Promoting Order Acquisition, Asset Sales, and Yongsan Headquarters Development
Shindongah Construction received court approval for its rehabilitation plan from the Seoul Bankruptcy Court on August 29. This comes seven months after the commencement of rehabilitation proceedings in January.
The 3rd Division of the Seoul Bankruptcy Court (Presiding Judge Jung Junyoung) held a meeting of interested parties to review and vote on the debtor's rehabilitation plan, and announced on August 29 that the plan had been approved.
According to the Debtor Rehabilitation and Bankruptcy Act, approval of the plan requires the consent of at least three-quarters of secured creditors and two-thirds of unsecured creditors. The court determined that Shindongah Construction's rehabilitation plan met these requirements.
The court assessed that the company's going-concern value exceeded its liquidation value, based on the investigation report. The positive cooperation and relationship between the company, which demonstrated a strong will to recover independently, and its creditors also contributed favorably.
Under the rehabilitation plan, Shindongah Construction intends to repay its court-adjusted debts through order acquisition activities, asset sales, and the development of its headquarters building.
A representative of Shindongah Construction stated, "Thanks to the swift rehabilitation proceedings by the Seoul Bankruptcy Court and the approval of DIP financing, we were able to quickly obtain approval for a rehabilitation plan that prioritizes creditor repayment."
The court plans to monitor Shindongah Construction's debt repayment, debt-to-equity conversion, and capital reduction procedures, and will terminate the rehabilitation proceedings if there are no issues with the implementation plan.
Founded in 1977, Shindongah Construction is a mid-sized construction company known for its residential brand 'Familie'. The company exited a corporate workout (financial restructuring) in November 2019, but entered court-led rehabilitation proceedings again on January 22 this year, about five years later, due to deteriorating liquidity resulting from a downturn in the real estate market, increased unsold inventory, and rising construction costs. This year, its construction capability ranking dropped by 10 spots compared to last year, placing it at 68th.
The Shindongah Construction headquarters in Yongsan is currently included in the 'Seobinggo Station Area Development Project.' Following the district unit plan announcement and this year's building review approval, full-scale development will proceed. Shindongah Construction will directly participate in the development to increase profitability. The site will feature a mixed-use complex with six underground floors and 41 above-ground floors for both commercial and residential purposes. It will also include 123 apartment units (18 for rent) and a daycare center.
With the headquarters development, Shindongah Construction plans to relocate its office to the Cheonho-dong area in Gangdong-gu within this year. The company also aims to maintain a flexible negotiating relationship with its recently established in-house labor union, and will soon proceed with collective bargaining and seek a compromise.
Kim Yongseon, the court-appointed manager of Shindongah Construction, stated, "We sincerely apologize for having to change some of the creditors' rights and defer repayment periods. We will faithfully implement this rehabilitation plan to protect creditors' interests as much as possible and do our utmost to restore trust in the market."
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