CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose)

The purpose of this Act is to coordinate the interest of creditors, stockholders and other interested persons, and to strive for the reorganization and recovery of the business, in respect of any joint stock company (hereinafter in this Act referred to as the "company") which faces imminent bankruptcy due to poor financial circumstances, but which is likely to recover economically.

Article 2 (Effective Time of Reorganization Proceedings)

Reorganization proceedings shall take effect upon the decision regarding commencement thereof.

Article 3 (Status of Foreigners)

In the reorganization of a company, any foreigner or foreign corporation shall hold an equivalent status to that of a national or juristic person of the Republic of Korea.

Article 4 (Territorial Principle)

(1) Reorganization proceeding commences in the territory of the Republic of Korea, shall be effective only with respect to the property of the company existing in the Republic of Korea.

(2) Reorganization proceedings commenced in a foreign country shall not have any effect on property in the territory of the Republic of Korea.

(3) Any claim to be pursued through a judgment under the Civil Procedure Act, shall be regarded as existing within the Republic of Korea.

Article 5 (Interruption of Prescription)

Intervention by reorganization proceedings shall have the effect of suspending the statute of limitations; provided, That this shall not apply in case where the reorganization creditors or security holders withdraw their report, or their report is dismissed.

Article 6 (Jurisdiction over Reorganization Cases)

(1) Reorganization cases shall be subject to the exclusive jurisdiction of the collegiate division of the district court with jurisdiction over the location of the company's head office, and if the head office is in a foreign country, the location of the principal place of business in the Republic of Korea.

(2) Deleted.

(3) The location of the head office or principal place of business referred to in Paragraph (1) shall be in accordance with the register. [This Article Wholly Amended by Act No. 3380, Mar. 5, 1981]

Article 7 (Transfer of Reorganization Cases)

If the court as prescribed in Article 6 deems it necessary in order to prevent any signification loss or delay, the court may transfer ex officio the reorganization case to a district court with jurisdiction over the location of another place of business or property of the company concerned.

Article 8 (Application Mutatis Mutandis of Civil Procedure Act)

Except as otherwise provided in this Act, the Civil Procedure Act shall apply mutatis mutandis to the reorganization proceedings.

Article 9 (Voluntary Pleadings and Investigation ex officio)

(1) Hearings regarding reorganization in this Act, the Civil Procedure Act shall apply in respect of reorganization proceedings.

(2) The court may conduct ex officio any investigations necessary regarding reorganization cases.

Article 10 (Service of Judgment ex officio)

Service of any judgment regarding reorganization proceedings shall be made ex officio.

Article 11 (Appeal)

Any person with an interest in a judgment regarding reorganization proceedings may lodge an immediate appeal against it only where otherwise provided by this Act. In cases where judgment is publicly announced, the time period for appeals shall be two weeks inclusive from the day public notice is issued.

Article 12 (Public Notice)

(1) Any public notice made under this Act shall be inserted in the official gazette and such newspapers as designated by the court.

(2) The public notice shall be effective from the day after the day on which it is inserted in the newspapers.

Article 13

Deleted.

Article 14 (Service on Debenture Holders, etc.)

(1) Service on any debenture or stock holders of a company under this Act may be effected by sending the relevant documents by mail to the address reported under this Act by the debenture or stock holders, and if no such address has been recorded, then to the address entered in the debenture ledger or stockholders's list, or to the address notified by such holders to the company.

(2) Service on a reorganization security holders with a registered security may be effected by sending the relevant documents by mail to the address reported under this Act by the reorganization security holder, and where no such address has been recorded, then to the address entered in the register.

(3) Where documents are sent by mail in accordance with the two preceding paragraphs, the documents shall be regarded as having been served at such time when the mail may ordinarily be presumed to have arrived.

(4) In the cases prescribed in paragraphs (1) and (1), a (Grade IV) court administrative officer or court clerk shall prepare the documents, enter therein the name and address of the person whom the documents are to be served, together with the date and time of sending, and then affix his signature and seal thereto.

Article 15 (Public Notice and Service)

(1) In the case of public notice and service made pursuant to this Act, service may be effected by sending the relevant documents by mail.

(2) In the case referred to in the preceding paragraphs, public notice shall have the effect of service on all interested person.

(3) The provisions of paragraph

(4) of the preceding Article shall be applicable to the case referred to in paragraph (1).

Article 16 (Public Notice in lieu of Service)

Where difficulties arise in determining the address or residence of the person to be served under this Act, or the place where service is to be carried out, the court may order substitution of public notice for service.

Article 17 (Registration of Commencement of Reorganization Proceedings)

(1) The court shall, under reaching a decision on the commencement of reorganization proceedings, ex officio and without delay, charge the registry in the location of the head and branch offices (if the head office is in a foreign country, the business office in the Republic of Korea) of the company concerned, with registering the commencement of reorganization proceedings, in a written commission together with a certified copy or abstract of the written decision.

(2) The registration referred to in the preceding paragraph shall also include the name or title of the manager.

(3) The provision of paragraph (1) shall apply mutatis mutandis in cases where any changes occur to maters referred to in the preceding paragraph, or where any matters to be registered arise regarding the company, or prior to the completion of reorganization proceedings in accordance with this Act.

