COMPOSITION ACT

Article 1(Meaning of Composition) #

For the purpose of this Act, the term “composition” means a compulsory composition for the purpose of prevention of bankruptcy.

Article 2(Effectuation Time of Composition) #

A composition procedure shall enter into force at the time of determination of its commencement.

Article 3(Jurisdiction over Composition Matter) #

The provisions of Articles 96, 98 and 98-2 of the Bankruptcy Act shall apply mutatis mutandis to composition cases.

[This Article Wholly Amended by Act No. 5518, Feb. 24, 1998]

Article 4(Redemptive Right) #

Articles 79 through 82 and 83 (1) of the Bankruptcy Act shall apply mutatis mutandis to cases, where the commencement of composition be made.

Article 5(Right of Offset) #

Articles 89 through 95 of the Bankruptcy Act shall apply mutatis mutandis to the offset right of a composition creditor.

Article 6(Application for Bankruptcy, Presumption of Adjudication) #

In application of the provisions of the two preceding Articles, an application for the commencement of composition shall be considered as an application for bankruptcy, and a commencement of composition shall be considered as the adjudication of bankruptcy.

Article 7(Appeal) #

(1) A person interested in the adjudication may make an immediate appeal of the adjudication regarding composition only in cases where a special provision concerning it exists in this Act.

(2) The time limit of appeal under the provisions of the preceding paragraph shall be fourteen days from its public notification in cases where the adjudication is publicly notified.

Article 8(Registration, Record on Composition) #

Articles 109, 110, 112 and 114 of the Bankruptcy Act shall apply mutatis mutandis to the case where composition commences, the cancellation of the decision on the commencement of composition is decided, composition is rescinded, composition is approved or disapproved, and a decision on the cancellation of composition becomes final and conclusive. <Amended by Act No. 6110, Jan. 12, 2000>

Article 9(Transfer to Bankruptcy Proceedings) #

(1) If composition is rescinded, or if composition is disapproved or a decision on the cancellation of composition becomes final and conclusive, the court shall make an adjudication of bankruptcy ex officio: Provided, That the same shall not apply to the case where the cause of bankruptcy is nonexistent. <Amended by Act No. 5518, Feb. 24, 1998; Act No. 6110, Jan. 12, 2000>

(2) If the adjudication of bankruptcy has been made pursuant to the provisions of the preceding paragraph, the entrustment of registration or record under the provisions of the preceding Article shall be made with the entrustment of registration or record of bankruptcy.

Article 10(Presumption as Suspension of Payment and Application of Bankruptcy) #

(1) Where the adjudication of bankruptcy is made pursuant to the provisions of paragraph (1) of the preceding Article, an application for the commencement of composition or the cancellation of composition, or conduct of applicant for composition falling under the fraud in insolvency in applying Part One of the Bankruptcy Act, shall, if an application for the suspension of payment or bankruptcy is not made before that time, be considered as an application for suspension of payment or bankruptcy, and obligation for composition and cost of composition procedures shall be the foundation obligation.

(2) In applying the Bankruptcy Act when bankruptcy is declared prior to approval of composition in accordance with the provisions of Article 9 (1), a report filed for composition obligation under this Act shall be deemed a report filed for bankruptcy obligation according to bankruptcy procedures.

<Newly Inserted by Act No. 6110, Jan. 12, 2000>

(3) If bankruptcy is declared in accordance with the provisions of Article 9 (1), the court may, with respect to any measure taken and any act performed by a court, an administrator, a preservative trustee, a reorganization member, the management committee established pursuant to Article 93-2 of the Company Reorganization Act (hereinafter referred to as the “management committee”), a member of the management committee (hereinafter referred to as “management member”), the creditors’ conference pursuant to Article 49-2, composition creditors, and other interested persons in composition procedures under this Act, deem such measure and act effective in bankruptcy procedures too, unless they are contrary to their nature. In this case, the court shall prescribe by decision the scope of measure and act, etc. that the court deems effective simultaneously with the declaration of bankruptcy. <Newly Inserted by Act No. 6110, Jan. 12, 2000>

Article 11(Provisions which Apply Mutatis Mutandis) #

(1) Articles 2, 3, 100, 101, 102, 104 through 108 and 115 of the Bankruptcy Act shall apply mutatis mutandis to the composition procedure. <Amended by Act No. 6110, Jan. 12, 2000>

(2) In case where there is no particular provisions on composition procedure in this Act, the Civil Procedure Act and Civil Execution Act shall apply mutatis mutandis. <Amended by Act No. 6627, Jan. 26, 2002>

