The debtor can stop the bankruptcy proceeding by presenting the court with a plan that is acceptable to the majority of creditors holding three fourths of the total obligations of the debtor. The problem with the system has to do with the process of mediation. Court supervised mediation is a process that was originally designed to help small companies settle debts without initiating the full bankruptcy process. The process allows companies in trouble some significant advantages. They can postpone debts.
Old management continues in control.
They can also to receive new money by way of the low interest loans. For example, under the system troubled companies can get loans with an interest rate of 20 percent a full ten percentage points lower than the present going rate. The system would be a very helpful alternative to bankruptcy for the smaller companies it was designed to help. Unfortunately the system has been misused by large companies including the Chaebols. Last year 201 companies registered for mediation.