(a) Where a corporate borrower is in financial difficulty and an unsecured debt has become due, would it be usual or customary for an unsecured creditor (particularly, a bank creditor) and/or the corporate borrower to attempt to negotiate some suitable arrangement for repayment of the debt before the creditor invokes legal recovery methods?

Yes.

(a) What mechanisms are available under the legal system of this economy for unsecured creditors to collect debts owed to them by the corporate debtor?

Normal litigation, Special Litigation for promissory notes and checks, and Payment Order (simplified procedure for certain monetary claims).

(b) In practice, which method(s) of recovery of unsecured debts are most commonly employed by unsecured creditors of a corporate debtor?

Normal Litigation

E3. Effectiveness of judicial system

(a) How effective is the judicial and court system for the purposes of debt collection?

The judicial system is effective. However the crucial problem is usually whether a debtor owns enough assets against which a creditor can enforce its right.

(a) What effect, if any, does the commencement of insolvency proceedings against a corporate debtor have on debt recovery proceedings?

The application of liquidation proceedings such as petition of bankruptcy has no legal effect to stop debt recovery proceedings. However unsecured creditors usually refrain from actions for recovery since they prospect that the debt recovery proceeding will be stayed if the formal pronouncement of bankruptcy is made.

Upon application of the corporate reorganisation procedures, the court can order a stay of enforcement procedures.

When the application of other rehabilitation proceedings is made, at the same time the application for preservative orders are usually made. Such preservative orders include a order to prohibit the corporate borrower to pay debts to its creditors.

However such order is not addressed to creditors and can not stop debt recovery proceedings

(b) What effect, if any, does the formal pronouncement of an insolvency administration in respect of the corporate debtor have on debt recovery proceedings?

Upon declaration of bankruptcy unsecured creditors' recovery is not allowed but secured creditors' enforcement procedures are not restricted.

Upon decision by the court to start corporate reorganisation procedures, all enforcement procedures whether by secured creditors or unsecured creditors are stayed.

Upon decision the court to start other rehabilitation procedures, the enforcement procedures by unsecured creditors are stayed.