Article 11-2(Work and Power of Management Committee) #

(1) The management committee shall, where it is established, perform the work falling under each of the following subparagraphs from among the works prescribed by Acts and subordinate statutes and the court under the court’s directions in respect to composition procedures: <Amended by Act No. 6110, Jan. 12, 2000>

1. Presentation of its opinions on the appointment of preservative trustees, reorganization members and administrators;

2. Supervision and evaluation over the discharge of operations by preservative trustees, reorganization members and administrators;

3. Examination and coordination over composition cases;

4. Provision of information to creditors and adjustment of their opinions; and

5. Other work on the composition procedures.

(2) The management committee may delegate part of its work to members of the management committee for the effective discharge of the operations listed in paragraph (1). <Amended by Act No. 6110, Jan. 12, 2000>

(3) Where the court deems that it is not proper for any managing member to discharge his operations pursuant to paragraph(2), it may order the management committee to delegate his operations to another managing member.

(4) The court may delegate part of permission business on composition procedures to a managing member. In this case, the scope and procedures etc. of delegation shall be determined by the Supreme Court Regulations.

(5) The provisions of Article 54-3 of the Corporate Reorganization Act shall apply mutatis mutandis to business done by managing members pursuant to paragraph (4).

(6) Where the management committee is not established, matters concerning the management committee from among the provisions of Article 13 (5), the proviso of Article 19-2, the latter part of Article 20 (1), Article 20 (2) and (3), Article 27 (1), and the proviso of Article 64 (2) shall not apply. <Amended by Act No. 6110, Jan. 12, 2000>

[This Article Newly Inserted by Act No. 5518, Feb. 24, 1998]

Article 12(Requirement of Commencement of Composition) #

(1) In cases where there exists a fact as the grounds of bankruptcy or such a fact is threatening to occur, a debtor may file an application for commencement of composition: Provided, That a director or an equivalent person shall consent to this in cases of a juristic person. <Amended by Act No. 5518, Feb. 24, 1998>

(2) A commencement of composition shall not be applied on inherited property.

Article 13(Application for Commencement of Composition) #

(1) In applying for commencement of composition, the method of repayment, or in furnishing security, the security and other conditions of composition shall be reported to the court.

(2) The applicant for composition shall produce a detailed statement, which can show the situation of the assets, and a list of creditors and debtors simultaneously with the application. In case where the production is not made simultaneously with the application, these shall be produced without delay thereafter.

(3) An applicant for composition may alter the conditions of composition with permission by the court. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

(4) The court shall, in deciding whether to grant the permission of paragraph (3), take into account intentions of interested persons such as composition creditors and seek the reorganization members’ opinions after making a decision on the commencement of composition. <Amended by Act No. 6110, Jan. 12, 2000>

(5) The court may have a debtor offer personal or real security (including stock security) for the conditions of composition, seeking opinions from a management committee and a creditors conference referred to in Article 49-2. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

Article 14(Prepayment of Expenses) #

Where the commencement of composition is applied, the expenses of composition, which the court finds as reasonable, shall be paid in advance.

Article 15(Commencement of Composition and Nonadmission of Application for Bankruptcy) #

After the commencement of composition has been decided, an application for bankruptcy may not be filed.

Article 16(Adjudication of Bankruptcy and Nonadmission of Application for Composition) #

After the bankruptcy has been adjudicated, an application for a commencement of composition may not be filed.

Article 17(Suspension of Bankruptcy Proceeding) #

If an application for a commencement of composition and a bankruptcy are made, the bankruptcy proceedings shall be suspended.

Article 18(Cases where Application shall be Dismissed) #

In cases falling under any of the following subparagraphs, the court shall dismiss the application for the commencement of composition:

1. If the application is made for the avoidance of bankruptcy;

2. If the whereabouts of the applicant for composition is unknown;

3. If any conduct falling under the fraud in insolvency is deemed to has been made;

4. If the condition of composition is contrary to any Act; or

5. If the condition of composition is contrary to the general interests of composition creditors.

Article 19(Cases where Application may be Dismissed) #

In cases falling under any of the following subparagraphs, the court may dismiss the application for the commencement of composition:

1. If the expenses of composition procedure are not paid in advance;

2. If the composition has been rejected in the meeting of creditors;

3. If an application for the commencement of composition or a tender of composition has been withdrawn;

4. If a disapproval of composition has been decided; or

5. If a cancellation of composition has been decided.

Article 19-2(Special Cases for Rejection of Applications by Stock Companies) #

Where an application for commencement of composition by a stock company falls under any of the following subparagraphs, the court may reject it: Provided, That it shall seek opinions from the management committee and the creditors’s conference in case of subparagraph 2: <Amended by Act No. 6110, Jan. 12, 2000>

1. Where the financial failure of a stock company which is a debtor is due to the misappropriation or concealment of a company’s property or the act of mismanagement that carries a serious responsibility by a director or equivalent person, or manager; and

2. Where it is inappropriate to go through composition procedures in the light of various reason such as the magnitude of a debtor’s assets and liabilities or a large number of interested persons such as creditors.

