Woori Bank Claims "TY Holdings, Major Shareholder of Taeyoung Construction, Debt Moratorium Is Unreasonable"
Creditors' Adjustment Committee to Conclude Woori Bank's Request in May
Corporate Improvement Plan Resolution Procedure Scheduled for the 30th as Planned
Woori Bank has emerged as a variable in the workout (corporate financial restructuring) process. This comes as Woori Bank requested an agenda adjustment regarding the debt of TY Holdings, the major shareholder of Taeyoung Construction. The Korea Development Bank, the main creditor bank, is stepping in to mediate the agenda adjustment, drawing attention to future developments. However, the financial creditors' meeting scheduled for the 30th to resolve the corporate improvement plan is expected to proceed as planned.
According to financial sources on the 27th, Woori Bank recently asked the Financial Creditors Adjustment Committee to exclude the agenda item that would defer the joint debt claim on TY Holdings for three years. Woori Bank holds approximately 36 billion KRW in joint debt from TY Holdings, the major shareholder of Taeyoung Construction.
Woori Bank argued that since Taeyoung Construction and TY Holdings are separate companies undergoing the workout process, deferring the joint debt claim on TY Holdings would unfairly burden the creditors.
On the other hand, the Korea Development Bank maintains that the creditor-debtor relationship between Taeyoung Construction and TY Holdings is closely related to the current workout, and thus prioritizes the normalization of Taeyoung Construction.
They argue that deferring the major shareholder’s joint debt aligns with the purpose of the workout. This judgment considers that if TY Holdings resolves its debt, it would be difficult to implement the self-rescue plan intended to support Taeyoung Construction. Accordingly, financial authorities previously issued a non-action opinion letter to financial creditors who deferred TY Holdings’ guarantee debt.
A financial authority official explained, "It is a priority that the creditors make decisions according to the purpose of the workout," adding, "There will be little impact on the corporate improvement plan resolution procedure on the 30th."
Whether Woori Bank’s claim will be accepted depends on the decision of the Creditors Adjustment Committee. The committee’s decision is expected around mid-May, so the corporate improvement plan resolution on the 30th is likely to proceed with the existing agenda. If the Creditors Adjustment Committee sequentially accepts Woori Bank’s claim, the agenda to defer TY Holdings’ joint debt will be invalidated.
It is known that Woori Bank plans to file a lawsuit to invalidate the resolution and resolve the debt relationship if the Creditors Adjustment Committee rejects its request. Besides the joint debt, Woori Bank holds 44 billion KRW in direct debt from TY Holdings.
Meanwhile, on the 30th, the financial creditors’ meeting plans to proceed with the resolution procedure on the corporate improvement plan, which includes self-rescue measures such as a 100-to-1 free capital reduction of the major shareholder’s shares, 100% equity conversion of 400 billion KRW in loans before the workout, and 100% perpetual bond conversion of 334.9 billion KRW in loans after the workout. The plan must secure the consent of more than 75% of the creditors to be finalized, and after the agreement is signed, the full-scale workout process will begin.
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