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Corporate Restructuring Promotion Act (hereunder, 'Restructuring Act') was legislated twice in Korea as a temporary law with the preset enforcement period in Korea. The first (hereunder 'the 1st. Restructuring Act') was legislated on August 14, 2001, and was in act until December 31, 2010. The second Restructuring Act (hereunder 'the 2nd. Restructuring Act') established on August 3, 2007 was lasted until December 31, 2010. Re-legislation of the act was promoted before the expiration at the end of 2010. However, the proposal could not be reviewed and resolved by the lawmakers due to raised issues on the act and circumstances of the National Assembly at that time. Based on this background situation, the study is conducted for the necessity of Restructuring Act, and the strategy in case of re-legislation of the act. The first of all, there were issues on the past Restructuring Act regarding the legal binding of the Governor of Financial Supervisory Service (FSS)'s request to postpone the exercise of debt rights of creditor banks. And, the other part of the issues was on the compulsive application of the request by the Governor of FSS to creditors who were against the resolution made by councils of creditors. Restructuring Act contributed a great deal to overcome the economic crisis and to propel corporate restructuring processes efficiently. Also, the necessity of re-legislation of the act still remains because the possibility of economic crisis is always existing not only in the present, but also in the future. Therefore, it is considered to be desirable to establish Restructuring Act not as a temporary, but as a permanent law. By adapting the Automatic Stay System currently implemented in various developed nations including the U.S., the requirement and the effectiveness of the re-legislated Restructuring Act should effectively be reinforced to suppress chaos. And, the compulsive application of postponement of the debt right to the creditors who are against the resolution made by councils of creditors as in the past act is desirable. Also, the disposal of the converted shares exceeding 50% should be alleviated to be processed without submission of the creditors' communal resolution to elevate the efficiency of the new act. And, the regulation of the past act acknowledged the shares of Debt-for-Equity Conversion as the exemption of the asset portfolio regulations of ground laws for each financial sectors. In the new Restructuring Act, the converted shares should be exempted from of the asset portfolio regulations until 2 years after the expiration of the act. And, if the disposal of the converted shares are not realized during the period, exceptional approval should be allowed according to procedures defined by relevant regulations and laws to financial institutions. In the past act, the additional credit grant to a potentially insolvent company was prohibited before the establishment of the MOU of management normalization plan. However, the regulation of the prohibition should be omitted in re-legislation of the act. Also, in case of proceeding the procedure as the past Restructuring Act, misunderstanding can be occurred for creditor banks to conduct compulsive actions to the companies. Therefore, it is considered to be desirable to stipulate the procedure to be conducted under mutual agreements to avoid such an unnecessity.

Fast-track program for SMEs is the system whereby creditor banks provide liquidity to SMEs facing temporary liquidity shortage in managerial difficulties, due to unstable financial market situation in domestic and global financial market, for the purpose of normalization of their management and enhancement of creditor bank's asset soundness. It was introduced by the Government in October 2008 as part of preemptive responses to overcome global financial crisis. By implementation of Fast-track program, banks first performed corporate credit risk assessment and provided conversion of KIKO loss into loan, maturity extension and interest rate cut for existing loans and new lending etc. to the SMEs classified as A or B grade. To conform to the purpose of emergency liquidity supply, banks' Fasttrack processing period shall in principle be within one month. In other words, Fast track program means bank's support for SMEs classified as A or B grade by the result of bank's corporate credit risk assessment, converting the liquidating liabilities of SME reflecting loss from KIKO currency option trades into new loan with the same bank, providing maturity extension of existing loans, new loan or interest rate cut etc. This is purposed for management normalization of client companies by providing quick liquidity to SMEs (including KiKO transactors) facing temporary liquidity shortage. Corporate credit risk assessment means the 4 grades of A,B,C,D, assessed by analysis of recent operation and cash flow etc. A and B graded SMEs are deemed as capable of normal operation. C graded SME needs financial structure enhancement such as corporate workout. D grade SMEs are required to be liquidated or apply for corporate reorganizationto the bankruptcy court. Performance of Fast-track program as of December 2010 is reported as total loans supported by the program amounting to 29.6 trillion won to 11,700 enterprises, and the program is evaluated as considerably effective in overcoming global financial crisis. In other words, FTP prevented or postponed chain reaction bankruptcies of SMEs and banks' loan losses, and was effective in mitigating credit crunch. However, as the epoch-making supports were pursued inevitably, there were insufficient aspects in corporate restructuring. In other words, though FTP was implemented temporarily within limited time scale at crisis, the program introduced several new attempts to complement procedural and internal problems in SME support. Firstly, the program prevents distress in advance, by providing support to normal SMEs with symptom of distress (B graded). Creditor banks preemptively support the selected SME before realization of distress through jointly selecting the beneficiary by discussion. Secondly, by liking between banks and Financial Supervisory Service and between banks, beneficiary SMEs are selected by stages and SMEs having trade relationship with multiple banks are actively supported. Selection of beneficiaries is systemized as bank implements credit risk assessment primarily and then notifies the assessment result to guarantor institutions. By strengthening interbank adjustment function under FSS's lead, SMEs having trade relationship with multiple banks are actively supported. Thirdly, by adopting special guarantee method separate from normal guarantee, suitable conditions for private sector's autonomous SME support are prepared. The program took progressive action to prepare suitable condition for extension of banks' SME loans, such as indemnifying bank directors and staffs in charge of lending unless they are negligent or intentional in loss making. Fourth, Shortening of guarantee screening period and progressive support etc. are adopted temporarily. To conform to purpose of emergency funding support, guarantee screening period was shortened. And banks progressively support even SMEs with excessive debt ration (including low credit KIKO transactors). These actions are temporarily implemented (until December 2011) and extension thereof shall be determined according to business cycle situation. However, there were adverse reactions as epoch-making supports were pursued inevitably to prevent insolvencies in paper profits or mass defaults by SMEs in crisis situation. In other words, SMEs were relatively negligent on corporate restructuring, Therefore difficulties are expected after termination of the program, as follow up management is burdensome, and it cannot be ruled out that the beneficiaries increasingly becomes distressed. In Korea, chain reaction bankruptcies of lots of companies during currency crisis in the past as well as global financial crisis caused enormous social costs as industrial facilities were broken down. In the course of overcoming the bankruptcies, experiences of introducing and using various debtor relief systems were accumulated. FTP has been adopted as part of overcoming global financial crisis this time and is assessed as considerably effective in overcoming global financial crisis. In other words, FTP is regarded as considerably effective in preventing or postponing chain reaction bankruptcies of SMEs and banks' loan loss realization, as well as mitigation of credit crunch.