[This Article Newly Inserted by Act No. 5518, Feb. 24, 1998]

Article 20(Preservative Measure and Preservative Trustees) #

(1) The court may order provisional attachment, injunction or any necessary preservative measure on the debtor’s property upon request of any interested person or ex officio before the determination of commencement of composition. In this case, the court shall seek opinions from the management committee. <Amended by Act No. 5518, Feb. 24, 1998>

(2) The court may appoint preservative trustees by seeking opinions from the management committee as deems necessary in taking measures referred to in paragraph (1). <Newly Inserted by Act No. 5518, Feb. 24, 1998>

(3) The court may modify or cancel the measures under the provisions of the preceding paragraphs (1) and (2) by seeking opinions from the management committee. <Amended by Act No. 5518, Feb. 24, 1998> .

(4) The judgement under the provisions of paragraphs (1) through (3) shall be made in the form of decision. An immediate appeal may be filed against this decision. <Amended by Act No. 5518, Feb. 24, 1998>

(5) An immediate appeal referred to in paragraph (4) shall have no effect for suspension of execution. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

(6) Where the court takes the measure of paragraphs (1), alter or cancel such measure, it shall, without delay ex officio, commission the registry office having jurisdiction over the subject matter of the right subject to said measures or the registry office at the seat of the head office (the seat of the main business place in the Republic of Korea, where its head office is in a foreign country) of company to register. <Newly Inserted by Act No. 5518, Feb. 24, 1998; Act No. 6110, Jan. 12, 2000>

(7) The provisions of paragraph (6) shall apply mutatis mutandis to those registered as a debtor’s property. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

(8) In commissioning a registration or registry referred to in paragraphs (6) and (7), a copy or an abstract of a written decision shall be accompanied by. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

(9) An applicant for composition shall not withdraw an application for its commencement without permission of the court after the dispositions referred to in paragraph (1) have been taken. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

Article 21 #

Deleted.<by Act No. 6110, Jan. 12, 2000>

Article 22 #

Deleted.<by Act No. 6110, Jan. 12, 2000>

Article 23 #

Deleted.<by Act No. 6110, Jan. 12, 2000>

Article 24 #

Deleted.<by Act No. 6110, Jan. 12, 2000>

Article 25 #

Deleted.<by Act No. 6110, Jan. 12, 2000>

Article 26(Notice of Commencement of Composition) #

In a written decision of the commencement of composition, the date of decision shall be stated.

Article 26-2(Time for Deciding on Commencement of Composition) #

A decision on whether to commence composition shall be made within one month from the date of application.

[This Article Wholly Amended by Act No. 6110, Jan. 12, 2000]

Article 27(Matters to be Determined Simultaneously) #

(1) The court shall appoint an administrator and a reorganization member decide the following particulars by seeking opinions from the management committee and the creditor’s conference referred to in Article 49-2 simultaneously with the commencement of composition: <Amended by Act No. 5518, Feb. 24, 1998; Act No. 6110, Jan. 12, 2000>

1. The period for reporting credits: Provided, That the period shall be not less than two weeks and not more than two months from the date of decision; and

2. The fixed date for the meeting of creditors: Provided, That a period of not less than one week and not more than two months shall be between the fixed date and the last day of the period for reporting credits.

(2) The court may have an administrator concurrently serve as a reorganization member taking into account various circumstances such as the scale and contents of business and the magnitude of assets and liabilities of a debtor and the difficulty to investigate. <Newly Inserted by Act No. 5518, Feb. 24, 1998; Act No. 6110, Jan. 12, 2000>

(3) An immediate appeal may be made against the ruling of the commencement of composition.

