue the bankruptcy becomes final and conclusive, the trustee in bankruptcy shall repay the estate claims, and with respect to any disputed claim, the trustee in bankruptcy shall make a deposit for creditors. Article 548 (Mutatis Mutandis Provisions)
CHAPTER VII SUMMARY BANKRUPTCY Article 549 (Requirements for Summary Bankruptcy)
Article 550 (Decision on Summary Bankruptcy in Course of Bankruptcy Procedures)
Article 551 (Cancellation of Summary Bankruptcy) If it is found during the summary bankruptcy procedures that the amount of the properties belonging to the bankruptcy estate is equivalent to or higher than 500 million, the court may decide to cancel the summary bankruptcy, at the request of an interested person or ex officio. In this case, the provisions of Article 550 (2) shall apply mutatis mutandisthereto. Article 552 (Combination of Date of Meeting of Creditors and Claim Inspection Date) In the case of summary bankruptcy procedures, the date on which the first meeting of creditors is held and the date on which claims are inspected shall be combined, except for unavoidable reasons. Article 553 (Non-Appointment of Audit Commissioner) In the case of summary bankruptcy, no audit commissioner shall be appointed. Article 554 (Decision in Lieu of Resolution of Meeting of Creditors) In the case of summary bankruptcy procedures, the decision made by the court shall be substituted for the resolution passed at the meeting of creditors, except for the resolution passed at the first meeting of creditors and the resolution passed at the meeting of creditors on the claim inspection and the accounting report. Article 555 (One-Time Distribution of Dividends) In the case of summary bankruptcy procedures, the distribution of dividends shall be made once and be governed by the provisions regarding the final dividends: Provided, That additional dividends may be distributed. CHAPTER VIII IMMUNITY AND REINSTATEMENT Article 556 (Application for Immunity)
Article 557 (Suspension of Compulsory Execution)
Article 558 (Examination of Debtor)
Article 559 (Grounds for Dismissing Application Filed for Immunity)
Article 560 (Inspection Report by Trustees in Bankruptcy) The court may order the trustee in bankruptcy to inspect whether grounds for refusing to permit immunity exist and to report the results thereof on the hearing date provided for in the provisions of Article 558. Article 561 (Keeping of Documents, etc, concerning Application for Immunity) The court shall keep the following documents for inspection by interested persons:
Article 562 (Objection to Application for Immunity)
Article 563 (Hearing of Opinion about Objections) When an objection is raised pursuant to the provisions of Article 562 (1), the court shall hear the opinions of the debtor and the person who has raised such objection. Article 564 (Immunity Granted)
Article 565 (Timing of Effect of Decision to Grant Immunity) The effect of immunity shall arise only after a decision to grant such immunity becomes final and conclusive. Article 566 (Effect of Immunity) The debtor who has been granted immunity shall be exempted from the liabilities for his/her all debts to bankruptcy creditors, except for the dividends according to the bankruptcy procedures: Provided, That the debtor shall not be exempted from liabilities with respect to any of the following claims: <Amended by Act No. 9935, Jan. 22, 2010>
Article 567 (Effect on Guarantor, etc.) The immunity shall not affect the rights that are held by creditors on guarantors of the debtor and any other persons who bear obligations together with the debtor and any security that is furnished for any bankruptcy creditor. Article 568 (Entry of Decision to Grant Immunity) The clerk, etc, of the court shall, when a decision to grant immunity becomes final and conclusive, enter the gist of the confirmation of such decision in the table of bankruptcy creditors if such table exists. Article 569 (Revocation of Immunity)
Article 570 (Hearing of Opinions about Revocation of Immunity) The court shall hear opinions of the debtor and applicants before it grants a judgment on the revocation of the debtor's immunity. Article 571 (Timing for Effect of Decision to Revoke Immunity) The effect of a decision to revoke immunity shall accrue after such decision becomes final and conclusive. Article 572 (Preferential Rights of New Creditors) When immunity is revoked, anyone who holds claims on grounds that accrue from between the time immunity is granted and the time such immunity is revoked shall be entitled to greater preference for repayments than other creditors. Article 573 (Entry of Decision to Revoke Immunity) Where a decision to revoke immunity becomes final and conclusive, the court official of Grade V, etc. shall, if they have the table of bankruptcy creditors, enter the gist of the confirmation of the decision to cancel the immunity in such table.
