Daewoo Industrial Development, a mid-sized construction company ranked 75th in construction capability evaluation, is undergoing rehabilitation procedures.
According to the Financial Supervisory Service's electronic disclosure system on the 9th, Daewoo Industrial Development announced that the Seoul Rehabilitation Court decided to commence rehabilitation proceedings on the 7th. Rehabilitation plans will be accepted until January 16 of next year.
Daewoo Industrial Development submitted a rehabilitation petition to the court on the 2nd of last month. The commencement decision was made about a month later.
Daewoo Industrial Development is known to have delayed payment due to financial difficulties. As of the first quarter of this year, Daewoo Industrial Development's assets amounted to 293 billion KRW, of which about 100 billion KRW in construction sales receivables and short- and long-term loan receivables have largely become non-performing or unrecoverable. Liabilities stand at 230.8 billion KRW.
Owner-related risks are also holding the company back. Lee Sang-young, chairman of Daewoo Industrial Development, and former CEO Han Jae-jun have been under detention and investigation since the end of last month on charges including accounting fraud amounting to approximately 143 billion KRW, embezzlement, and breach of trust. When the police investigation intensified, Chairman Lee is also under investigation by the Corruption Investigation Office for High-ranking Officials for allegedly promising to pay 300 million KRW to Kim, a police superintendent working at the Gangwon Police Agency at the time, to halt the investigation, and actually handing over 120 million KRW.
Concerns over the collapse of mid-sized construction companies are spreading in the industry. According to the Ministry of Land, Infrastructure and Transport's Construction Industry Knowledge Information System, a total of 248 general construction companies closed in the first half of this year, marking the highest number in 12 years.
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