Article 28(Public Notification and Service of Composition Commencement) #

(1) If the court decides upon the commencement of composition, it shall publish matters falling under each of the following subparagraphs: <Amended by Act No. 6110, Jan. 12, 2000>

1. The judgement of the commencement of composition;

2. An administrator and a reorganization member; and

3. The period for reporting credits and the fixed date for the meeting of creditors.

(2) A written notice stating matters of each subparagraph of paragraph (1) and terms of composition shall be served on the verified creditors, the applicant for composition, the administrator and the reorganization member. <Amended by Act No. 6110, Jan. 12, 2000>

(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis to the case where any alteration of matters of paragraph (1) 2 and 3 occurs and the provisions of paragraph (2) shall apply mutatis mutandis to the case where any alteration of terms of composition occurs. <Amended by Act No. 6110, Jan. 12, 2000>

Article 29(Publication of Cancellation of Composition Commencement) #

(1) If the court decides to cancel the decision of commencement of composition, the court shall notify publicly the judgement at once.

(2) The provisions of Article 28 (2) shall apply mutatis mutandis to the case of paragraph (1). <Amended by Act No. 6110, Jan. 12, 2000>

Article 30(Keeping of Document) #

The documents of application for commencement of composition, the investigation documents and written opinion of reorganization member under the provisions of Article 39-2 shall be kept in the court for perusal by interested persons. <Amended by Act No. 6110, Jan. 12, 2000>

Article 31(Restriction on Acts of Debtor) #

(1) From the application for commencement of composition to decision, a debtor shall not conduct any such act as has not ever been done.

(2) Where a preservative trustee is appointed after the application for commencement of composition, a debtor shall not conduct any act although if it belongs to the acts as have ever been done, if an objection by a preservative trustee is made. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

(3) A debtor may fulfil obligations falling under any of the following subparagraphs arising after the application for commencement of composition, though such fulfillment does not belong to the acts as have ever been done if he obtains the consent of a preservative trustee: <Newly Inserted by Act No. 5518, Feb. 24, 1998>

1. Obligations arisen from the other party’s supply under a consecutive supply contract;

2. Obligations arisen from a debtor’s borrowing of funds, purchase of materials or other inevitable acts for continued business; and

3. Other expenses to be necessarily disbursed for a debtor.

(4) Where a preservative trustee is not appointed, a debtor may carry on act listed in paragraph (3) under permission by the court. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

(5) A preservative trustee may request at any time debtor to make a report on the receipts and disbursements of money or property business of the debtor, and may investigate, request for correction or take other appropriate measures. <Newly Inserted by Act No. 5518, Feb. 24, 1998>

Article 32(Effect of Commencement of Composition) #

(1) A commencement of composition shall not affect the rights of a debtor on administration and disposition of his own assets: Provided, That any act beyond the ordinary course of business shall not be done without the consent of the administrator.

(2) Though it is conduct within the ordinary course of business, a debtor shall not conduct it in case of dissent of administrator.

(3) If the administrator is to consent to important conduct pursuant to paragraph (1), he shall seek opinions from the reorganization member: Provided, That this shall not apply in case of Article 27 (2). <Amended by Act No. 5518, Feb. 24, 1998>

Article 33(Denying Power of Composition Creditor) #

The composition creditor may deny any act inconsistent with Article 31 or paragraphs (1) and (2) of the preceding Article: Provided, That this shall apply only in case that the fact comes to the knowledge of the other party at the time of that act.

Article 34(Payment and Receipt of Money by Administrator) #

The administrator may request a debtor pay and receive money for himself.

Article 35(Aid Allowance) #

The administrator may determine the sum of the aid allowance to be paid to the debtor and the person supported by him with permission of the court.

Article 36(Report and Investigation of Property) #

(1) The administrator may request at any time the debtor to make a report on the receipts and disbursements of money or property business of the debtor, and may investigate the financial status, request for correction or take other appropriate measures. <Amended by Act No. 5518, Feb. 24, 1998>

(2) The reorganization member may request a report on the debtor’s property from the administrator at any time.

Article 37(Duty of Explanation) #

Article 143 of the Bankruptcy Act shall apply mutatis mutandis to cases where the administrator or the meeting of creditors makes a demand for composition.

Article 37-2(Dismissal of Administrator) #

The court may, when appropriate reasons are in existence, dismiss any administrator ex officio or upon a request from interested persons. In this case, the court shall put the administrator under examination.

[This Article Newly Inserted by Act No. 6110, Jan. 12, 2000]

Article 38(Report of Accounts) #

If the duties of an administrator are terminated, the administrator or the successor shall report the accounts to the court without delay.

