CHAPTER I GENERAL PROVISIONS

Article 1 (Meaning of Composition)

For the purpose of this Act, the term "composition" shall mean 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)

Articles 96, 98, and 98-2 of the Bankruptcy Act shall apply mutatis mutandis to the jurisdiction over a composition matter. [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 commencement of composition, the cancellation of its decision, or recession of composition, and to cases where decision of the approval or disapproval of composition or cancellation of composition has become final and conclusive.

Article 9 (Transfer to Bankruptcy Proceeding)

(1) If recession of composition has been decided, or if decision of disapproval or the cancellation of composition has become final and conclusive, the court shall make a adjudication of bankruptcy ex officio, except in the case where causes of bankruptcy do not exist.

(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)

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 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 shall be the foundation obligation.

Article 11 (Provisions which Apply Mutatis Mutandis)

(1) Articles 2, 3, 100 through 102, 104 through 108 and 115 of the Bankruptcy Act shall apply mutatis mutandis to the composition procedure.

(2) In case where there is no particular provisions on composition procedure in this Act, the Civil Procedure Act shall apply mutatis mutandis.

Article 11-2 (Duty and Power of the Administrative Committee)

(1) If the administrative committee pursuant to Article 93-2 of the Company Reorganization Act (hereinafter referred to as the "administrative committee") has been established, the administrative committee shall exercise its duty prescribed by law or by the court, among the duties set forth in the following subparagraphs, regarding the composition procedure, under the directions of the court.

  1. Presentation of the opinion regarding the designation of preservative administrators, liquidation commissioner, and administrators;
  2. Supervision and evaluation regarding the performance of duty of preservative administrators, liquidation commissioner, administrators;
  3. Inspection and arbitration regarding composition conditions;
  4. Providing information about the creditor and arbitration of opinions; and/ or
  5. Any other business regarding the composition procedure.

(2) The administrative committee may mandate a part of its duties to a member of the administrative committee (hereinafter referred to as the "administrative member") in favor of the effective performance of its duties in each item under the preceding Paragraph (1) effectively.

(3) In cases where the administrative member performing its duty pursuant to the provision of Paragraph (2) above is deemed to be inappropriate to perform such duty, the court may issue an order to the administrative committee to mandate such duty to another administrative member.

(4) The court may mandate a part of permitted business regarding composition procedure to the administrative member. In this case, the scope and procedure of the mandate shall be provided by the regulations of the Supreme Court.

(5) The provision of Article 54-3 of the Company Reorganization Act shall apply mutatis mutandis to the business performed by an administrative member pursuant to the provision of Paragraph (4) above.

(6) In the case where the administrative committee is not established, provisions related with the administrative committee, among Article 13 (5), proviso of Article 19-2, latter part of Article 20 (1), Article 20 (2) and (3), Article 21 (1) and Article 27 (1), shall not be applied thereto. [This Article Newly Inserted Act No. 5518, Feb. 24, 1998]