Distribution Company Facing Closure Due to 5 Billion KRW Debt Successfully Secures Corporate Rehabilitation Plan Approval
26-07-23 143
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1. Case Overview
The client's company was a sound import and manufacturing distribution enterprise that had grown steadily based on outstanding competitiveness. However, it suffered a severe blow due to unexpected operational disruptions from a new distribution channel contract, combined with a sudden unit price dispute with a major overseas partner. To make matters worse, unilateral transaction suspensions and provisional asset attachments by the partner ensued, plunging the company into an uncontrollable liquidity crisis. Desperate for a final breakthrough for survival amidst snowballing debt pressure, the client sought assistance from Law Firm Theo.
Law Firm Theo's dedicated corporate rehabilitation team immediately initiated thorough financial due diligence and data analysis to formulate a meticulous strategy to save the company.
- Proving Objective Corporate Value: We flawlessly proved to the court and creditors through data that the company was merely experiencing a temporary liquidity crisis and that its "going concern value" upon normalization was vastly higher than its liquidation value.
- Establishing a Feasible Customized Rehabilitation Plan: Through bold self-rescue measures such as selling non-operating assets, we assured key creditors by proposing the early and full repayment of claims held by the most demanding secured creditors.
- Strategic Debt Restructuring: For general rehabilitation claims, such as loans and commercial claims, we persistently persuaded creditors by establishing an unconventional yet reasonable rehabilitation plan. This involved boldly converting over 80% of the debt into equity (debt-for-equity swap) and paying off only the remaining balance in installments over a long period.
4. Result of Assistance
Thanks to Law Firm Theo's flawless legal structuring and sincere persuasion of creditors, the rehabilitation plan was approved with an overwhelming consent rate at the notoriously difficult interested parties' meeting. Ultimately, we secured the court's final "decision of authorization" for the rehabilitation plan. The client's company, which had been pushed to the brink of closure by a massive 5 billion won debt, obtained a perfect opportunity for rebirth through our assistance, legally writing off and restructuring its debt to rise vigorously in the market once again.
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