Article 39(Applicable Provisions) #

The provisions of Articles 148 through 151, 153 through 156, 159 of the Bankruptcy Act shall apply mutatis mutandis to the administrator. <Amended by Act No. 6110, Jan. 12, 2000>

Article 39-2(Investigation, etc. by Reorganization Members) #

(1) The court shall get reorganization members, within a specified period, to check and examine the property, books, and terms of composition of a debtor and to furnish a statement of their opinions as to whether it is proper to continue composition procedures.

(2) Any reorganization member may appoint any appraiser on his responsibility.

(3) The investigation and the submission of a statement of opinions by reorganization members shall be made within 2 months from the date of appointments: Provided, That where the resignation of a reorganization member and other unavoidable reasons are in existence, any reorganization member may extend such period within the limit of one month after getting permission from the court.

[This Article Newly Inserted by Act No. 6110, Jan. 12, 2000]

Article 39-3(Obligation to Take Investigation) #

No applicant for composition shall reject the investigation as prescribed in the provisions of Article 39-2 (1).

[This Article Newly Inserted by Act No. 6110, Jan. 12, 2000]

Article 39-4(Obligation to Explain) #

The provisions of Article 143 of the Bankruptcy Act shall apply mutatis mutandis to the case where any reorganization member files a request in respect of composition.

[This Article Newly Inserted by Act No. 6110, Jan. 12, 2000]

Article 39-5(Mutatis Mutandis Application of Provisions to Bankruptcy Administrator, etc.) #

The provisions of Article 37-2, and Articles 149 through 151, 154 through 156, 159, and 171 of the Bankruptcy Act shall apply mutatis mutandis to reorganization members.

[This Article Newly Inserted by Act No. 6110, Jan. 12, 2000]

Article 40(Prohibition, Suspension of Preservative Measure of Compulsory Execution) #

(1) During the composition procedure, compulsory execution, provisional attachment or provisional disposition on the debtor’s property shall not be made in relation to composition credits.

(2) The compulsory execution, provisional attachment and provisional disposition on the debtor’s property in relation to composition credits made prior to the commencement of composition shall be suspended during the composition procedure.

Article 41(Interruption of Prescription) #

The intervention in the composition procedure shall be considered a judicial claim on interruption of prescription.

Article 42(Composition Claim) #

The property claim against the debtor out of a cause prior to the commencement of composition shall be regarded as composition credit.

Article 43(Exclusion of Claim with General Priority) #

A claim with general priority shall not be regarded as a composition credit.

Article 44(Rightful Person of Separation) #

A person who are entitled to exercise the right of separation in case of bankruptcy, may exercise the right as a composition creditor up to the sum of credit which cannot be satisfied with the exercise of the right.

Article 45(Claim Posterior to Composition Claim) #

(1) Any of the following claims shall not be considered as composition credits:

1. Interest accrued after the commencement of composition;

2. Indemnification and penalty out of default after the commencement of composition;

3. Expenses of the intervention in the composition procedure; or

4. Fine, minor fine, cost of criminal procedure, forfeit and fine for negligence.

(2) The claims under the preceding paragraph shall be posterior to the composition credits.

Article 46(Composition Credits Amount of Credits Bearing No Interest with Maturity) #

If a claim is interest-free and the maturity date comes after the commencement of composition, the sum of the composition credits shall be sum of claim minus the legal interest of the composition credits from the commencement of composition to the maturity date.

Article 47(Composition Credits Amount of Claim for Money Payable on Installments with Certain Sum) #

The provisions of the preceding Article shall apply mutatis mutandis to the credits for money payable in installments with a certain sum and duration: Provided, That if the total sum exceeds the principal to be interested equivalent to the money payable in installments with the legal rate of interest, the principal shall be considered as the sum of composition credits.

Article 48(Sum of Composition Credits of Claim with Unfixed Maturity) #

In case of Article 46 the amount appraised at the time of commencement of composition, if the maturity is not fixed, shall be the sum of composition credits.

Article 49(Application Mutatis Mutandis of Provisions on Credits in Bankruptcy) #

Articles 16 through 22 and 201 through 203 of the Bankruptcy Act shall apply mutatis mutandis to the composition credits. In such case, the commencement of composition shall be considered adjudication of bankruptcy.

Article 49-2(Composition of Creditor’s Conference) #

(1) The management committee (meaning the court, where a management committee is not established: hereafter in this Article, the same shall apply) shall compose a creditor’s conference (hereinafter referred to as “conference”) composed of major creditors of the debtor who is a business manager after an application for composition procedures.

(2) The conference shall be composed of not more than ten persons.