Article 18 (Idem)

(1) If the Court becomes aware that a right appertaining to any property of a company is registered, the court shall, ex officio and without delay, charge the registry with registering the decision regarding commencement of reorganization proceedings, in a written commission together with a certified copy or abstract of the written decision regarding commission of the reorganization proceedings.

(2) The provision of the proceeding paragraph shall apply mutatis mutandis in cases where any registered right is acquired, lost or modified during implementation of the reorganization programs, or prior to the completion of reorganization proceedings in accordance with this Act; provided, that the above provision shall not apply to the registration of someone other than the company, reorganization creditors or security holders, stockholders or new company, as the holder of the right.

Article 19 (Application Mutatis Mutandis to Registration of Other Matters Regarding Reorganization Proceedings)

The provision of Article 17 (1) and paragraph (1) of the preceding Article shall apply mutatis mutandis in cases where a decision to cancel the decision on commencement of reorganization proceedings, to repeal the reorganization proceedings, or to refuse approval of the reorganization programs, becomes final, or where a decision is reached on the authorization or closure of the reorganization programs.

Article 20 (Duties of Registry)

(1) The registry shall, upon receiving a commission of registration as prescribed in the three preceding Articles, carry out the registration without delay.

(2) Where registration of the commencement of reorganization proceedings occurs, the registry shall, if there is a registration of the commencement of the composition of the company, cancel ex officio such registration.

(3) Where registration of the cancellation of a decision on commencement of the reorganization proceedings occurs, the registry shall, if there has been a registration cancelled in accordance with the preceding paragraph, restore it ex officio.

(4) The provision of the two preceding paragraphs shall apply mutatis mutandis to the registration of bankruptcy, in cases where the authorization of reorganization programs or the cancellation thereof are registered.

Article 21 (Registration of Denial)

(1) If an act giving rise to the registration, does not receive approval, the manager shall register that disapproval. This provision shall also apply in cases where registration is refused.

(2) The provision of Article 19 shall apply mutatis mutandis to the case prescribed in the preceding paragraph.

Article 22 (Application to Registration)

The provision of the four preceding Article shall apply mutatis mutandis to any registered right pertaining to company property.

Article 23 (Proceeding to Bankruptcy)

(1) Where a decision to reject an application for commencement of reorganization proceedings, to repeal reorganization proceedings, or to refuse approval of reorganization programs, becomes final with respect to a company prior to a declaration of bankruptcy, the court may declare a bankruptcy ex officio pursuant to the Bankruptcy Act, if it deems that facts giving rise to bankruptcy there exist in respect of the company.

(2) The commission to register under Article 19, or to record under Article 19 applied mutatis mutandis by Article 22, shall be issued in the case prescribed in the preceding paragraph, simultaneously with the commission to register or registration of bankruptcy.

Article 24 (Idem)

In the application of the provision of Part I of the Bankruptcy Act when a bankruptcy is declared under paragraph (1) of the preceding Article, a decision to commence reorganization proceedings, a request for commencement of composition in composition proceedings, or conduct of a company director or equivalent person falling under the crime of fraudulent bankruptcy, shall, if there has been no suspension of payment or application for bankruptcy prior to that time, be regard as suspension of payment or application for bankruptcy, and any claim for common profits shall be the claim of a foundation.

Article 25 (Idem)

If, after a declaration of bankruptcy, bankruptcy proceedings continue in respect of a company due to the rejection of an application for commencement of reorganization proceedings, cancellation of reorganization proceedings under Article 272 or 272, or the confirmation of a decision to refuse approval of reorganization program, any claim for common profits shall be the claim of a foundation.

Article 26 (Idem)

(1) If a decision to cancel reorganization proceedings as prescribed in Article 276 becomes final after bankruptcy proceedings become ineffective due to a decision to authorize reorganization programs for the company following a declaration of bankruptcy, the court shall declare ex officio the bankruptcy.

(2) In the application of Part I of the Bankruptcy Act to the case referred to in the preceding paragraph, the application for bankruptcy shall be regarded as having been made at the time the application for bankruptcy was made in the bankruptcy proceedings which became ineffective due to a decision to authorize the reorganization programs, and the claim for common profits shall be the claim of a foundation.

(3) The provisions of Article 23 (2) shall apply mutatis mutandis to the case referred to in Paragraph (1).

Article 27 (Proceeding to Composition Proceedings)

(1) In case where the decision prescribed in Article 23 (1) is made, the court may approve the application for composition even prior to confirmation of the decision, if it deems it appropriate.

(2) When the court grants approval pursuant to paragraph (1), it shall continue with composition proceedings under the Composition Act.

Article 28 (Idem)

(1) If composition proceedings are commenced upon an application made pursuant to the proceeding Article after composition proceedings become ineffective due to a decision on commencement of reorganization proceedings, then in respect of the application of the provision of Articles 10 and 33 of the Composition Act, the application for commencement of composition shall be regarded as having been made at the time the application for commencement of composition was made under the ineffective composition procedure.

(2) If composition proceedings are commenced upon application made pursuant to the preceding Article, then in respect of the application of the provisions of Article 60 of the Composition Act, the claim for common profits shall be regarded as a claim created for composition or as expense for composition proceedings.

Article 29 (Obligation to Apply for Bankruptcy and Application for Commencement of Reorganization Proceedings)

Even in cases where the company liquidator is under an obligation to apply for bankruptcy in respect of the company, he may request the commencement of reorganization proceedings.