CONTENTS
- 1. The Client Who Came to Daeryun's Chuncheon Office
- - The Client's Story Shared at Daeryun's Chuncheon Office
- - Corporate Bankruptcy Petition Explained by Daeryun's Chuncheon Office
- 2. Daeryun's Chuncheon Office's Strategy for the Corporate Bankruptcy Petition
- - Daeryun's Chuncheon Office Argues a Decline in Profits Caused by Rising Raw Material Prices
- - Daeryun's Chuncheon Office Argues Excessive Expenditures Relative to Sales
- - Daeryun's Chuncheon Office Argues That Continuing the Business Was Impossible
- 3. ‘Declaration of Bankruptcy’ as a Result of Daeryun's Chuncheon Office's Assistance
1. The Client Who Came to Daeryun's Chuncheon Office
The client who came to Daeryun's Chuncheon office was a company that manufactured steel structures. In the course of business, all of the employees resigned and the company came to bear debts such as taxes and public charges, and, having determined that it no longer had the ability to repay, it sought to file a bankruptcy petition.
The Client's Story Shared at Daeryun's Chuncheon Office
The client operated a company that assembled and installed ship parts and steel structures.
Having previously worked at a related company, the client thought it would be feasible to run the business directly and, after resigning, went into business personally.
However, once the business actually began, the client learned that the companies receiving deliveries avoided new suppliers out of stability concerns.
In addition, due to COVID-19, the company experienced a sharp decline in sales and lost the ability to repay its debts to business partners and financial institutions.
No longer able to raise funds and with all of its workers having resigned, the client resolved to file a bankruptcy petition.
Corporate Bankruptcy Petition Explained by Daeryun's Chuncheon Office
🔗Corporate bankruptcy refers to the process in which a company (corporation) whose operations have become difficult due to excessive debt and that has reached a state of insolvency, after a declaration of bankruptcy through bankruptcy proceedings, determines creditors' rights through an investigation of claims under the court's supervision, then liquidates the company's (corporation's) assets and distributes the proceeds according to the priority of rights and the amount of the claims.
■ Eligibility to file for corporate bankruptcy (company bankruptcy)
- A company in a state of insolvency, such as suspension of payments or dishonor of a current account, due to excessive debt
- A company at high risk of insolvency because its liabilities exceed its assets
- A company at risk of having its rehabilitation proceedings discontinued while corporate rehabilitation proceedings are underway
- A company unable to carry out its rehabilitation plan even though the plan has been approved
- A company that has become unable to fully repay its debts during liquidation
■ Corporate bankruptcy (company bankruptcy) procedure
① Bankruptcy petition |
② Examination, correction order, and advance deposit order |
③ Declaration of bankruptcy |
④ Conversion of the bankruptcy estate into cash |
⑤ First creditors' meeting and date for investigation of claims |
⑥ Repayment of estate claims and distribution to bankruptcy claims |
⑦ Creditors' meeting for the accounting report |
2. Daeryun's Chuncheon Office's Strategy for the Corporate Bankruptcy Petition
After grasping the specific circumstances of the client company, Daeryun's Chuncheon office made the following arguments so that the corporate bankruptcy petition could succeed.
Daeryun's Chuncheon Office Argues a Decline in Profits Caused by Rising Raw Material Prices
The price of raw materials for steel products rose rapidly, and because the client's company was a newly established business, it was difficult to secure price competitiveness.
It was argued that, in response, the client tried to operate the business by reducing fixed costs, such as by adjusting the employees' working days, but this only resulted in a decline in the employees' productivity, and profits gradually decreased.
Daeryun's Chuncheon Office Argues Excessive Expenditures Relative to Sales
The existing technical staff began to leave the company as their salaries decreased due to the reduction in working days, and, given the nature of the manufacturing industry, the company could not continue to hire employees who demanded high wages.
It was therefore emphasized that production naturally remained low, and that while overall sales were sluggish, the burden of raw material costs and labor costs increased.
Daeryun's Chuncheon Office Argues That Continuing the Business Was Impossible
It was argued that the client company had reached financial collapse and could not continue the business, as it had lost the ability to repay not only the employees' wages and severance pay but also its debts to business partners and financial institutions.
3. ‘Declaration of Bankruptcy’ as a Result of Daeryun's Chuncheon Office's Assistance
With the assistance of Daeryun's Chuncheon office, the client who filed for corporate bankruptcy succeeded in obtaining a ‘declaration of bankruptcy’ from the court.
The court acknowledged that the facts constituting a cause of bankruptcy, namely insolvency and excess of liabilities, existed with respect to the client.
If You Intend to File for Corporate Bankruptcy
If you intend to file a corporate bankruptcy petition, you must present clear materials showing that the eligibility requirements for bankruptcy are met.
In addition, because there is even a process of examining the representative of the company in bankruptcy, it is advisable to receive an attorney's assistance and have them attend with you.
If you need help in this regard, please request a 🔗legal consultation from Daeryun Law Firm (LLC).
This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
Unauthorized reproduction, duplication, or distribution and other copyright infringements may result in legal action under applicable laws.
