CONTENTS
- 1. The Client Who Sought a Rehabilitation and Bankruptcy Attorney
- - The Client Who Filed for Corporate Rehabilitation
- 2. Corporate Rehabilitation Explained by a Rehabilitation and Bankruptcy Attorney
- - What Are the Procedures and Eligibility for Corporate Rehabilitation?
- 3. The Attorney's Areas of Assistance
- - Rehabilitation Approval Strategy (1): High Going-Concern Value
- - Rehabilitation Approval Strategy (2): Submission of a Financial Restructuring Plan
- - Rehabilitation Approval Strategy (3): Revenue Expansion Through Increased Exports
- 4. Result of the Attorney's Assistance: Approval of the Rehabilitation Plan
- - When Assistance With Corporate Rehabilitation May Be Needed
1. The Client Who Sought a Rehabilitation and Bankruptcy Attorney
The rehabilitation and bankruptcy attorney's client sought to recover through corporate rehabilitation as debt continued to increase during the operation of the business, and with the attorney's assistance, the client obtained approval of the rehabilitation plan.
The Client Who Filed for Corporate Rehabilitation
This is the background of the case as understood by the rehabilitation and bankruptcy attorney.
The client is the representative of a company engaged in automobile parts manufacturing.
As the business continuously expanded in scale, the company made a major investment in new equipment several years ago.
However, shortly afterward, the volume of orders from business partners decreased significantly due to the COVID-19 pandemic, and sales declined.
It is said that, in a poor financial situation due to the expansion of new equipment, when sales also sharply decreased, the debt increased exponentially.
Although there were many difficulties in operations, the client nevertheless resolved to pursue corporate rehabilitation in order to make a fresh start once again.
Accordingly, the client came to a rehabilitation and bankruptcy attorney to request help in obtaining approval of the rehabilitation plan.
2. Corporate Rehabilitation Explained by a Rehabilitation and Bankruptcy Attorney
The client who came to the rehabilitation and bankruptcy attorney wished to file for 🔗corporate rehabilitation.
Corporate rehabilitation refers to a system in which a debtor facing financial collapse adjusts its debts and legal relations and other matters to pursue rehabilitation.
When an approval decision is obtained for a corporate rehabilitation petition, the debtor can typically be relieved of a certain proportion of its debts through the reconstruction of the business and the continuation of operations.
However, since this is ultimately a procedure carried out with the aim of continuing to operate the business, it differs from corporate bankruptcy, in which the remaining assets are disposed of and divided fairly among the creditors.
The relevant statutes are as follows.
When a decision to approve the rehabilitation plan has been made… except for the rights recognized therein, the debtor is discharged from liability for all rehabilitation claims and rehabilitation security rights, and the security rights existing over the debtor's property are extinguished.
What Are the Procedures and Eligibility for Corporate Rehabilitation?
The procedure for corporate rehabilitation is as follows.
1. Application for commencement of rehabilitation proceedings
2. Decision to commence proceedings
3. Submission and deliberation of the rehabilitation plan
4. Approval of the rehabilitation plan
5. Performance and conclusion of the rehabilitation plan
In addition, to apply for corporate rehabilitation, the following specific standing as a party must be met.
The qualifications to apply for corporate rehabilitation are as follows.
▶ A debtor that will undergo rehabilitation proceedings
▶ A creditor holding claims amounting to at least one-tenth of the capital
▶ A shareholder or equity holder holding shares or equity amounting to at least one-tenth of the capital
3. The Attorney's Areas of Assistance
The rehabilitation and bankruptcy attorney closely reviewed the client company's financial situation and business capacity, calculated the projected profit and loss if the business continued, and developed advocacy for approval of the rehabilitation plan.
Rehabilitation Approval Strategy (1): High Going-Concern Value
The rehabilitation and bankruptcy attorney calculated and compared the value of the client's company upon liquidation and its value upon continuing the business.
As a result, the value upon continuing the business far exceeded the value upon liquidation.
On this basis, the attorney emphasized that approval of corporate rehabilitation was needed in order to preserve the going-concern value.
Rehabilitation Approval Strategy (2): Submission of a Financial Restructuring Plan
Through the mediation of the rehabilitation and bankruptcy attorney, the client company planned to actively utilize a financial structure improvement program.
Through this, it could be expected to raise production efficiency and reduce unnecessary financial costs.
It was emphasized that the financial structure could be improved through approval of the corporate rehabilitation.
Rehabilitation Approval Strategy (3): Revenue Expansion Through Increased Exports
After the effects of COVID-19 ended, orders from business partners recovered, and there was reason to expect a revitalization of overseas sales.
In particular, sales were expected to be revitalized in the North American market.
The rehabilitation and bankruptcy attorney calculated the expected revenue after approval of corporate rehabilitation in specific figures and emphasized the need for corporate rehabilitation.
4. Result of the Attorney's Assistance: Approval of the Rehabilitation Plan
The court, accepting the arguments of the rehabilitation and bankruptcy attorney, issued a decision approving the rehabilitation plan of the client company.
When Assistance With Corporate Rehabilitation May Be Needed
This was a story in which the client's company, which had been in crisis due to increased debt, was able to obtain approval of the rehabilitation plan with the attorney's help.
Corporate rehabilitation has a complex procedure and requires a long process of persuasion and review, so the assistance of an expert is very important.
At Law Firm Daeryun, accountants, tax accountants, and attorneys with expertise in the relevant field form a task force together to prepare a strategy for corporate rehabilitation.
In particular, we provide efficient services for the data review and procedural preparation that take a great deal of time.
If you are experiencing a related issue, we hope you will seek help through a 🔗legal consultation reservation.
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.
