Eastar Jet Submits Rehabilitation Plan... Bond Amount Increased Further

Estimated Maximum Bond Amount Around 400 Billion KRW
Some Leasing Companies Calculate Idle Period Costs
"Will Aim to Maximize Repayment Amount"

[Asia Economy Reporter Dongwoo Lee] The amount of claims estimated by Eastar Jet for submitting its rehabilitation plan is expected to reach up to 400 billion KRW. The reported claim amount has increased as some major creditors, including certain leasing companies, have demanded repayment calculations that include costs incurred during idle periods.

According to the aviation industry on the 17th, Eastar Jet will submit its rehabilitation plan containing normalization measures to the Seoul Bankruptcy Court as scheduled this afternoon. The submission will be made electronically through the law firm Yulchon, which is in charge.

The reported claim amount is expected to increase to more than double the initially estimated 200 billion KRW range. Previously, Eastar Jet estimated public claims such as unpaid wages and severance pay for current and former employees at about 70 billion KRW, and rehabilitation claims owed to creditors at around 130 billion KRW. However, this estimate was based on data as of April, and the claim amount has increased due to accrued interest costs and additional discussions with leasing companies.

The company plans to finalize the repayment amount through negotiations with creditors during an approximately one-month adjustment period after submitting the rehabilitation plan. Eastar Jet intends to use the acquisition payment of 108.7 billion KRW received from the acquirer, Seongjeong Co., Ltd., for debt repayment. If public claims are paid first, the amount available for repaying rehabilitation claims is estimated to be in the 30 billion KRW range.

There are concerns that the acquisition process may be rejected due to a low repayment rate, as the rehabilitation plan must receive approval from at least two-thirds of the creditors at the upcoming creditors' meeting. If the plan is rejected due to lack of creditor approval at the meeting, the court still has the option to forcibly approve the rehabilitation plan.

Seongjeong Co., Ltd. has stated that there is no issue regarding its financial capability related to the acquisition of Eastar Jet. The court has set the deadline for full payment as five business days before the creditors' meeting for negotiations on repayment ratios after the rehabilitation plan submission. However, Seongjeong is open to making early payment of the remaining amount after the creditors' meeting schedule is decided to alleviate industry concerns.

An Eastar Jet official said, "It is true that the claim amount has increased while calculating the claims," but added, "We plan to continue steady negotiations with the creditors during the remaining period to align the repayment amount as much as possible."