Article 574 (Obligatory Reinstatement)
Article 575 (Reinstatement by Application)
Article 576 (Public Notice of Application for Reinstatement, etc.) Upon receiving an application for reinstatement, the court shall publicly notify the gist thereof and retain documents concerning the application for inspection by interested persons. Article 577 (Objection to Application for Reinstatement)
Article 578 (Timing of Effect of Decision on Reinstatement) A decision on the reinstatement shall take effect after such decision becomes final and conclusive. CHAPTER IX SPECIAL RULES CONCERNING BANKRUPTCY OF LIMITED-LIABILITY TRUST PROPERTY
Article 578-2 (Scope of Application) Except as otherwise expressly provided for in this Chapter, the provisions of the Chapters 1 through 7 of Part 3 shall apply to the bankruptcy regarding limited-liability trust property. [This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-3 (Persons Who Have Right to File Petition for Bankruptcy)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-4 (Grounds for Bankruptcy)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-5 (Notification, etc. of Bankruptcy of Trust Property)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-6 (Arrest of Trustee, etc. of Trust Declared Bankrupt)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-7 (Duty of Trustee, etc. of Trust Declared Bankrupt to Provide Explanations)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-8 (Preservative Measures before Declaration of Bankruptcy)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-9 (Preservative Measures on Property of Trustee, etc.)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-10 (Judgment in Claim Allowance Proceedings on Right to Seek Damages, etc. against Trustee, etc.)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-11 (Bankruptcy Trustee) Where bankruptcy regarding a limited-liability trust property has been declared, only the bankruptcy trustee may exercise any of the following powers: [This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-12 (Bankruptcy Estate) Where bankruptcy regarding a limited-liability trust property has been declared, the whole of such property shall belong to the bankruptcy estate. [This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-13 (Avoidance in Limited-liability Trust) Where bankruptcy regarding a limited-liability trust property has been declared, "debtor" shall be construed as "trustee or administrator of trust property" in applying Articles 391 through 392, 398 and 499. [This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-14 (Repossession Rights under Limited-Liability Trust) Where bankruptcy regarding a limited-liability trust property has been declared, "property not belonging to the debtor" referred to in Article 407 and "debtor" referred to in Article 410 shall be construed as "property not belonging to the trust property" and "trustee or administrator of trust property", respectively, in applying Articles 407 and 410. [This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-15 (Value of Bankruptcy Claims in Cases of Bankruptcy of Trust Property)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-16 (Order of Priority of Bankruptcy Claims in Cases of Bankruptcy regarding Trust Property)
[This Article Newly Inserted by Act No. 11828, May 28, 2013] Article 578-17 (Special Rules concerning Discontinuation of Bankruptcy) A petition for discontinuation of bankruptcy regarding a limited-liability trust property shall be filed by the trustee or administrator of trust property. In such cases, if several trustees or administrators of trust property exist, unanimous consent shall be required for the aforesaid petition. [This Article Newly Inserted by Act No. 11828, May 28, 2013] PART IV INDIVIDUAL REHABILITATION PROCEDURES CHAPTER I COMMON PROVISIONS Article 579 (Definition of Terms) The terms used in this procedure shall be defined as follows: <Amended by Act No. 9924, Jan. 1, 2010; Act No. 10366, Jun. 10, 2010; Act No. 12153, Jan. 1, 2014>
Article 580 (Individual Rehabilitation Estate)
Article 581 (Individual Rehabilitation Claims)
Article 582 (Repayment of Individual Rehabilitation Claims) With respect to individual rehabilitation claims that are entered in the list of individual rehabilitation creditors, any act extinguishing such claims by repaying for them or being repaid for them shall be prohibited from being performed without resorting to the repayment plan. Article 583 (Individual Rehabilitation Estate Claims)
Article 583 (Individual Rehabilitation Estate Claims)
<<Enforcement Date: Jan. 1, 2019>> Article 583 Article 584 (Avoidance Power)
