Earticle

Conversion of investment is carried out in the procedures for workout, composition or reorganization. Conversion of investment in the procedure for workout is mainly carried out for loan of financial institutes. In case of conversion of investment for loan, by converting its bad debts into investment on security of earnings value based on the possibility of revival of the applicable company, a financial institute may check the management as a creditor without direct involvement in business, and so such financial institute can reduce a potential risk of poor management and also have a positive impact on the Bank for International Settlements Capital Ratio from realization of gain on appreciation. In fact, in case of conversion of investment, creditors have some advantages from the perspective of value conversion because they acknowledge any debt with depreciated market value as the book value and then convert them into investment after capital decrease. In addition, conversion of investment has advantage from the perspective of establishment of reserves and asset soundness because assessment of market value is conducted if the subject company is a listed company. There is a discrepancy among opinions on whether conversion of investment eliminates principal liabilities. With respect to whether surety liabilities become extinct, there is a discrepancy among academic theories in corporate reorganization procedure. However, in the workout procedure, the scope of extinction of surety liabilities is fixed depending on the scope of extinction of principal liabilities.

Recently the bankruptcy related laws have been unified in Korea. Debtor Rehabilitation and Bankruptcy Law have been enforced from April 1, 2006. Our country have no separate regulation in the laws, about the legal relation between contracting parties during the period from the time of the commencement of corporate reorganization proceeding or the time of the adjudication of bankruptcy to when the trustee decides to undertake or reject. If both the failed debtor and the other party have not completed the performance of a bilateral contract when one party was declared bankrupt, the trustee in bankruptcy may cancel a contract, or claim for the performance of the other party after performing the obligation for the bankruptcy. Executory contract is the area in which disputes often occur in actual life. Therefore We hopes that the discussions in this article will make an effort which being actively made for improving the bankruptcy law regime.

Japanese government enacted a "Manpower Supporting Act for the SMBs" in order to address the problems of the SMB workforce in 1991. The ministry of labor and ministry of commerce jointly proposed the act to handle out not only the workforce scarcity but also youth unemployment. The act was heartily discussed and accepted by both Japanese Houses. The government and the assembly thought workforce scarcity mainly stem from the poor work conditions of SMBs. So, the core part of the enactment of Manpower Supporting Act for the SMBs was to improve the working conditions of SMBs. The act makes the government to set up national plans to improve the condition of getting personnel. The government accredits the businesses that have proper plans to improve personnel management conditions. The accredited businesses hold the rights to get government subsidies and the obligations to report the process of employment improvement. The act has been revised 24 times since it had been enacted. In 1995, the act enlarge the scope of accredited businesses to each business from organizations. Lots of exceptional favors are included in 1995 revision. In 1998, the government heads the main purpose of the law from employment improvement to the creation of decent job opportunity. The government also included the newly start-up businesses to support list. Other revisons are mainly subjected to revisions of other domestic laws. The backgrounds of enacting "Manpower Supporting Act for the SMBs" in Japan are similar with those of Korean "Manpower Supporting Act for the SMBs".

There has been a trend of increasing margin transactions in credit at most of the financial institutions in Korea. But the mortgage credit trading still accounts for a big portion. In particular, real estate is the first candidate for mortgage. Such kind of impersonal mortgage is favored in all kinds of transactions at financial institutions in that it's relatively expensive compared to other types of property and they get repaid prior to general creditors. Given that real estate is preferred as mortgage in credit trading and most credit bonds are collected via real estate auctions, it's only natural to focus on compulsory execution of real estate in discussing compulsory execution in general. Accordingly most of the efforts and researches to collect credit bonds evolve around execution of real estate and the resulting dividends, which makes it rather unnecessary to identify and explore other types of property for compulsory execution. But it's inevitable to accept the everlasting existence of default and the resulting accumulation of bad debt. Then does the ultimate answer to bad debt in credit trading lie in setting enough mortgage to prevent any happenings of bad debt? In this study the overall contents of returning amount of national tax as floating collective bond were reviewed, and its benefits as property for compulsory execution were examined. Then its potential of guarantee for transfer as a pre-management means and of compulsory execution as a postmanagement means was considered. The goals were thus to contribute to expansion of property scope for compulsory execution and to discussion of related legal issues. The results will help add one more category of property for compulsory execution and the returning amount of national tax will become common objects of compulsory execution and guarantee for transfer. In the future more research efforts should be made to examine floating collective bonds whose kinds are expected to be limitless in the business and their possibility for compulsory execution.