Court Initiates Rehabilitation Proceedings for Sambutogeon, Ranked 71st in Construction Capability

Sambootogen, a mid-sized construction company ranked 71st in construction capability evaluation, has decided to undergo rehabilitation procedures.

Logo attached to the exterior wall of the former Sambutogeon building in Jung-gu, Seoul. Photo by Yonhap News

The Seoul Bankruptcy Court Division 3 (Presiding Judge Jung Jun-young) announced on the 6th that it has decided to commence rehabilitation procedures for Sambootogen.

The court explained, "Liquidity has deteriorated due to a vicious cycle of cash flow caused by a sharp rise in raw material prices, a surge in uncollected construction payments and developer loans due to the construction market downturn, assumption of PF debts due to the contractor's failure to fulfill completion obligations, and repeated increases in additional project costs."

The court will review the rehabilitation plan and decide whether to approve the rehabilitation. If it determines that rehabilitation is not feasible, the company will proceed to bankruptcy.

When deciding to commence rehabilitation procedures, the court decided not to appoint a separate administrator. If the appointment of an administrator is declined, the current representative is considered the administrator. The current executives will continue to manage the company during the rehabilitation process.

The creditors' council will discuss the progress of the rehabilitation procedures, including improving Sambootogen's financial structure. Additionally, a Chief Restructuring Officer (CRO), appointed upon recommendation by the creditors' council, will oversee Sambootogen's cash flow and other financial matters.

With the commencement of rehabilitation procedures, Sambootogen must prepare and submit a list of creditors by the 27th. Creditors must file claims with the court by April 17th; however, if they are included in the list prepared by the company, they do not need to file separately. An investigation committee, responsible for determining whether the company has value to be maintained, will be handled by Anjin Accounting Corporation.

Meanwhile, Sambootogen attracted attention last year as a theme stock for Ukraine reconstruction but faced allegations of stock price manipulation and was denied an audit opinion on its consolidated financial statements for the first half of last year by an accounting firm. The Korea Exchange designated Sambootogen as a 'management item' and suspended trading of its shares for a period. As of the end of September last year, Sambootogen's debt ratio was 838.5%, the highest among construction companies ranked within the top 100 in last year's construction capability evaluation.