Temporary Relief from Business Suspension... HDC Hyundai Development Company Faces a Difficult Road Ahead

HDC Hyundai Development Company (HDC Hyundae Industrial Development, Hyunsan) has breathed a sigh of relief. This is because the court has put a brake on the 8-month business suspension penalty following the redevelopment site collapse accident that occurred in June last year in Hakdong, Gwangju. However, in the phase of revitalizing the redevelopment and reconstruction market, the prolonged litigation has caused image deterioration, and the possibility of additional disciplinary actions remains, leaving the future still uncertain.

According to the related industry on the 15th, until just before the suspension of business penalty was stayed, Hyunsan was on the brink, facing threats to its construction rights not only in new project orders but also in existing projects. Earlier, Hyunsan announced on the 13th that it had been notified of contract termination for the construction of apartments near Gonjiam Station in Gwangju, Gyeonggi Province. On the 8th, it also received a contract termination notice for the second phase of Daejeon Doan I-Park City (Daejeon Doan 2-2 District) construction project, worth about 1 trillion won. In Gwangju Unam Jugong 3rd Complex and Gyeonggi Gwangmyeong 11 District, it was notified of exclusion from the consortium.

With the court's decision, Hyunsan has secured considerable time to restore trust. The stay of the penalty is effective until the 30th day after the first trial verdict of the main lawsuit is announced, allowing Hyunsan to operate until the main judgment is made. However, the market views maintaining existing contracts as more important than new orders. A construction industry official said, "If you add up the scale of projects where contract withdrawal is possible, it amounts to trillions of won," adding, "It is crucial to protect the contracts already won." The Samho New Town reconstruction association in Anyang, Gyeonggi Province, plans to hold a general meeting on the 21st to vote on whether to retain the contractor (Hyunsan). The Busan Citizens Park 3rd District and Busan Seogeumsa A District will also soon hold general meetings to terminate construction contracts with Hyunsan.

The variable is that Hyunsan is facing disciplinary action for the collapse accident of the outer wall of Gwangju Hwajeong I-Park that occurred in January this year. This case is expected to have a stronger punishment as Hyunsan's responsibility is greater than in the Hakdong case. Already, Seoul City sent a prior notice on the 12th to Hyunsan, stating that it would impose either deregistration or a one-year business suspension. Hyunsan plans to devote all efforts to persuading the association members of the projects it previously won, while actively managing the accident site and compensating for damages.