Transcript
Page 1: Insolvency Reform - A Chinese Taipei Perspective

Insolvency Reform -A Chinese Taipei Perspective

Sherri CHUANG

Ministry of Finance

Chinese Taipei

Page 2: Insolvency Reform - A Chinese Taipei Perspective

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

Page 3: Insolvency Reform - A Chinese Taipei Perspective

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

Page 4: Insolvency Reform - A Chinese Taipei Perspective

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

Page 5: Insolvency Reform - A Chinese Taipei Perspective

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

Page 6: Insolvency Reform - A Chinese Taipei Perspective

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