The Financial Services Commission announced that the Corporate Restructuring Promotion Act, which makes available prompt debt restructuring support for distressed enterprises, was reenacted by the National Assembly on December 8.

The Corporate Restructuring Promotion Act, which provides legal foundation for the corporate workout process, was first enacted in 2001 with a sunset provision and has been renewed or reenacted multiple times thus far.

The newly reenacted version of the Act largely maintains the same legal provisions carried under the previous law regarding the corporate credit risk assessment and workout process, but includes additional measures intended to boost the effectiveness of the corporate debt workout support. The new measures include offering the right of priority payment to third party creditors to enhance funding support and granting exemption of liability to the administrators of corporate debt restructuring. The newly enacted law has a three-year sunset provision, and the FSC needs to draw up measures to improve the system regarding the role of the court in corporate restructuring until the end of 2025 as provided by the supplementary opinion given by the National Policy Committee of the Parliament.

Since this year’s corporate credit risk assessment results are scheduled to be announced soon, the authorities expect that the newly reenacted law will help those selected as showing signs of insolvency to take advantage of the debt workout process. At the same time, the FSC will form a taskforce to work on measure for improving the corporate debt restructuring system.

The newly reenacted Corporate Restructuring Promotion Act will take effect immediately after the promulgation of the law, which is expected to be in early January 2024.

* Please refer to the attached file for details.