Complexity of collecting debt:
Days Sales Outstanding (DSO)
The paying culture in Korea is fairly good, but transactions are rarely paid for as originally agreed: delays of up to 30 days may be expected on average.
Late payment interest
Late payment interests may be claimed to the debtor, as contractually agreed or taking the statutory default interest rate (5% to 6%) as a basis. ==> [Data needed]
Orchestrated negotiation first
Amicable settlement opportunities should always be considered as a serious and very common alternative to formal legal proceedings. In practice, even though the courts have no authority to impose pre-trial negotiations on the parties, mediation centres established in each major cities to limit the tribunals' caseload are increasingly relied upon. ==> please describe the legal dunning process ==> are there any fast-track or summary proceedings available to deal with non disputed debts?
The judicial system of South Korea is divided between District Courts rendering decisions in first instance, High Courts acting as appellate jurisdictions, and a Supreme Court. Special divisions tend to deal with insolvency issues; however commercial claims are dealt with as civil matters. As a result of this, the courts may have problems coping with the caseload and lengthy proceedings must be expected. Ordinary legal action would usually commence when amicable collection has failed. The creditor would file a claim with the District Court and serve the debtor with Summons. The debtor is then given a month to respond (i.e. pay the debt or bring a defence), after which the court organises hearings to consider the parties evidence and arguments. The courts would typically award remedies in the form of damages, specific performance, or injunctions (to do or abstain from doing something), but punitive damages cannot be ordered. ==> would the courts order default judgment against the debtor should the debtor fail to respond the summons within the prescribed period?
A debtor in Korea would be deemed insolvent when unable to pay its debts as they fall due, or when liabilities become excessive in comparison with the company's assets.