"Opposition to 'Land Swap at Mapo Western Driver's License Test Site' Requests 'Contract Timing Clause Revision'"
[Asia Economy Reporter Yu Je-hoon] The sale of the Songhyeon-dong site in Jongno-gu, Seoul, one of Korean Air's self-rescue plans, has hit a final rough patch. Although it seemed that opinions were converging through mediation by the Anti-Corruption and Civil Rights Commission, Seoul City requested a revision of the wording regarding the 'sale contract timing' in the contract.
According to industry sources on the 26th, the signing ceremony for the mediation agreement on the sale of the Songhyeon-dong site, scheduled to be held at 9:30 a.m. with the participation of the Anti-Corruption and Civil Rights Commission, Seoul City, and Korean Air, was suddenly postponed. This site, covering 36,642㎡ in the Jongno-gu area, is land that Korean Air has been trying to sell to secure liquidity due to the COVID-19 pandemic.
The sale, which had been progressing for several months and was nearing completion, suddenly encountered turbulence because Seoul City requested a revision of the wording in the mediation document prepared by the Commission the day before. Seoul City reportedly proposed replacing the contract clause with wording that does not specify the contract timing but states, "We will endeavor to conclude the contract as soon as possible."
The mediation document prepared by the Commission specified the contract timing and payment timing. Under the current Anti-Corruption and Civil Rights Commission Act, mediation has the effect of a settlement under civil law, so a clause regarding the right to claim performance was also specified. The Commission sent this mediation document to each party on the 16th and conducted additional opinion inquiries twice on the 20th and 23rd, reflecting the revision requests.
However, Seoul City, citing the results of legal advice, requested revisions regarding the contract timing and other clauses the day before. It is reported that Seoul City is concerned that it may be difficult to obtain city council approval due to controversies surrounding the land swap plan with LH (Korea Land & Housing Corporation) for the Songhyeon-dong site, involving the Mapo Western Driver's License Test Site.
Korean Air is reportedly very perplexed. Realistically, if the three-party sale through LH fails, there is no suitable method for sale unless the park plan is canceled. In particular, the company explains that if Seoul City designates the site as a cultural park and does not proceed with compensation immediately, it can hold out for more than 10 years, and after the park designation notice, the company can only claim the purchase of the site by the city after 10 years. This is a major setback for Korean Air, which urgently needs asset liquidity due to COVID-19.
A Korean Air official expressed concern, saying, "Saying that city council approval is negative and that they cannot even provide a guarantee is no different from saying they cannot do anything at all," and added, "If we rely solely on Seoul City and do not receive payment next year, Korean Air will be unable to implement its self-rescue plan."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