The banking crisis(1997) in Korea has ushered in a new strategy for safe and sound banking and risk management. To allocate loanable funds, the banks no more rely on the government instructions. Workout is the mechanism designed and supported by the government to prevent domino effect of big companies; failure and consequent bank run. It is an extended industrialization measures. Econocrats have favored direct intervention into exit mechanisms of big companies to judicial procedures including company reorganization procedures. This paper focused on the corporate restructuring implemented by banks. And suggests two pivotal plans of improvement. First, it is important to revise the Corporate Restructuring Promotion Act. The Act established basically the methodological basis of smoothing promotion of the corporate restructuring by market autonomy. There are many problems, however, on the rights and duties of party interested. The Act has poor provisions. Secondly, it is also important to promote the effectiveness of the credit risk ordinary evaluation system. Managing the corporate restructuring system by financial institution's autonomy is based on the credit risk ordinary evaluation system. If both the evaluation of the corporation and the selection of an insolvent enterprise are not accomplished strictly, it is no use mentioning the effective management of the corporate restructuring of an insolvent enterprise.

There are various ways to revitalize a company. Among such ways, this paper deals with the issue of gift tax imposed in connection with the acquisition of new shares of a company undergoing rehabilitation procedures as well as an ordinary company. The issue of gift tax arises because the issue price calculated by a company is different from the appraised price. The person who acquires new stocks must pay gift tax if the price of the new stock appraised by the National Tax Service as of the payment date, is higher than the issue price calculated by the company. As such, the person who acquires new stocks may be obligated to pay gift tax even if he or she could not have anticipated the rise of the appraisal price, at that time he or she had applied for the shares. Fortunately, the National Tax Service has not yet imposed gift tax on the acquirer of new stocks of a company undergoing rehabilitation procedures, unless there were any special reasons. If the National Tax Service imposes gift tax on the person who acquires new stocks of a company undergoing rehabilitation procedures, he or she would be hesitant to acquire new stocks, which would be against the purpose of the corporate rehabilitation system. On a related issue, gift tax is not imposed when a company issues new stocks through public offering, even if the appraisal price is higher than the issue price, since it is considered that the issue price had been determined by open competition. There is doubt on whether it is in line with public sentiment to impose gift tax by reason of such difference in price. In fact, there were many disputes between the acquirer of stocks and the tax office due to such issue, and many taxpayers have filed an objection regarding the problem. I think that it is not appropriate to impose gift tax on all cases when there is a difference in price. Rather, if the taxpayer can verify that he or she could not have anticipated that the appraisal price would become higher than the issue price at the time of application of shares, the National Tax Service should annul the imposition of gift tax which was imposed based on the assumption that the difference in price constitutes a gift. Therefore, it is explicitly unreasonable demand for the Surety, contrary to the proportionality principle and the egalitarian principle that even the Principal Obligor is exempted from liability by the bankruptcy procedure but the Surety still has liability under the certain procedure. Accordingly the obligation of Surety shall be exempted by taking only the limited responsibility that the Principal Obligor is actually burdened.

With the increasing intertwining of the world's economic activity and more emerging countries adopting market reforms and opening themselves to the world economy, increased attention has been given to the need for effective insolvency and bankruptcy laws. An effective insolvency regime must balance the goal of maximizing the value of the debtor's assets with the need to protect the interests of creditors. One of the most challenging tasks in formulating bankruptcy laws is finding the balance between the important public policy of value maximization and the public policy of maintaining the integrity of the debtor's pre-bankruptcy transactions with its creditors. The interaction between bankruptcy and tax law present various dilemmas and raise several questions. The enforcement of a tax claim and its priority confronts the core values of insolvency law which is a system of fair, predictable, and consistently enforced laws and procedures to deal with financial failure. There are, however, no right or wrong answers to these questions. The structure of the country's tax system, underlying policy considerations, and other issues such as culture, history and economic background will influence how a country governs the interaction between tax and bankruptcy system. This article examines the state of the tax claim and its priority as it stands today in the context of the national insolvency laws of England, the United States, Germany, and France. Historically, each of these countries has granted preferential treatment to their respective governments' claims when a taxpayer's is unable to pay tax and insolvent. This article discusses various issues concerning preference of tax claim including the history, their policy justifications, criticism of the priority rules and the comparison of the different approaches that have been adopted in these four countries. In conclusion, the article recommends issues to be considered in revising in insolvency law in conjunction with tax claims.