Court Likely to Decide Tomorrow on Whether to Commence TMEF Rehabilitation Proceedings

Decision to Open Proceedings: Submission of Rehabilitation Plan for Approval Determination

The fate of TMON and WEMAKEPRICE, which caused a large-scale settlement delay crisis, will be decided on the 10th.

Ryu Hwa-hyun, CEO of Wemakeprice (left), and Ryu Kwang-jin, CEO of Tmon, greet each other as they attend the hearing at the Seoul Rehabilitation Court in Seocho-gu, Seoul on the 2nd. The court plans to review the reasons for Tmon and Wemakeprice's rehabilitation applications, their debt status, and funding plans. Photo by Jo Yong-jun jun21@

According to the legal community on the 9th, the Seoul Rehabilitation Court’s Rehabilitation Division 2 (Presiding Judge An Byeong-wook, Chief Judges Kim Ho-chun and Yang Min-ho) is expected to determine on the 10th whether to commence rehabilitation proceedings for TMON and WEMAKEPRICE.

The court’s decision on that day will also change the fate of the two companies and their creditors. If rehabilitation commencement is decided, a court-appointed administrator will take over management, and the two companies must prepare a rehabilitation plan through processes such as compiling creditor lists, filing and investigating claims. During this process, court-appointed investigators will assess the going-concern value and liquidation value of the two companies. Based on this, once the final rehabilitation plan is submitted, if it meets the requirements after obtaining consent from creditors and secured creditors, the court will approve it and the corporate rehabilitation procedure will proceed.

On the other hand, if the causes of bankruptcy such as insolvency or excess debt are found to lie with the debtor and there is no prospect of rehabilitation, the court may declare bankruptcy. In this case, the procedure concludes by liquidating the company’s remaining assets and distributing them to creditors. The court’s decision on whether to commence rehabilitation proceedings follows the failure of the voluntary restructuring support program (ARS) applied for by the two companies.

When the settlement delay crisis occurred, TMON and WEMAKEPRICE applied for corporate rehabilitation on July 29, stating that they could not resolve their financial situation independently. The court approved the ARS program and gave them one month to prepare their own self-rescue plans before starting rehabilitation proceedings. The ARS is a system supported by the court to facilitate voluntary restructuring negotiations between debtors and creditors prior to the decision to commence rehabilitation proceedings. However, after two creditor meetings, the two companies failed to prepare self-rescue plans, and the court decided on the 30th of last month not to extend the ARS program. With the termination of the ARS program, the court resumed the review of whether to commence rehabilitation proceedings for the two companies.