After three-and-half years, Korea's corporate restructuring law
has proven less than wholly effective in handling cases where there
are many foreign creditors.
When the Corporate Restructuring Promotion Act (CRPA) was
enacted in mid-2001, the aim was to give lenders a framework for
determining at an early stage whether financially distressed
companies were near insolvency. The intention was that by making
corporate accounting control systems more transparent and requiring
financial institutions to continuously monitor the credit risk of
their debtors, the CRPA would ensure restructurings were carried
out in a speedier and more efficient way. It has been used in a
number of high profile cases since.
Yet as the Act's December 31 expiry date approaches,
policymakers will no doubt want to review the $8.3 billion
restructuring of SK Networks Co Ltd (formerly known as SK Global Co
Ltd) when they debate the future of the CRPA and the possible
unification of Korea's insolvency laws....