Seoul Rehabilitation Court Concludes Corporate Rehabilitation Proceedings for Eastar Jet

As Eastar Jet notified 605 employees of layoffs, raising concerns about a mass unemployment crisis in the aviation industry, officials are entering the temporary shareholders' meeting held on the 9th at Eastar Jet headquarters in Gangseo-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kim Daehyun] The Seoul Bankruptcy Court has concluded the corporate rehabilitation proceedings for Eastar Jet, one year and one month after the airline entered the process.

On the 22nd, the Seoul Bankruptcy Court, Rehabilitation Division 1 (Presiding Judge Seo Kyunghwan, Chief Judge Na Sanghoon) announced, "A substantial portion of the repayment obligations for rehabilitation secured claims and rehabilitation claims have been fulfilled since the approval of the rehabilitation plan," and officially closed Eastar Jet's corporate rehabilitation proceedings.

The court explained that Eastar Jet fully repaid approximately 15.3 billion KRW worth of rehabilitation secured claims and rehabilitation claims subject to repayment under the rehabilitation plan, and also repaid about 44.5 billion KRW in public claims (unpaid wages and retirement benefits).

The court further stated, "There is no recognition of any hindrance to the execution of the rehabilitation plan." It noted that various licensing procedures for resuming operations are underway, and with the easing of quarantine guidelines for overseas entrants, it is expected that the debtor's business and sales will improve.

Previously, Eastar Jet pursued a merger and acquisition (M&A) with Jeju Air in 2019, but after the contract fell through, it initiated rehabilitation proceedings in February of last year.

Initially, Ssangbangwool Group (Gwanglim Consortium) participated in the main bid to acquire Eastar Jet, but Seongjeong, a golf course management and real estate rental company, exercised the priority acquisition right and was selected as the final acquirer. Seongjeong completed the acquisition by investing 70 billion KRW in acquisition funds and 38.7 billion KRW in operating funds.

According to the rehabilitation plan, Eastar Jet repaid approximately 330 billion KRW in total rehabilitation claims at a repayment rate of 4.5%.

Subsequently, Eastar Jet applied to the Ministry of Land, Infrastructure and Transport for the Air Operator Certificate (AOC) for international air transport operations and began preparations for resuming flights. In January of this year, it received approval for work and training manuals necessary for employee training, and is currently in the process of obtaining the AOC.