(3) The management committee may have minor creditors as members participate in the conference as deems necessary.

[This Article Newly Inserted by Act No. 5518, Feb. 24, 1998]

Article 49-3(Functions of Conference) #

(1) The conference may present its opinions on composition procedures by adjusting the interests between creditors.

(2) The conference may request the debtor to submit necessary data to evaluate whether the conditions of composition have been met smoothly and to judge the progress of fulfilling the conditions of composition after a decision on approval of composition becomes final and definite.

[This Article Newly Inserted by Act No. 5518, Feb. 24, 1998]

Article 49-4(Submission, etc. of Data to Conference) #

(1) The court shall provide documents on the application for commencement of composition procedures, a written decision or other copies of important data on composition procedures as determined by the Supreme Court Regulations to the conference.

(2) The conference may request for an access to the debtor’s books or other data on composition procedures as necessary to make a decision relating to composition procedures.

(3) Where the debtor receives a request referred to in paragraph (2), he shall comply with it unless there exists a justifiable cause.

(4) Where a request is made by another creditor not affiliated with the conference, the conference shall provide information and data related to composition procedures.

(5) The composition, functions, powers of a conference or other necessary matters shall be determined by the Supreme Court Regulations.

[This Article Newly Inserted by Act No. 5518, Feb. 24, 1998]

Article 50(Summons on Day for Meeting of Creditors) #

(1) On the day for meeting of creditors, the composition creditor who has reported, the applicant for composition and a person who has become guarantor for composition or is under obligation with the debtor or has furnished security for composition creditor, shall be summoned.

(2) On the persons as prescribed in paragraph (1), written instruments on which are stated the conditions of composition and the gist of the opinion of the reorganization member shall be served. <Amended by Act No. 6110, Jan. 12, 2000>

Article 51(Voting Right of Interested Persons) #

The administrator and the reorganization member shall inspect whether or not the voting right is exercised in the meeting of creditors in relation to each reported claim and in what amount it shall be exercised.

Article 52(Report of Administrator and Reorganization Member) #

(1) The administrator and the reorganization member shall report the circumstances causing commencement of composition, the progress and the present state of debtor and his property and the result of investigation under the provisions of the preceding Article and express their opinions on the suitability of composition conditions in a meeting of creditors.

(2) Article 166 (2) through (4) of the Bankruptcy Act shall apply mutatis mutandis to the dissent of the person as provided in Article 50 (1), the administrator or the reorganization member on a reported claim.

Article 53(Provisions of Meeting of Creditors in Bankruptcy which Apply Mutatis Mutandis) #

(1) Articles 162, 165, 211 (the proviso), 273, 278, and 279 of the Bankruptcy Act shall apply mutatis mutandis to the meeting of creditors. <Amended by Act No. 6110, Jan. 12, 2000>

(2) Articles 276 and 277 of the Bankruptcy Act shall apply mutatis mutandis to a composition.

Article 53-2(Special cases for Small and Medium Businesses) #

For small and medium businesses referred to in Article 2 (1) of the Framework Act on Small and Medium Enterprises (excluding those deemed small and medium businesses pursuant to Article 2(3) of the said Act), the court may appoint a preservative trustee, administrator or reorganization member from among managing members as deems necessary for the speedy progress of composition procedures.

[This Article Newly Inserted by Act No. 5518, Feb. 24, 1998]

Article 54(Approval or Disapproval of Composition) #

(1) If the composition has been approved in the meeting of creditors, the court shall determine the approval or disapproval of composition on the fixed date or the immediately announced date.

(2) The persons as provided in Article 50 (1), the administrator and the reorganization member may express their opinions on the approval or disapproval of composition.

(3) The proviso of Article 211 of the Bankruptcy Act shall apply mutatis mutandis to the decision which determines the fixed date for the approval or disapproval of composition.

Article 55(Cases where Disapproval of Composition may be Decided) #

Only in cases falling under any of the following subparagraphs, the court may decide the disapproval of composition ex officio or upon request of a composition creditor:

1. If the proceedings or the resolution of composition is contrary to the provisions of any Act and the subsequent remedy of its defect is impossible;

2. If there are causes of subparagraph 2 or 3 of Article 18;

3. If a resolution of composition has been made by unlawful manners; or

4. If a resolution of composition is contrary to the general interest of composition creditor.

Article 56(Announcement and Public Notification of Approval or Disapproval of Composition) #

The decision of approval or disapproval of composition shall be announced, and the judgement and the abstract of reasoning shall be notified publicly: Provided, That the service thereof shall not be required.

