Court Mandates Rehabilitation Plan for Daechang Enterprise Ranked in Top 100 Construction Companies

The rehabilitation plan of Daechang Enterprises, a mid-sized construction company ranked within the top 100 in construction capability evaluation, has been forcibly approved.

Seoul Rehabilitation Court. [Image source=Yonhap News]

According to the legal community on the 29th, the Seoul Rehabilitation Court, Rehabilitation Division 15 (Chief Judge Na Sang-hoon) announced that it forcibly approved the previously rejected rehabilitation plan of Daechang Enterprises.

The court stated, "Even if the rehabilitation plan was rejected because it did not obtain the statutory majority consent from the class of secured rehabilitation creditors, approving the rehabilitation plan aligns with the interests of secured rehabilitation creditors, rehabilitation creditors, employees, shareholders, and all other stakeholders."

The court decided to forcibly approve the rehabilitation plan based on the following reasons: adherence to the principle of guaranteeing liquidation value; receiving 72% consent from the class of secured rehabilitation creditors, with only 3 out of 11 secured rehabilitation creditors dissenting; obtaining consent from the class of rehabilitation creditors far exceeding the statutory approval requirement; and recognition of the feasibility of executing the rehabilitation plan.

Daechang Enterprises, ranked 109th in construction capability evaluation, applied for the commencement of rehabilitation proceedings on the 7th of last month due to increased construction receivables caused by COVID-19 and a sharp rise in construction costs due to global raw material price increases. However, at the creditors' meeting held on the 23rd, although the rehabilitation creditors met the approval requirements, the rehabilitation plan was rejected because the secured rehabilitation creditors, including opposition from the Construction Mutual Aid Association, did not meet the approval requirements.

A representative from the Seoul Rehabilitation Court stated, "We will strive to help the construction industry overcome difficulties through corporate rehabilitation procedures."