[Exclusive] Number of Tmon Creditors Drops to 9,000 After Priority Repayment of Small Claims... Creditors' Disputes and Court's Dilemma

200 Million KRW Equal Repayment Small Claims Priority Repayment
Reduction in Number of Creditors, First Step in Stakeholder Adjustment
Court: "Concerns Over Procedure Costs if Many Creditors"

At the first 'rehabilitation procedure consultation' held at the court on the 13th for TMON and WEMAKEPRICE (Timep), TMON proposed a self-rescue plan that would reduce the number of creditors to 9,000 by prioritizing repayment of small claims (equal repayment of 2 million KRW), but it was confirmed that the creditor group did not accept this, stating that 'normalization' should come first.

WEMAKEPRICE also proposed a plan to reduce the number of creditors to below 10,000 by prioritizing repayment of small claims, but it was not accepted. Reducing the number of creditors is an important first step to streamline the creditor group and expedite decision-making on the rehabilitation plan, but the agreement broke down at this stage.

According to a comprehensive report by Asia Economy on the 14th, at the first meeting of the Autonomous Restructuring Support (ARS) program held the previous day at the Seoul Rehabilitation Court's Rehabilitation Division 2 (Presiding Judge An Byung-wook), the priority repayment plan for small claims emerged as the biggest issue.

Ryu Kwang-jin, CEO of TMON, told Asia Economy, "The self-rescue plan specifies a plan to reduce the total number of creditors from 49,000 to 9,000 through equal repayment of 2 million KRW."

It was also reported that WEMAKEPRICE could reduce the number of small creditors from 66,000 to around 6,000 using the same method. The plan is to slim down the creditor group of Timep from 115,000 to about 15,000 by reducing 100,000 creditors, first resolving unsettled payments, and streamlining the rehabilitation decision-making structure. Regarding the approximately 200 billion KRW repayment cost for small claims, Timep told Asia Economy, "The self-rescue plan includes methods for attracting funds and ongoing efforts."

This plan was rejected after heated debate due to opposition from the creditor council composed of large financial creditors. TMON's creditor council includes Korea Standard Chartered Bank, Simone Asset Management, Korea Cultural Promotion, Kakao Pay, Onda, among others. WEMAKEPRICE's creditor council includes Korea Standard Chartered Bank, Korea Cultural Promotion, Kyowon Tour, Hanssem, etc.

The creditor council argued that although the number of creditors could be significantly reduced with the 200 billion KRW funds, from the perspective of large financial creditors with substantial claims, the execution of funds for future repayments becomes uncertain. However, for commercial creditors with unsettled payments under 2 million KRW, this plan offers a way to receive their owed money all at once, highlighting a conflict of interest between large financial creditors and small commercial creditors.

The court reportedly conveyed feedback during the consultation that "a large number of creditors raises concerns about procedural costs." In the Autonomous Restructuring Support (ARS), if the number of creditors exceeds 100,000, the process from creditor registration to obtaining consent for the rehabilitation plan becomes prolonged. It takes considerable time to verify creditor registers, identify addresses and contact information, and confirm subcontracting relationships. If the company's identified claims differ from the amounts reported by small creditors, a creditor investigation confirmation trial must also be conducted.

The restructuring process slows down, creditor consultations become difficult, and all decision-making can be delayed. For this reason, prioritizing repayment of small claims is considered the 'first key' to restructuring. Legally, the repayment priority between small commercial creditors and large financial creditors is equal, but small commercial creditors face greater risks of chain bankruptcies or cascading defaults.

In fact, Fly Gangwon (Seoul Rehabilitation Court Rehabilitation Division 14, 2024), whose rehabilitation plan was approved on the 23rd, also started with priority repayment of small claims, and Dongyang (Seoul Central District Court Bankruptcy Division 6, 2015), which had 37,000 victims, also began its rehabilitation process with small claim repayments.

However, if the creditor council does not accept this until the end, restructuring must proceed with prioritizing business normalization for investment attraction. Attorney Jeon Dae-gyu, a former chief judge of the Seoul Rehabilitation Court, said, "It is a point that requires consideration whether commercial creditors should be treated the same as large financial creditors," adding, "When there are many creditors, coordinating numerous interests is a challenge, making the restructuring process difficult."

Attorney Choi Sung-il of Law Firm Class said, "Priority repayment of small claims is not something the court can decide; it will only be possible if a central voice emerges within the creditor group." The court decided to continue the next rehabilitation procedure consultation at 3 p.m. on the 30th.