Decision on whether to open formal rehabilitation proceedings deferred until July 30

JTBC's headquarters in Sangam-dong, Mapo-gu, Seoul. [Yonhap]
JTBC's headquarters in Sangam-dong, Mapo-gu, Seoul. [Yonhap]

By Yang Geun-hyuk, The Herald Business

A court has approved JTBC's application for a voluntary restructuring support program and deferred its decision on whether to open formal rehabilitation proceedings.

The Second Rehabilitation Division of the Seoul Rehabilitation Court announced Tuesday that it would hold off on deciding whether to commence rehabilitation proceedings until July 30, to monitor JTBC's progress in voluntary restructuring consultations.

The voluntary restructuring support program, known by its Korean acronym ARS, allows a court to suspend the forced opening of rehabilitation proceedings and instead support a company and its creditors in working out a restructuring arrangement on their own terms. During the ARS phase, the rights of creditors and shareholders are not diluted or impaired. The court may defer the opening of rehabilitation proceedings for up to three months and may extend that period if negotiations show substantial progress. A company may continue normal business operations while negotiating with creditors under the program.

The court said it plans to investigate the circumstances that led JTBC to seek rehabilitation and to assess the value of its assets, its going-concern value and its liquidation value. If an agreement is reached within the deferral period, JTBC will withdraw its rehabilitation application and implement its planned restructuring measures. If talks break down, the court will decide whether to formally open rehabilitation proceedings.

JTBC declared a default on June 12 after failing to repay 20.6 billion won ($13.4 million) in securitized borrowings at maturity. Two days later, on June 14, Joongang Holdings, ContentreeJoongAng, Joongang P&I and Megabox Joongang filed for rehabilitation proceedings in quick succession, widening what has come to be called the "Joongang Group rehabilitation crisis."


yg@heraldcorp.com