(a) Is the system of ownership rights in respect of both land and other property reasonably stable and certain in this economy?

Yes. System of ownership rights for land and other property is reasonably stable in Korea.

 

(b) In particular:

(i) is the system of land ownership and rights sufficiently developed to encourage lending on the security of land; and

Yes. System of mortgage registration on property is well developed in Korea.

 

(ii) is the system of ownership and rights in relation to property other than land sufficiently developed to encourage lending on the security of such property?

Although property other than real property (and quasi-real property) are not registered in Korea, the system of ownership in personal property is developed and lending on security of such property is common.

(a) What mechanisms for taking of security over assets of a corporate borrower are available to financiers in this economy (for example mortgages over land; fixed and/or floating charges over personal property; legal and/or equitable mortgages; debentures; pledges; liens, etc.)?

There are a number of ways to take security over assets in Korea Broadly, they can be categorized as mortgage, lien by retention (yuchikwon) and pledge.

 

(b) In practice, which of these types of security are most commonly employed by financiers?

All these types of security can be used by financiers. The most common form would be a mortgage on real property.

 

(c) Is there a system of registration in this economy for any of these types of security taken by financiers?

This would largely depend on whether the asset subject to a security is registered. As such, mortgage on real property is registered. A pledge on securities can also be registered.

 

(d) To what extent are priorities between competing securities regulated?

Priorities would depend on perfection and timing of perfection among competing securities.

(a) When a corporate borrower is in financial difficulties and a secured debt has become due, would it be usual or customary for a secured lender and/or the corporate borrower to attempt to negotiate a suitable arrangement for repayment and/or refinancing before the secured lender invokes legal enforcement methods?

It is often the case that a secured lender and the corporate borrower would seek to negotiate a suitable arrangement before the secured lender enforcement upon the security.

 

(b) What mechanisms are available to security holders to enforce their securities under the legal system of this economy (For example, power to take possession of the property, power to appoint a receiver, power to foreclose on a mortgage, power to sell the secured property, power to wind up the corporate borrower)?

The secured lender has the power to enforce the security. This may take the form of filing a legal proceeding with the court, taking title and possession of the secured property or liquidating such property. Whether all of these remedies are available would depend on the nature of the secured asset and the nature of the security.

 

(c) Do these methods include that a secured creditor may 'self-enforce' the security (ie, without the need for an order of a court or the consent of a regulatory authority)?

Yes, a secured creditor may "self-enforce" the certain security without an order from the court or regulatory authority.

 

(d) In practice, which method(s) of enforcement are most commonly employed by security holders?

The most commonly employed method would be foreclosure proceeding where the court would auction the property.

 

(e) Briefly describe the process involved in these method(s).

An application to auction the property is filed with the court having jurisdiction over the property. If the court approves the application, it will issue an order for seizure. Thereafter, an appraiser will value the property. Based on the appraised value, the court will set the minimum auction price and set the date and time of auction. After the auction, the successful bidder must pay the money to the court by the date decided by the court. The court will then distribute the proceeds to the interested parties.

(a) How effective is the judicial or court system for the purpose of enforcing secured property rights?

The judicial system is quite effective for the purpose of enforcing secured property and Korean court handle numerous such cases.

(a) What effect, if any, does the commencement of insolvency proceedings in respect of the corporate borrower (ie where an application has been filed for some type of insolvency procedure but has not yet been adjudicated) have on the process of security enforcement?

The answer depends on the type of insolvency proceeding filed. In a company reorganization proceeding, the rights of the secured creditor will depend on the reorganization plan as finally determined by the court. In a composition proceeding and bankruptcy proceeding, the secured creditors have a right of separation. Once an insolvency petition is filed, the company is prohibited from engaging in acts that may "harm the creditors".

 

(b) What effect, if any, does the formal pronouncement of an insolvency administration in respect of the corporate debtor have on the process of security enforcement?

In a reorganization context, company's assets cannot be enforced, attached or seized and on-going enforcement, attachment and seizure will cease once the commencement for reorganization proceeding is ordered. In the bankruptcy and composition context, the secured creditors have a right of separation.