Article 585 (Repossession Rights) The provisions of Articles 407 through 410 shall apply mutatis mutandisto individual rehabilitation procedures. In such cases, "bankruptcy estate" shall be deemed "individual rehabilitation estate" and "bankruptcy declaration" shall be deemed "decision to commence individual rehabilitation procedures," respectively. Article 586 (Right to Foreclose Outside Bankruptcy) The provisions of Articles 411 through 415 shall apply mutatis mutandisto individual rehabilitation procedures. In this case, "bankruptcy estate" shall be deemed "individual rehabilitation estate," "bankruptcy declaration" shall be deemed "decision to commence individual rehabilitation procedures," respectively. Article 587 (Offset Right) The provisions of Articles 416 through 422 shall apply mutatis mutandisto individual rehabilitation procedures. In such cases, "petition for bankruptcy" shall be deemed "application for commencement of individual bankruptcy procedures", "bankruptcy estate" shall be deemed "individual rehabilitation estate" and "bankruptcy declaration" shall be deemed "decision to commence individual rehabilitation procedure", respectively. CHAPTER II COMMENCEMENT OF INDIVIDUAL REHABILITATION PROCEDURES Article 588 (Holder of Right to File Application for Commencement of Individual Bankruptcy Procedures) Any individual debtor may file an application with the court for commencing individual rehabilitation procedures. Article 589 (Written Application for Commencement of Individual Rehabilitation Procedure)
Article 589-2 (Modification of List of Individual Rehabilitation Creditors)
[This Article Newly Inserted by Act No. 12595, May 20, 2014] Article 590 (Prepayment of Expenses) When an application is filed for commencing individual rehabilitation procedures, the amount of expenses necessary for such procedures that is prescribed by the Rule of the Supreme Court shall be prepaid. Article 591 (Report on Accounting, etc.) The court and any rehabilitation commissioner may request the debtor at any time to report on his/her revenues and expenditure of funds and other work relating to properties and, if it is deemed necessary, may inspect the current status of his/her properties, request any correction and take other appropriate measures. Article 592 (Preservative Measure)
Article 594 (Withdrawal of Application to Commence Individual Rehabilitation Procedures) The debtor may withdraw an application for commencement of individual bankruptcy procedures before a decision is made to commence such individual rehabilitation procedures: Provided. That the debtor may withdraw his/her application after obtaining permission therefor from the court after he/she takes the preservative measure provided for in the provisions of Article 592 or the stay order provided for in the provisions of Article 593. Article 595 (Grounds for Dismissal of Applications Filed to Commence Individual Rehabilitation Procedures) In any of the following cases, the court may dismiss any application filed for commencement of individual rehabilitation procedures:
Article 596 (Decision To Commence Individual Rehabilitation Procedures)
Article 597 (Public Notice and Delivery of Commencement Public Notice)
Article 598 (Immediate Appeal Filed against Judgment on Commencement of Individual Rehabilitation Procedures)
Article 599 (Cancellation of Decision to Commence Individual Rehabilitation Procedures) When a decision to cancel the decision to commence individual rehabilitation procedures becomes final and conclusive, the court shall, without delay, publicly notify the operative part of such decision and deliver the purport of such decision to the following persons:
Article 600 (Suspension, etc. of other Procedures)
CHAPTER III REHABILITATION COMMISSIONERS Article 601 (Appointment and Dismissal)
Article 602 (Work of Rehabilitation Commissioners)
CHAPTER IV CONFIRMATION OF INDIVIDUAL REHABILITATION CLAMS Article 603 (Confirmation of Individual Rehabilitation Claims)
Article 604 (Judgment in Claim Allowance Proceedings on Individual Rehabilitation Claims)
Article 605 (Lawsuit Objecting to Judgment in Claim Allowance Proceedings on Individual Rehabilitation Claims)
Article 606 (Entry of Result of Appeal on Confirmation of Individual Rehabilitation Claims, etc.) The court official of Grade V, etc. shall, at the request of the debtor, any rehabilitation commissioner or any individual rehabilitation creditor, prepare a table of individual rehabilitation creditors in which the matters falling under each of the following subparagraphs are entered:
Article 607 (Effect of Judgment in Claim Allowance Proceedings on Individual Rehabilitation Claims)
Article 608 (Refund of Litigation Costs) When any profit accrue to the debtor's properties as a result of the claim allowance proceedings on individual rehabilitation claims, any individual rehabilitation creditor who files such lawsuit may claim a reimbursement of litigation costs as an individual rehabilitation creditor within the limit of the profit that accrues. Article 609 (Value of Subject Matter of Claim Allowance Proceedings on Individual Rehabilitation Claims) The value of the subject matter of a claim allowance proceeding on individual rehabilitation claims shall be determined by the court with pending individual rehabilitation cases based on the estimated amount of the profit that accrues according to the repayment plan. <Amended by Act No. 14472, Dec. 27, 2016> Article 609-2 (Transfer of Title)
