"Failed Negotiations with Franchise Owners"... Korea Pizza Hut Finally Initiates Rehabilitation Process

ARS Processed Before Launch but No Agreement Reached
"Deeply Regrettable... Unavoidable Decision"
"Not Avoiding Legal Responsibility... Store Operating Normally"

Korea Pizza Hut, which lost a lawsuit demanding the return of unjust profits from franchisees, has ultimately entered rehabilitation proceedings.

The Seoul Rehabilitation Court, Rehabilitation Division 12, decided to commence rehabilitation proceedings for Korea Pizza Hut on the 16th. The final deadline for submitting the rehabilitation plan is March 20 of next year. The court will review the plan and decide whether to approve the rehabilitation. If it determines that rehabilitation is not feasible, the case will proceed to bankruptcy.

Yonhap News

Earlier, Korea Pizza Hut lost the second trial in a lawsuit filed by 94 franchisees against the headquarters demanding the return of unjust profits, resulting in a compensation of 21 billion KRW. Facing the risk of forced execution on the claim amount, the company applied for the commencement of rehabilitation proceedings last month to buy time. At the same time, it applied for the Autonomous Restructuring Support (ARS) program to negotiate with the creditor franchisees before the start of rehabilitation proceedings. However, since no amicable agreement was reached between the company and the creditors by the 11th, the rehabilitation proceedings were initiated.

Korea Pizza Hut issued an official statement on the day, saying, "Through the ARS program over the past month, we made various efforts under the court’s mediation to reach an amicable and swift agreement with the creditors, but no visible results were achieved," and added, "We deeply regret that we have ultimately had to enter corporate rehabilitation proceedings."

Korea Pizza Hut emphasized that the commencement of rehabilitation proceedings was an unavoidable decision. The company explained, "The lawsuit group seized our financial institution accounts, making it impossible to operate the business normally," and stated, "To continue the business for all franchisees who trust us and make a living through the Pizza Hut brand, including those not involved in the lawsuit, we had no choice but to apply to the court for the commencement of rehabilitation proceedings."

It also stressed that this is not an attempt to evade legal responsibility through rehabilitation proceedings. Korea Pizza Hut stated, "We will make every effort with a responsible attitude to normalize the business under proper procedures and the supervision of the rehabilitation court."

Despite the commencement of corporate rehabilitation proceedings, about 330 Pizza Hut stores nationwide are expected to operate normally. Korea Pizza Hut said, "Regardless of the corporate rehabilitation, we inform consumers that they can continue to order and enjoy Pizza Hut as usual."