The process of conducting rehabilitation procedures using patents as collateral and promoting business normalization becomes relatively easier in court.
On the 23rd, the Korean Intellectual Property Office (KIPO) announced that it signed a "Business Agreement to Expand the Use of Intellectual Property (IP) by Rehabilitation Companies" with the Suwon Rehabilitation Court (hereinafter referred to as the Court).
Until now, rehabilitation companies faced difficulties in repaying debts by selling collateral IP because they could not dispose of assets arbitrarily without the court's permission. According to the Debtor Rehabilitation Act (Article 131), rehabilitation companies are prohibited from arbitrarily disposing of assets.
However, with this business agreement, rehabilitation companies will be able to quickly obtain court approval to sell collateral IP through the IP Collateral Loan Recovery Support Organization and repay certain debts with the proceeds from the sale.
The IP Collateral Loan Recovery Support Organization, composed of KIPO, the Korea Invention Promotion Association, and Intellectual Discovery Inc., plays the role of purchasing collateral IP from banks in cases of defaulted IP collateral loans.
KIPO expects that the sale of collateral IP through the Recovery Support Organization will increase the likelihood of court approval of rehabilitation plans and support the smooth execution of rehabilitation procedures for companies.
In particular, rehabilitation companies that secure IP usage rights (non-exclusive licenses) through KIPO’s "Sale & License Back (SLB)" program can continue their business by utilizing the collateral IP they hold with a prescribed royalty fee, and after business normalization, they are granted priority rights to repurchase the collateral IP they sold.
This structure supports companies’ debt repayment by having KIPO purchase the companies’ collateral IP while simultaneously granting usage rights of the collateral IP to the companies, allowing continuous use of the collateral IP.
Considering that 9 out of 17 total SLB program demands from rehabilitation companies occurred in the Gyeonggi-do region, KIPO expects that the agreement with the Suwon Rehabilitation Court will provide practical assistance in corporate rehabilitation procedures.
Kim Wanki, Commissioner of KIPO, said, “The agreement is meaningful in that it expands support for rehabilitation procedures of companies in financial distress, which was previously limited to Seoul, to Gyeonggi-do. KIPO and the Suwon Rehabilitation Court will spare no effort to support the expanded use of collateral IP by rehabilitation companies.”
Kim Sanggyu, Chief Judge of the Suwon Rehabilitation Court, said, “We expect that the agreement will increase the likelihood of rehabilitation approval for companies. The court will actively cooperate with KIPO to support rehabilitation companies, including appointing a dedicated judge for the SLB program.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