[This Article Newly Inserted by Act No. 12595, May 20, 2014] Article 610 (Submission and Revision of Draft Repayment Plan)
Article 611 (Contents of Repayment Plan)
Article 611 (Contents of Repayment Plan)
<<Enforcement date: Jun. 13, 2018>> Article 611 (5) Article 612 (Invalidation of Preferential Benefits) The debtor’s act of giving special profits to some individual rehabilitation creditors without resorting to the repayment plan, in his/her name or in the name of any third person, shall be made invalid. Article 613 (Assembly of Individual Rehabilitation Creditors)
Article 614 (Whether to Authorize Repayment Plan)
Article 615 (Effect of Authorizing Repayment Plan)
Article 616 (Special Rules Concerning Assignment Order)
Article 617 (Performance of Repayments)
Article 617-2 (Deposit for Debtors) Where a deposited amount (including interest) exists even after a decision on the discontinuation of individual rehabilitation procedures or a decision on immunity becomes final and conclusive, a rehabilitation commissioner shall return such deposited amount to a debtor: Provided, That where the debtor refuses to receive the deposited amount or where it cannot be returned because his/her whereabouts are unknown, the rehabilitation commissioner may deposit the amount for the debtor. [This Article Newly Inserted by Act No. 15158, Dec. 12, 2017] Article 618 (Immediate Appeal against Decision on Whether to Authorize Repayment Plan)
Article 619 (Revision of Repayment Plan after Authorization Thereof)
CHAPTER VI DISCONTINUATION AND IMMUNITY Article 620 (Discontinuation of Individual Rehabilitation Procedures Prior to Authorization of Repayment Plan)
Article 621 (Discontinuation of Individual Rehabilitation Procedures after Authorization of Repayment Plan)
Article 622 (Public Notice of Decision to Discontinue Individual Rehabilitation Procedures) The court shall, when it decides to discontinue the individual rehabilitation procedures, publicly notify the operative part of such decision and the gist of its reasoning thereof. In this case, no service need be made. Article 623 (Immediate Appeal Filed Against Discontinuation of Individual Rehabilitation Procedures)
Article 624 (Immunity Decision)
Article 625 (Effect of Decision to Grant Immunity)
Article 626 (Cancellation of Immunity)
Article 627 (Immediate Appeal Filed against Decision on Immunity) An immediate appeal may be filed against any decision to grant immunity and any decision to cancel immunity. PART V INTERNATIONAL BANKRUPTCY Article 628 (Definitions) The definition of terms used in this Part shall be as follows:
Article 629 (Scope of Application)
Article 630 (Jurisdiction) Cases concerning approval of, and support for foreign bankruptcy procedures shall be placed under the exclusive jurisdiction of the collegiate division of the Seoul Rehabilitation Court: Provided, That when it is deemed necessary to ensure the efficient implementation of the procedures and to protect the rights of interested parties, the Seoul Rehabilitation Court may transfer such cases to the competent court provided for in Article 3 at the time it decides to approve the foreign bankruptcy procedures or after it decides to approve such foreign bankruptcy procedures, at the request of the party or ex officio. <Amended by Act No. 14472, Dec. 27, 2016> Article 631 (Application Filed for Approving Foreign Bankruptcy Procedures)
Article 632 (Decision to Approve Foreign Bankruptcy Procedures)
Article 633 (Effect of Approval for Foreign Bankruptcy Procedures) A decision to approve foreign bankruptcy procedures shall not affect the commencement or the progress of procedures pursuant to this Act. Article 634 (Application by Representative of Foreign Bankruptcy Procedures for Commencing Domestic Bankruptcy Procedures, etc.) When foreign bankruptcy procedures are approved, the representative of the foreign bankruptcy procedures may file an application for commencement of domestic bankruptcy procedures or participate in domestic bankruptcy procedures that are in progress. Article 635 (Order, etc. Prior to Approval)
Article 636 (Support for Foreign Bankruptcy Procedures)
Article 637 (International Bankruptcy Custodians)
Article 638 (Simultaneous Proceedings of Domestic Bankruptcy Procedures and International Bankruptcy Procedures)
Article 639 (Multiple International Bankruptcy Procedures)
Article 640 (Authority for Custodians to Carry Out Activities Overseas) Any custodian and any trustee in bankruptcy of domestic bankruptcy procedures and any other person who obtains permission from the court, shall have the authority to carry out activities overseas for domestic bankruptcy procedures in any way permitted by the applicable foreign law. Article 641 (Cooperation)
