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Special treatment of derivatives in Korean insolvency proceedings : Comparison with the United States and Japan

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  • Special treatment of derivatives in Korean insolvency proceedings
  • Lim, Chaewoong
  • Seoul National University(BK 21 Law)


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Title Special treatment of derivatives in Korean insolvency proceedings
Similar Titles
Sub Title

Comparison with the United States and Japan

Material Type Articles
Author(English)

Lim, Chaewoong

Publisher

[Seoul]:Seoul National University(BK 21 Law)

Date 2007
Journal Title; Vol./Issue Journal of Korean Law:vol. 7(no. 2)
Pages 36
Subject Country United States(Americas)
Japan(Asia and Pacific)
South Korea(Asia and Pacific)
Language English
File Type Link
Subject Government and Law < Laws and Legislation
Holding Seoul National University

Abstract

In April 2005, Korea enacted the Debtor Rehabilitation and Bankruptcy Law (“DRBL”) which took effect in April 2006. Article 120, Paragraph 3 and Article 336 of the DRBL contain special provisions (referred to herein as the “Korean Netting Provision”) for certain “Qualified Financial Transactions” such as derivatives as well as repo and securities lending transactions. The Korean Netting Provision eliminates most of the legal uncertainty arising from the lack of express provisions under Korean insolvency and other statutes relating to close-out netting and credit support arrangements and thus, should further stimulate the expansion of domestic and cross-border derivatives transactions in Korea. This paper briefly reviews the legal issues that may arise when a party to a derivatives transaction becomes the subject of proceedings under the insolvency laws of Korea, the United States and Japan and examines the major provisions of the Korean Netting Provision and compares then with similar provisions in the United States and Japan.