Article 57(Immediate Appeal) #

(1) An immediate appeal may be filed against the decision of approval or disapproval of a composition.

(2) Article 291 of the Bankruptcy Act shall apply mutatis mutandis to composition creditors.

(3) When an appeal is filed against the decision of disapproval of a composition, the court may get an appellant, within a specified period, to deposit money or such securities as recognized by the court as a guarantee, within the limit prescribed by the Regulations of the Supreme Court. <Newly Inserted by Act No. 6110, Jan. 12, 2000>

(4) In case of paragraph (3) the court shall, when an appellant fails to provide the guarantee within a period set by the court, dismiss by decision the appeal. <Newly Inserted by Act No. 6110, Jan. 12, 2000>

(5) When the appeal of paragraph (3) is turned down and the debtor is declared bankrupt or bankruptcy procedures continues, the money or securities offered as a guarantee shall belong to the bankruptcy foundation. <Newly Inserted by Act No. 6110, Jan. 12, 2000>

(6) The provisions of paragraphs (2) through (5) shall apply mutatis mutandis to any appeal filed in accordance with the provisions of Article 449 of the Civil Procedure Act, which are applied mutatis mutandis in Article 11 (2). <Newly Inserted by Act No. 6110, Jan. 12, 2000; Act No. 6626, Jan. 26, 2002>

Article 58(Entering-into-Force of Composition) #

The composition shall enter into force by the final conclusion of the decision of approval.

Article 59(Recording in Credits List) #

If the approval decision of composition has become final and conclusive, the court administrative officer or clerk shall record the conditions of composition in the credits list.

Article 60(Payment of Credits without Effect of Composition) #

(1) If the decision of approval of composition has become final and decisive, the debtor shall pay the credits coming into existence for composition, the cost of the composition procedure and credits with general priority.

(2) The claims as provided in the preceding paragraph and dissented shall be deposited for the creditor.

Article 61(Application Mutatis Mutandis of Provisions over Effect of Compulsory Composition in Bankruptcy) #

Articles 297 through 299 and 314 of the Bankruptcy Act shall apply mutatis mutandis to the effect of a composition.

Article 62(Invalidation of Bankruptcy Proceeding, Compulsory Execution, Conservatives Measure during Suspension) #

If the decision of approval of composition has become final and decisive, the application for bankruptcy suspended pursuant to the provisions of Article 17 and the compulsory execution, the provisional attachment and the provisional disposition suspended pursuant to the provisions of Article 40 (2) shall lose the effect.

Article 62-2(Duty of Report by Debtor) #

The debtor shall report matters which are necessary to judge whether the conditions of composition are fulfilled, his receipts and disbursements of money, or the progress of fulfilling other conditions of composition and are determined by the court, to the court half-yearly.

[This Article Newly Inserted by Act No. 5518, Feb. 24, 1998]

Article 63(Case where Composition shall be Rescinded) #

(1) The court shall, where any debtor is deemed to be unable to execute the terms of a composition, rescind by decision the composition even prior to a meeting of creditors ex officio or upon a request from an administrator or composition creditors. <Newly Inserted by Act No. 6110, Jan. 12, 2000>

(2) In cases falling under any of the following subparagraphs, the court shall decide the rescission of composition ex officio:

1. If the offerer of composition withdraws the offer prior to the passage of composition; or

2. If the composition has not been passed within two months from the first fixed date of the meeting of creditors.

Article 64(Cases where Composition may be Rescinded) #

(1) In cases falling under any of the following subparagraphs, the court may decide the rescission of composition ex officio or upon request of the administrator or the reorganization member. In this case, the court shall question the debtor: <Amended by Act No. 6110, Jan. 12, 2000>

1. If the orders of the court under the provisions of Article 20 (1) and (2) have been violated;

2. If the creditor has violated the provisions of Article 31, or32 (1) and (2); or

3. If the debtor has paid and received money for himself despite the fact that the application under the provisions of Article 34 has been filed.

(2) The court may, where a corporation is found to fall under any subparagraph of Article 19-2 after the commence of a composition is decided with respect to such corporation, rescind by decision such composition ex officio or upon a request from an administrator, reorganization members or composition creditors: Provided, That where the rescission of a composition is to be decided on the grounds of subparagraph 2 of Article 19-2, the court shall seek opinions of the management committee and the creditors’ conference. <Newly Inserted by Act No. 6110, Jan. 12, 2000>

Article 65(Publication of Rescission of Composition, etc.) #

(1) The court shall, when it rescinds by decision a composition, publish the main text of judgement and the gist of reasons thereof.

