Insolvency Reform - A Chinese Taipei Perspective
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![Page 1: Insolvency Reform - A Chinese Taipei Perspective](https://reader036.fdocument.pub/reader036/viewer/2022082818/56812cc6550346895d918050/html5/thumbnails/1.jpg)
Insolvency Reform -A Chinese Taipei Perspective
Sherri CHUANG
Ministry of Finance
Chinese Taipei
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Current Banking NPL Problem
10, 073
13, 274
10, 74710, 211
8, 833
7, 303
5, 8655, 105
3, 515
3.0
4.2 4.24.9
5.76.2
8.2
6.86.4
0. 0
2. 5
5. 0
7. 5
10. 0
12. 5
15. 0
1995 1996 1997 1998 1999 2000 2001 2002 2003I I0
2500
5000
7500
10000
12500
15000
The rate of deposit reserve & business tax decreased to write off NPL
Fist NPL bulk sale to AMC
NPL ratioNPL amount
AMC mechanism established
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MOF Efforts
• Target: NPL Ratio < 5%
• Actions– Requiring write off NPLs– Providing the incentive – Facilitating AMC mechanism
• US $9 billion NPL sold to AMC till Oct 2003
• Issue:latest NPL ratio of 6.4% is still high compared to healthy counterparts
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Development of Informal Workouts
• Current Moratoriums Between Banking Creditors & Debtors
• MOF involved from 1998 till 2001• Negotiation mechanism under the Bankers Association after Nov 2001• Planning to include AMC into the mechanism
• Drafting Rescue Law• Firm’s value evaluated by appraisal committee• Joint management by creditor banks• Obligations by the firm in financial difficulty• Termination of workouts
• Developing Turnaround Fund by Joint-venturing with Executive Yuan Development Fund ( the Fund)
• Broadening the investment scope of the Fund to venture capital firms which focus on turning around companies
• Raising the ceiling of investment of the Fund
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Current Judicial Reform on Bankruptcy
• Draft Amendments to the Bankruptcy Law– Connection of liquidation and bankruptcy
– The procedures for liquidation of government-owned corporations
– The recognition of bankruptcy judgments declared in foreign courts
• MOF Suggestions on the Draft– Balancing the rights between creditors and debtors
– Avoid appointing the debtor’s management as receivers or conservators
– Bankruptcy cases assigned to specific divisions or judges
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Summary
• Improving asset quality continuously in order to
restore financial intermediary function
• Guiding debt-rescheduling to real restructuring in
order to maximize NPL value
• Supporting turnaround fund in order to develop
corporate restructuring expertise