Timon Free Market's Voluntary Restructuring Fails... Court to Decide on Rehabilitation Soon

Court Decides Not to Extend ARS Program
Company Plans M&A Push if Rehabilitation Begins

The self-restructuring support (ARS) program for TMON and WEMAKEPRICE to prepare self-rescue plans has effectively failed. The court is expected to soon decide whether to initiate rehabilitation procedures for the two companies.

The Seoul Bankruptcy Court Rehabilitation Division 2 (Presiding Judge An Byeong-wook, Chief Judges Kim Ho-chun and Yang Min-ho) held a second rehabilitation procedure consultation on the afternoon of the 30th with the two companies and the creditors' council in attendance, announcing the decision not to extend the ARS program. Presiding Judge An stated, "We plan to decide on whether to initiate (rehabilitation procedures) as soon as possible," and added, "We ask the creditors' council to submit their opinions on the initiation decision to the court through the representative creditors."

Ryu Hwa-hyun, CEO of Wemakeprice (left), and Ryu Kwang-jin, CEO of Tmon, are leaving the building after concluding the second rehabilitation procedure consultation related to the Tmon-Wemakeprice incident on the afternoon of the 30th at the Seoul Rehabilitation Court in Seocho-gu, Seoul.
[Photo by Yonhap News]

The ARS is a system supported by the court to facilitate autonomous restructuring negotiations between debtors and creditors before a decision to initiate rehabilitation procedures is made. It was introduced with the purpose of resolving disputes quickly, smoothly, and at minimal cost.

Earlier, on the 2nd of this month, the court approved the ARS program for the two companies and granted a one-month period until the 2nd of next month before deciding on the initiation of rehabilitation procedures. The companies formed a creditors' council composed of major creditors and proceeded with negotiations, but they failed to prepare a self-rescue plan satisfactory to the creditors by this date.

The Chief Restructuring Officer (CRO) appointed to support the ARS program for the two companies also reported difficulties in finding investors during the ARS period. The CRO stated, "The company's cash flow situation is poor, and cash inflow is extremely minimal," adding, "From the investors' perspective, acquisition negotiations are difficult at this stage, and they seem to prefer continuing negotiations after the initiation." Some creditors attending the consultation also reportedly expressed opposition to extending the ARS program.

Shin Jeong-gwon, Emergency Response Committee Chairman of the TMON and WEMAKEPRICE Victims' Union, told reporters after the consultation, "If accurate details about the amount and investment destination had been presented, it would have been credible and satisfactory, but since that is not the case, we can only wait and see." Regarding the extension of the ARS program, he said, "If the time keeps dragging on, the company's value will only decrease, lowering the value of the recoverable claims," and added, "We have decided to share opinions with the sellers and submit an official statement to the court."

Ryu Hwa-hyun, CEO of Wemakeprice (left), and Ryu Kwang-jin, CEO of Tmon, are holding a press conference after concluding the second rehabilitation procedure consultation related to the Tmon-Wemakeprice incident at the Seoul Bankruptcy Court in Seocho-gu, Seoul, on the afternoon of the 30th. [Image source=Yonhap News]

Once the ARS program ends, the court is expected to soon decide whether to initiate rehabilitation procedures for the two companies.

If the initiation of rehabilitation procedures is approved, the two companies plan to pursue mergers and acquisitions (M&A) before the rehabilitation plan is approved. Ryu Hwa-hyun, CEO of WEMAKEPRICE, told reporters, "We have received letters of intent to invest from two domestic private equity firms." Currently, the two companies have held meetings with 15 investors for investment attraction, but most responded that it is difficult to proceed with investment reviews during the ARS stage.