Article 642 (General Rules Governing Dividends) Where domestic bankruptcy procedures, foreign bankruptcy procedures or multiple foreign bankruptcy procedures for a common debtor are in progress, any creditor who receives repayment from the foreign bankruptcy procedures or debtor's overseas properties shall not be entitled to take any dividend or any repayment from the domestic bankruptcy procedures until such time as other creditors who belong to the same group and the same ranking as the group and the ranking of the former receive the same percentage of repayment. PART VI PENALTY PROVISIONS Article 643 (Offense of Fraudulent Rehabilitation)
Article 644 (Offense of Fraudulent Rehabilitation Committed by Third Person) Where any person other than persons specified in the provisions of Article 643 commits any of the following acts and a decision to commence rehabilitation procedures for the debtor becomes final and conclusive, such person shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding 50 million won:
Article 644-2 (Exceptional Provisions concerning Crime of Fraudulent Rehabilitation) A person who provides false information or submits false materials for the purpose of escaping from the application of Article 231-2 or 243-2 shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding fifty million won. [This Article Newly Inserted by Act No.12783, Oct. 15, 2014] Article 645 (Offense of Rehabilitation Bribery)
Article 646 (Offense of Rehabilitation Bribery) Any person who promises, gives or expresses the intention of giving the bribe provided for in the provisions of Article 645 (1) or (2) shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding 50 million won. Article 647 (Offense of Violating Prohibition on Management Participation) Any person who is appointed as a director or the chief executive officer of the debtor after the termination of rehabilitation procedures or the termination of simplified rehabilitation procedures in violation of the provisions of Article 284 shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding 30 million won. <Amended by Act No. 12892, Dec. 30, 2014> Article 648 (Offense of Performing Act without Permission)
Article 649 (Offense of Refusing to Make Reports and Refusing Inspection) Any of the following persons shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding ten million won: <Amended by Act No.12783, Oct. 15, 2014; Act No. 12892, Dec. 30, 2014>
Article 650 (Offense of Fraudulent Bankruptcy)
Article 651 (Offense of Negligent Bankruptcy)
Article 652 (Offense of Fraudulent Bankruptcy and Negligence Bankruptcy by Person in Certain Position) When any of the following persons conducts an offense provided for in the provisions of Articles 650 and 651 and the debtor's bankruptcy is declared final and conclusive, he/she shall be governed by the precedent under Articles 650 and 651. The same shall apply to the inheritor and his/her legal representative and manager in cases of bankruptcy regarding inherited estate:
Article 653 (Offense of Non-Compliance with Order for Arrest) Where a person who has been issued with the order for arrest under Articles 319, 320, 322, and 578-6, knowingly escapes with the aim of delaying the bankruptcy procedure or evading the execution of such arrest, he/she shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding ten million won.?<Amended by Act No. 11828, May 28, 2013> Article 654 (Offense of Fraudulent Bankruptcy by Third Person) Where a person who is neither a debtor nor a person specified in any subparagraph of Article 652 commits an act specified in any subparagraph of Article 650 with intent to make a profit for him/herself or for any other person or to inflict harm on creditors or falsely exercises a right as a bankruptcy creditor for a benefit of his/her own or any other person, irrespective of whether such act is committed before or after the bankruptcy is declared, and the bankruptcy of a debtor is declared final and conclusive, the person who commits such act shall be punished by imprisonment with labor for not more than ten years or by a fine not exceeding 100 million won. Article 655 (Offense of Bankruptcy Bribery)
Article 656 (Offense of Bankruptcy Bribery) Anyone who promises or gives any bribe, or expresses an intention to give any bribe to any of the following persons shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding 30 million won:
Article 657 (Offense of Using Results of Property Inquiry for Other Purposes) Any person who uses the results of the property inquiry provided for in the provisions of Article 29 (1) for any purpose other than that of inspecting the debtor's properties for rehabilitation procedures, bankruptcy procedures, or individual rehabilitation procedures shall be punished by imprisonment with labor for not more than two years or by a fine not exceeding 20 million won. Article 658 (Offense of Violation of Duty to Give Explanation) Where a person who has a duty to give explanation pursuant to the provisions of Articles 321 and 578-7 fails to give such explanation, or gives false explanation without any justifiable reason, he/she shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding ten million won.?<Amended by Act No. 11828, May 28, 2013> Article 659 (Overseas Offense)
