810 S. Korea firms file for receivership last year

January 16, 2014 Leave a comment

810 S. Korea firms file for receivership last year

2014.01.13 18:09:58

Kim Hyo-hye, Shin Soo-hyun

A host of South Korean companies have resorted to the court after failing to tackle financial woes amid the sputtering economy. The number of companies, which filed for the corporate revival process that equates to court receivership or composition in the past, stood at 810 last year, the highest since the 1998 Asian financial crisis.
The combined assets of all the troubled corporations under management of the court bankruptcy divisions topped 30 trillion won, on a par with assets of the country’s 10 biggest conglomerates. A total of 810 companies filed for corporate revival last year, said sources at the 14 regional courts’ bankruptcy divisions nationwide and investment banks Monday. The number hit a 15-year high since the Asian financial crisis, when corporations went bankrupt in record numbers.
The bankruptcy divisions of the Seoul Central District Court (SCDC) and Suwon District Court, both of which are in areas most densely packed with companies, reported 272 and 125 cases of corporate revival applications last year respectively, up from 266 and 101 in 2012.
As an increasing number of companies are put under receivership, the courts’ bankruptcy divisions have been managing assets comparable to those of conglomerates. Corporations that filed for receivership to the SCDC’s bankruptcy division last year held a total of 17.4 trillion won ($16.4 billion) in assets. This is larger than 17.1 trillion won of Dongbu Group, Korea’s 17th biggest conglomerate in terms of total asset value as of April of 2013, and close to 22.8 trillion won of Shinsegae Group and 20 trillion won of LS Group.
The combined assets of all companies managed by the courts’ bankruptcy divisions nationwide are estimated at 30 trillion won, according to the industry. The size of the assets is similar to those of the top 10 conglomerates, including Hanwha Group and Hanjin Group.
Among the companies that entered the revival process last year, builders took up an overwhelming majority of 28 percent.

Filed under Macro Trends

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