Seoul Bankruptcy Court Approves Balan's Rehabilitation Proceedings
Rehabilitation Plan Must Be Submitted by June 27
The luxury platform 'Balan,' which experienced a delay in settlement of sales proceeds, has ultimately entered corporate rehabilitation proceedings.
The Seoul Bankruptcy Court Division 15 (Presiding Judge Kim Yoon-sun) decided to commence Balan's rehabilitation proceedings on the 4th. This came four days after Balan filed for corporate rehabilitation on the 31st of last month.
The court explained on the day, "(Balan) has accumulated operating losses due to marketing costs and fixed expenses necessary for the initial growth of the e-commerce platform business," adding, "Furthermore, due to incidents involving Tmon and Wemakeprice, trust in the entire e-commerce platform industry declined, leading to a reduction in transaction volume and a sharp drop in sales." It further stated, "Although it tried to overcome the liquidity crisis through large-scale investment attraction, it failed to secure investments of the initially expected scale," as the reason for commencing rehabilitation.
The court decided not to appoint a manager (non-appointment of a manager) in this rehabilitation process. Accordingly, CEO Choi Hyung-rok of Balan is regarded as the manager and will oversee company management. However, if illegal activities by the management are revealed in the future, they may be replaced.
The creditors' council, composed of Balan's major creditors, will negotiate with Balan throughout the rehabilitation process, including financial restructuring. Additionally, a Chief Restructuring Officer (CRO), appointed based on recommendations from the creditors' council, will supervise the debtor company's cash flow and other financial matters.
Balan must submit a list of creditors to the court by the 18th. Creditors must file their claims with the court by the 9th of next month. The claim investigation period lasts until May 23. Taeseong Accounting Corporation has been designated as the investigation committee to evaluate the company's going concern value and liquidation value.
The investigation report must be submitted by June 5, and if rehabilitation is deemed impossible, the process may be converted to bankruptcy proceedings. Balan must submit its rehabilitation plan by June 27.
Earlier, CEO Choi officially announced the rehabilitation application on the 31st of last month and stated that a merger and acquisition (M&A) would be conducted simultaneously. At that time, CEO Choi said, "We plan to designate a lead manager within this week and proceed in earnest," but no progress has been made yet. After attending the corporate rehabilitation application representative hearing on the 3rd, CEO Choi told reporters, "We are negotiating behind the scenes regarding M&A, but nothing is certain yet."
CEO Choi submitted a 40-page interrogation document and mentioned 'failed investment' regarding the background of the rehabilitation application. He explained, "We planned and communicated for a second investment from Silicon Two, but it failed. We judged that if the second investment amount (7.5 billion KRW) came in, everything would be resolved, but after realizing it was not feasible within the period, we sought Silicon Two's consent and applied for rehabilitation."
Silicon Two paid half of the investment amount, 7.5 billion KRW, to Balan in February. The remaining 7.5 billion KRW was conditioned on meeting certain criteria from November 1 this year to May 1 next year: on the 1st of each month, the previous two months must have a continuous purchase sales ratio of 50% or more, and continuous monthly operating profit must be achieved for the previous two months.
Previously, on the 24th of last month, Balan faced a liquidity crisis after failing to pay settlement proceeds to some vendors. Balan's average monthly transaction volume is known to be around 30 billion KRW, with approximately 1,300 vendors in total. Some vendors filed criminal complaints against CEO Choi Hyung-rok and some executives following the settlement delay incident.
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