‘Business Deterioration’ Gwangju Cheongyeon Medical Group to Enter Court-Ordered Management Process

Affiliates of Gwangju Cheongyeon Medical Group have ultimately entered the process of court receivership.

[Asia Economy Honam Reporting Headquarters Reporter Lee Gwan-woo] Affiliates of Gwangju Cheongyeon Medical Group, struggling with financial difficulties, have ultimately entered the process of court receivership.

According to the legal and medical communities on the 23rd, five affiliates of Cheongyeon Medical Group recently submitted corporate rehabilitation procedure (court receivership) applications to the Seoul Bankruptcy Court Rehabilitation Division 18 (Chief Judge Seo Kyung-hwan).

The court issued a comprehensive prohibition order against the five affiliates that applied for rehabilitation procedures: Cheongyeon Holdings, Cheongyeon Investment, Seoyeon Holdings, CY Co., Ltd., and Gwanggaeto001.

These affiliates will no longer be able to dispose of assets arbitrarily or repay debts without court approval before the commencement of rehabilitation procedures.

Cheongyeon Holdings is a hospital management consulting firm, while Cheongyeon Investment and Seoyeon Holdings are companies engaged in leasing non-residential buildings. CY is a traditional Korean medicine manufacturing and distribution company established by Cheongyeon Korean Medicine Hospital, and Gwanggaeto001 is a real estate development company.

Additionally, the hospital directors of Cheongyeon Korean Medicine Hospital, Seogwangju Cheongyeon Nursing Hospital, and Suwan Cheongyeon Nursing Hospital are reported to have each filed for personal rehabilitation procedures.

The massive group, employing about 1,000 people, has suddenly reached the brink of bankruptcy, prompting related industries to comment that reckless, sprawling business expansion caused severe financial difficulties.

Starting with Cheongyeon Korean Medicine Hospital in 2008, the group expanded its business to operate 14 hospitals and clinics nationwide, as well as overseas medical institutions, herbal medicine manufacturing, and real estate markets, which intensified cash liquidity problems.

Moreover, last month, just before loan maturity, the plan to sell three buildings?Cheongyeon Korean Medicine Hospital, Sangmu Rehabilitation Center, and Seogwangju Nursing Hospital?as a bundled REIT to a REIT operator and then lease them back, known as the ‘REIT sale,’ fell through, extinguishing the last hope, according to local medical circles.

The court is reportedly planning to decide whether to commence rehabilitation procedures after reviewing the corporation’s rehabilitation plan and other documents.