Advantages of Corporate Rehabilitation
Maintains control of the company
The management maintains the control of the company. Article 74 of the Debtor Rehabilitation and Bankruptcy Act has adopted a system where the management of the debtor company becomes the custodian under the rationale that the management may actively utilize the corporate rehabilitation procedure as well as the management’s know-how to increase the efficiency of the proceeding itself. However, the management may not maintain control in cases of financial ruin arising from misuse of corporate property, mismanagement or upon request by creditor on reasonable grounds.
Suspension of collection & debt forgiveness
Repayment in installments over 10 years, suspension of collection efforts and in some cases the debts can be forgiven.
Prevent bankruptcy
With court's permission, wage claims and trade payables can be paid preferentially to prevent labor disputes and small and medium suppliers from going bankrupt.
Creditors cannot exercise rights individually
Creditors cannot exercise rights individually. Once a rehabilitation proceeding commences, the individual exercises of creditors’ rights such as provisional attachment, provisional injunction, compulsory execution, and enforcement of security rights are suspended or prohibited to allow some breathing room for the debtor.