On September 20, 2018, the National Assembly passed a bill to revive the Corporate Restructuring Promotion Act (the “New CRPA”), which is expected to be promulgated and take effect in October, and remain effective until the fifth anniversary of its enforcement date, expiring around October 2023.

Background:

The Corporate Restructuring Promotion Act (“CRPA”), which was most recently enacted in 2016, contained a sunset clause, and the CRPA expired as of June 30, 2018.

The terms of the New CRPA are substantially similar to the terms that were in the recently expired CRPA.  Under the New CRPA, financial creditors may commence management proceedings against a debtor company without the involvement of the court to restructure the debtor company’s financial claims in an effort to revive the debtor company.  As the New CRPA does not restrict the type of debtor companies that may become subject to the law, all companies may be eligible for restructuring under the CRPA, and any foreign creditors and general creditors who hold “financial claims” will be subject to restructuring under these proceedings.

Significance:

However, unlike the expired CRPA, which exempted financial claims that arose before the enforcement of the law from restructuring under the CRPA, the New CRPA does not provide for any such exemption.  Accordingly, creditors who have long-term financial instruments that were not subject to the previous CRPA may also become subject to the New CRPA.  

Also, the New CRPA provides for an indemnity clause under which the creditor financial institutions and their officers and employees actively managing the corporate restructuring of the debtor company under the New CRPA shall be exempt from liability, unless they fall under certain exceptions.