According to the Second Secretary and Consul at the Embassy of the Republic of Korea, even though individuals have been able to declare bankruptcy in Korea under the Bankruptcy Act of 1962, new procedural guidelines for declaring personal bankruptcy were introduced in 1997 (11 May 2004). One month after the court has made its decision, a person may file an application for exemption of responsibility and if the applicant is successful, the court will delete all personal information from its records (Embassy 11 May 2004). However, if a person is found guilty of bankruptcy, they can face up to ten years imprisonment (ibid.). The Second Secretary also stated that bankrupt individuals may face other types of sanctions such as limitations on employment opportunities and eligibility for bank loans, credit cards, etc. (ibid.).

According to an Asian Development Bank report on insolvency law reform in Korea, the laws governing corporate bankruptcy in Korea are the Bankruptcy Act, the Composition Act and the Corporate Reorganization Act, all of which were modified in February 1998 (n.d.a). The same report states that there were 467 corporate bankruptcy cases filed in 1998 and equivalent numbers were expected for 1999 (ADB n.d.a). No statistics for 2004 on the total number of bankruptcy cases in Korea could be found among the sources consulted by the Research Directorate. There are, however, some reports of individual companies that have gone bankrupt, such as the automobile giant, Daewoo Motors, that became insolvent in November 2000 (AW 16 Feb. 2001), Inchon (oil) Refinery that went bankrupt in August 2001 (Interfax 6 Apr. 2004), and Sewon Telecom Ltd. that filed for bankruptcy in May 2004 (The Korea Herald 10 May 2004). Furthermore, Yonhap News Agency reported that 33 to 35 percent of Korean small to medium sized enterprises (SMEs) are experiencing financial deficits and "are fanning fears of a wholesale collapse of small businesses across the country" (23 Apr. 2004).

With respect to whether a declared bankrupt would be subject to prosecution for criminal or civil offences in Korea, Soo Chang Kim, a Korean expert on insolvency issues, stated in an Asian Development Bank report that "there are civil and criminal sanctions in relation to incurring and non-payment of debts" (ADB n.d.b). Without elaborating on the specific penalties relating to bankruptcy, Soo Chang Kim added that

in the case of checks, criminal sanctions may apply for criminal use of checks (e.g., non-payment due to insufficient funds, cease of trading, termination of checks etc. after the check is issued). Criminal fraud and misrepresentation and civil tort liability may also apply (ibid.b).

No further information on criminal charges as they apply to corporate bankruptcy in Korea could be found among the sources consulted by the Research Directorate.

In its Freedom in the World Report for 2001 Freedom House noted that during 2001, violent conflicts erupted between workers, who had been laid off from companies like Daewoo, and the police (17 July 2002). Moreover, state-owned banks continued their financial support for large, bankrupt Korean companies (FH 17 July 2002). The Freedom House report also mentions corruption problems, such as bribery, linked to top Korean officials (ibid.) and an April 2000 report by the Asian Development Bank states that there is "evidence of corporate fraud" in Korea. An Asia Week article about the fall of Daewoo founder, Kim Woo Choong, alleges that the company, along with other large corporations, benefited from political patronage and that effectively prosecuting Kim would result in exposing high-level corruption in Korea (16 Feb. 2001). Nevertheless, a 2004 Asian Development Outlook Report by the Asian Development Bank claims that the Korean government is "serious about restructuring" since it acquired the Daewoo company and forced some of the chaebols [conglomerate business groups] into receivership.

This Response was prepared after researching publicly accessible information currently available to the Research Directorate within time constraints. This Response is not, and does not purport to be, conclusive as to the merit of any particular claim for refugee protection. Please find below the list of additional sources consulted in researching this Information Request.

References

Asia Week. 16 February 2001. Vol. 27. No. 6. Peter Cordingley and Laxmi Nakarmi. "In Search of Daewoo's Kim: What He Knows Could Embarrass Seoul." http://www.asiaweek.com/asiaweek/magazine/nations/0,8782,98447,00.html [Accessed 10 May 2004]

Asian Development Bank (ADB). 2004. Asian Development Outlook 2004: I. Developing Asia and the World. "Nonperforming Loan Resolution in the Crisis-Affected Countries." http://www.adb.org/Documents/Books/ADO/2004/part010202.asp [Accessed 11 May 2004]

_____. April 2000. Vol. 1. "Law and Policy Reform at the Asian Development Bank: Insolvency Law Reforms in the Asian and Pacific Region." http://www.adb.org/Documents/Others/Law_ADB/lpr_2000_1.pdf [Accessed 10 May 2004]

_____. n.d.a. Lee & Ko. Regional Technical Assistance, Insolvency Law Reform. "Supplementary Report on Korea." (TA NO: 5795-REG) http://www.insolvencyasia.com/supplement_report/korea.html [Accessed 10 May 2004]

_____. n.d.b. Lee & Ko. Regional Technical Assistance Project, Insolvency Law Reform. "Report on Korea." http://www.insolvencyasia.com/insolvency_law_regimes/korea/section_f.html [Accessed 10 May 2004]

Embassy of the Republic of Korea, Ottawa. 11 May 2004. Interview with the Second Secretary and Consul.

Freedom House (FH). 17 July 2002. Freedom in the World 2001-2002. "Korea, South." http://www.freedomhouse.org/research/freeworld/2002/countryratings/korea-south.htm [Accessed 10 May 2004]

Interfax. 6 April 2004. "Chinese Oil Major Pursuing Takeover of Bankrupt South Korean Refinery." http://www.interfax.com/com?id=5710148&item=China [Accessed 10 May 2004]

The Korea Herald. 10 May 2004. "Sewon Telecom Files for Bankruptcy." http://www.koreaherald.co.kr/SITE/data/html_dir/2004/05/04/200405040032.asp [Accessed 10 May 2004]

Yonhap News Agency. 23 April 2004. "Government's SME Plan Could Ease Bankruptcy Worries." http://english.yna.co.kr/Engnews/20040423/300400000020040423103056E1.html [Accessed 10 May 2004]

Additional Sources Consulted

Internet sites, including: Asia Week; Asian Development Bank; FindLaw; Internet Legal Resource Guide; LawMoose's World Legal Resource Center; Supreme Court of Korea; World Legal Information Institute; World News Connection.