Article 660 (Administrative Fines)
ADDENDA Article 1 (Enforcement Date) This Act shall enter into force beginning on the date on which one year lapses after its promulgation. Article 2 (Repeal of Acts) A case of reorganization for which an application is filed for commencing Article 4 (Transitional Measure concerning Penalty Provisions) The application of the penalty provisions to any act that is performed prior to this Act enters into force shall be governed by the former provisions and when the commission of any individual offense across the time committed before and after this Act enters into force, such offense shall be deemed committed before this Act enters into force. Article 5 Omitted. Article 6 (Relationship with other Statutes) Where other statutes cite the previous Company Reorganization Act, Composition Act, Bankruptcy Act, and Individual Debtor Rehabilitation Act or their provisions at the time this Act enters into force and when the provisions falling under the cited provisions exist in this Act, this Act or the relevant provisions of this Act shall be deemed to have been cited in lieu of the previous provisions. ADDENDUM <Act No. 7892, Mar. 24, 2006> This Act shall enter into force on April 1, 2006. ADDENDA <Act No. 7894, Mar. 24, 2006>
ADDENDA <Act No. 7895, Mar. 24, 2006>
ADDENDA <Act No. 8138, Dec. 30, 2006> Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2007. (Proviso Omitted.) Articles 2 through 6 Omitted. ADDENDA <Act No. 8635, Aug. 3, 2007> Article 1 (Enforcement Date) This Act shall enter into force one year and six months after the date of its promulgation. (Proviso Omitted.) Articles 2 through 44 Omitted. ADDENDA <Act No. 8814, Dec. 27, 2007>
ADDENDA <Act No. 8829, Dec. 31, 2007> Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2008. Articles 2 through 12 Omitted. ADDENDA <Act No. 8863, Feb. 29, 2008> Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. Articles 2 through 5 Omitted. ADDENDA <Act No. 9346, Jan. 30, 2009> Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2013. Articles 2 and 5 Omitted. ADDENDA <Act No. 9804, Oct. 21, 2009>
ADDENDA <Act No. 9924, Jan. 1, 2010> Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2010. Articles 2 through 7 Omitted. ADDENDA <Act No. 9935, Jan. 22, 2010> Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. Articles 2 and 3 Omitted. ADDENDA <Act No. 10219, Mar. 31, 2010> Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2011. Articles 2 through 12 Omitted. ADDENDA <Act No. 10281, May 14, 2010> Article 1 (Enforcement Date) This Act shall enter into force six months after the date of its promulgation. Article 2 Omitted. ADDENDA <Act No. 10303, May 17, 2010> Article 1 (Enforcement Date) This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.) Articles 2 through 10 Omitted. ADDENDA <Act No. 10366, Jun. 10, 2010> Article 1 (Enforcement Date) This Act shall enter into force two years after the date of its promulgation. Articles 2 through 4 Omitted. ADDENDA <Act No. 10682, May 19, 2011> Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. Articles 2 and 3 Omitted. ADDENDA <Act No. 11828, May 28, 2013> Article 1 (Enforcement Date) This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.) Articles 2 (Applicability) This Act shall apply beginning with the first rehabilitation or bankruptcy cases which are filed after this Act enters into force. ADDENDA <Act No. 12153, Jan. 1, 2014> Articles 1 (Enforcement Date) This Act shall apply on January 1, 2014. (Proviso omitted) Articles 2 through 19 Omitted. ADDENDA <Act No. 12591, May 20, 2014> Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. Articles 2 through 4 Omitted. ADDENDA <Act No. 12595, May 20, 2014> Article 1 (Enforcement Date) This Act shall enter into force six months after the date of its promulgation. Article 2 (Transitional Measures) With respect to an application for commencement of rehabilitation procedures, petition for bankruptcy, or application for commencement of individual rehabilitation procedures which has been filed before this Act enters into force, the previous provisions shall apply. ADDENDUM <Act No. 12783, Oct. 15, 2014> This Act shall enter into force three months after the date of its promulgation. ADDENDA <Act No. 12892, Dec. 30, 2014> Article 1 (Enforcement Date) This Act shall enter into force six months after the date of its promulgation. Article 2 (Applicability concerning Public Notification of Rehabilitation Procedures and Holding of Explanatory Meeting for Interested Persons) With respect to the public notification of the matters under the amended provisions of Article 51 (1) and the holding of an explanatory meeting under the amended provisions of Article 98-2, this Act