(2) An immediate appeal may be filed against the decision of paragraph (1). <Newly Inserted by Act No. 6110, Jan. 12, 2000>

(3) The provisions of Article 57 (2) through (5) shall apply mutatis mutandis to any appeal filed against the decision of rescission of a composition and the appeal as prescribed in Article 449 of the Civil Procedure Act, which are applied mutatis mutandis in Article 11 (2). <Newly Inserted by Act No. 6110, Jan. 12, 2000; Act No. 6626, Jan. 26, 2002>

Article 66(Cancellation of Concession) #

Articles 301 through 303 of the Bankruptcy Act shall apply mutatis mutandis to the cancellation of concession determined by the composition.

Article 67(Cancellation of Composition in Case of Fraud in Insolvency) #

If there is conduct of fraud in insolvency on debtor, the court may decide the cancellation of composition ex officio or upon request of composition creditor.

Article 68(Cancellation of Composition through Non-Compliance of Composition) #

(1) Article 304 (1) and (2) of the Bankruptcy Act shall apply mutatis mutandis to the cancellation of composition.

(2) Where it deems that the debtor neglects the fulfillment of the conditions of composition without any justifiable cause and has no intention or capacity to fulfill the conditions of composition in the future as well, the court shall, on the application of the creditor or ex officio, make a decision to cancel the composition. <Amended by Act No. 5518, Feb. 24, 1998>

(3) The calculation of the sum of claims and all claims necessary for the application for the cancellation of composition shall depend on the sum of claim as decided pursuant to the provisions of Article 52.

Article 69(Effect of Cancellation of Composition) #

The cancellation of composition shall not affect the rights which a composition creditor attains through composition.

Article 70(Publication of Cancellation of Composition, etc.) #

(1) If the court dismisses an application for cancellation of composition or decides a cancellation of composition, it shall notify publicly the judgement and the abstract of reasoning.

(2) An immediate appeal may be filed against the decision of paragraph (1). <Amended by Act No. 6110, Jan. 12, 2000>

(3) The provisions of Article 57 (2) through (5) shall apply mutatis mutandis to any appeal filed against the decision of cancellation of a composition and the appeal as prescribed in the provisions of Article 449 of the Civil Procedure Act, which are applied mutatis mutandis in Article 11 (2). <Newly Inserted by Act No. 6110, Jan. 12, 2000; Act No. 6626, Jan. 26, 2002>

Article 71(Progress of Bankruptcy Proceeding by Cancellation of Composition) #

Articles 310, 312 and 313 of the Bankruptcy Act shall apply mutatis mutandis to the adjudication of bankruptcy under Article 9.

Article 72(Acceptance of Bribe) #

(1) Any managing member, reorganization member, preservative trustee or an administrator, who accepts, requests or promises a bribe in connection with his duties, shall be punished by imprisonment for not more than five years or a fine not exceeding fifty million won. This provision shall also apply to cases where the composition creditor, his agent, or director or an equivalent person accepts, requests or promises a bribe in connection with a resolution in the meeting of creditors. <Amended by Act No. 5518, Feb. 24, 1998>

(2) In the case of the preceding paragraph the accepted bribe shall be forfeited. If the forfeiture of the whole or a part of it is not possible, its equivalent value shall be collected in addition.

Article 73(Bribery) #

(1) A person, who delivers, offers or promises a bribe to a managing member, reorganization member, preservative trustee, administrator or composition creditor, his agent or director or an equivalent person, shall be punished by imprisonment for not more than three years or a fine not exceeding thirty million won. <Amended by Act No. 5518, Feb. 24, 1998>

(2) If a person who commits a crime under the preceding paragraph, surrenders himself, the punishment may be reduced or exempted.

Article 74(Breach of Duty of Explanation, Report, Examination) #

(1) Where a person who is under an obligation to give an explanation under the provisions of Article 37 or 39-4 fails to explain or explains falsely without any justifiable reason, he shall be punished by imprisonment for not more than one year or a fine not exceeding ten million won. The same shall apply to the case where the applicant for the composition or the debtor rejects an investigation or a report referred to in Article 31 (5), 36 (1), 39-2 (1) or 62-2 or makes a false report. <Amended by Act No. 5518, Feb. 24, 1998; Act No. 6110, Jan. 12, 2000>

(2) If a person who commits a crime under the preceding paragraph reports the fact to the composition court, the punishment may be reduced or exempted.