Shinil, a mid-sized construction company known for its apartment brand 'Happy Tree,' has filed for court receivership (corporate rehabilitation). It is believed that the company has been struggling with financial difficulties due to overlapping adverse factors such as an increase in unsold units amid the real estate market downturn. Following HN Inc, a Hyundai family company ranked within the top 100 in construction capability evaluation, and Daechang Enterprises, concerns over a wave of bankruptcies among mid-sized construction firms are growing.
According to the legal community on the 1st, Shinil filed for corporate rehabilitation at the Seoul Bankruptcy Court on the 31st of last month. Typically, the court reviews the company's submitted petition for provisional disposition and comprehensive injunction application before deciding whether to accept them. This process usually takes about a week.
Shinil is a mid-sized construction company established in 1985. It showed rapid growth, ranking 57th in the construction capability evaluation in 2006, but due to reckless business expansion and sales failures, it went bankrupt in 2007. After being acquired by GNS in 2011, it was normalized and recovered to 113th place in the construction capability evaluation last year.
Shinil's filing for corporate rehabilitation is attributed to the increased burden of construction costs caused by unsold units. One of Shinil's projects, 'Ulsan Onyang Bali Shinil Happy Tree' in Onyang-eup, Ulju-gun, Ulsan, had only 6 applicants for 93 units offered in general sales last month.
Within the industry, concerns are growing that a chain of bankruptcies may continue as mid-sized construction companies enter court receivership one after another. In particular, due to growing concerns over real estate project financing (PF) last year, Wooseok Construction, the 6th largest construction company in Chungnam region, was processed for a first bankruptcy at the end of last month after failing to cover a promissory note due for payment. This year, HN Inc, a mid-sized Hyundai family construction company ranked 133rd in construction capability evaluation, filed for court receivership, and on the 7th of last month, Daechang Enterprises, ranked 109th and known for its apartment brand 'Zoom,' also filed for court receivership.
Meanwhile, the volume of unsold housing units continues to steadily increase. In February, the nationwide number of unsold housing units reached 75,438, the highest since November 2012 (76,319 units). In particular, the amount of 'malignant unsold' units, which remain unsold even after construction is completed, is also increasing. As of April, the number of unsold units after completion was recorded at 8,716, the highest in 1 year and 10 months since June 2021 (9,008 units).
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