shall apply beginning with the first rehabilitation procedures commenced after this Act enters into force. Article 3 (Applicability concerning Wage Claimant, etc.) The amended provisions of Article 415-2 shall apply beginning with the claim for wage, disaster compensation, retirement allowance, etc. which arises for the first time from labor relations after this Act enters into force. Article 4 (Transitional Measures concerning Conduct and Discontinuation of Rehabilitation Procedures and Continuation and Public Notification of Distribution Procedures) Notwithstanding the amended provisions of Article 51, Article 92, Article 98, Article 99, Article 182 (2), Article 193 (3), Article 220, Article 221, Article 223 (1), (4) and (6), Article 285, Article 286 (2) and the subparagraph 2 of Article 511, the previous provisions thereof shall apply to the conduct of rehabilitation procedures such as holding of the first assembly of related persons, the discontinuation of rehabilitation and the continuation and public notification of the distribution procedures, with respect to cases in which rehabilitation procedures is in progress at the time when this Act enters into force. Article 5 Omitted. ADDENDA <Act No. 14177, May 29, 2016> Article 1 (Enforcement Date) This Act shall enter into force three months after the date of its promulgation: Provided, That the amended provisions of Article 3 shall enter into force six months after the date of its promulgation. Article 2 (Applicability to Jurisdiction of Courts) The amended provisions of Article 3 (4) shall apply starting from rehabilitation cases and bankruptcy cases filed after the said amended provisions enter into force. Article 3 (Applicability to Matters to Be Determined Concurrently with Decision on Commencement of Rehabilitation Procedures, Claims Which Become Rehabilitation Claims, Prior Submission of Draft Rehabilitation Plans, Resolutions in Writing, and Authorization or Non-Authorization of Rehabilitation Plans When They Have Undergone Written Resolutions) The amended provisions of Articles 50 (1) 1, 2 and 4, 179 (1) 8-2, 223 (1), (3), (4), (5) and (8), 240 (2) and 242-2 shall apply starting from rehabilitation cases and simplified rehabilitation cases filed after this Act enters into force. Article 4 (Transitional Measures concerning Incompetents, etc.) Persons under adult guardianship or limited guardianship prescribed in the amended provisions of Article 16 (4) 1 shall be considered to include persons for whom a sentence for incompetency or quasi-incompetency is maintained under Article 2 of Addenda of the partially amended Civil Act (Act No. 10429). ADDENDA <Act No. 14472, Dec. 27, 2016> Article 1 (Enforcement Date) This Act shall enter into force on March 1, 2017. Article 2 (Transitional Measures concerning District Courts, etc.) Every district court or principal district court having jurisdiction over an area in which no rehabilitation court is established at the time this Act enters into force shall be considered as a rehabilitation court under this Act, and the head of such district court, as the head of a rehabilitation court under this Act until a rehabilitation court is established. ADDENDA <Act No. 14476, Dec. 27, 2016> Article 1 (Enforcement Date) This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.) Articles 2 through 5 Omitted. ADDENDA <Act No. 15158, Dec. 12, 2017> Article 1 (Enforcement Date) This Act shall enter into force three months after the date of its promulgation: Provided, That the amended provisions of Article 611 (5) shall enter into force six months after the date of promulgation. Article 2 (Applicability)
What must a debtor do to be released from his obligation if the creditor refuses to accept payment?If the creditor to whom a tender of payment is made refuses to accept it, without reason, the debtor shall be released from liability by the consignation due.
What is the remedy available to the creditor when the debtor fails or refuses to perform his obligation to deliver a determinate thing?ARTICLE 1204. The creditor shall have a right to indemnity for damages when, through the fault of the debtor, all the things which are alternatively the object of the obligation have been lost, or the compliance of the obligation has become impossible.
What are the remedies of the creditor when the debtor fails to comply?In cases where the obligor breached his/her obligation, s/he shall be liable for damages. [1] If the obligation to give a specific thing is breach by the debtor, the creditor may either compel the debtor to make delivery (specific performance)[2] or rescind.
What is the obligation of the debtor to the creditor?In the absence of any agreement as to the place of payment, it is the duty of the debtor to take reasonable steps to seek out the creditor and to pay the money owed. A debtor is not, without agreement, entitled to any notice or demand from a creditor.
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