Shindonga Construction Files for Court Receivership... Five Years After Workout Graduation

Ranked 58th in Construction Capability Evaluation, Unable to Cover Maturing Bills Last Month
Financial Condition Worsens Due to Real Estate Market Downturn and Other Factors

Shindonga Construction, ranked 58th in construction capability evaluation, has filed for corporate rehabilitation proceedings (court receivership) with the court.

According to the construction industry and legal circles on the 6th, Shindonga Construction submitted an application for the commencement of corporate rehabilitation proceedings to the Seoul Rehabilitation Court, Rehabilitation Division 3 (Chief Judge Lee Yeo-jin) on the same day.

The court is expected to decide on provisional measures and comprehensive injunctions as early as this month. If the requirements for commencement of rehabilitation proceedings are recognized, the court will issue an order to commence, and thereafter assets and claims will be frozen.

Shindonga Construction was established in 1977 and is a mid-sized construction company known for its housing brand "Familie." It ranked 58th in last year's construction capability evaluation.

Shindonga Construction is undergoing court receivership procedures again five years after graduating from a workout (corporate financial restructuring) in November 2019. It had applied for a workout in 2010. As of the end of 2023, Shindonga Construction's debt ratio rose by about 80 percentage points from the previous year to 428.75%.

A representative of Shindonga Construction stated, "Due to liquidity deterioration, we were unable to cover a 6 billion KRW promissory note maturing at the end of last month, which led us to apply for rehabilitation proceedings."

The construction industry views the financial situation as worsened due to the real estate market downturn. Large-scale unsold units occurred at some sites where Shindonga Construction was responsible for completion, such as the Shinjinju Station area townhouse in Jinju, Gyeongnam, and the high-rise residential-commercial complex near Uijeongbu Station. This was compounded by the failure to convert the main project financing (PF) of the SongSan Green City townhouse development project in Songsan-myeon, Hwaseong, and an increase in unpaid construction costs.

A Shindonga Construction representative explained, "Recently, the real estate market has deteriorated and losses have occurred all at once. We judged that the going concern value is greater than the liquidation value, so we applied for court receivership."