[2025 Audit] Six Out of Ten Corporate Restructurings Fail Despite 28 Trillion Won Injection by Major Banks Over 10 Years

Kyeho Choo: "We Must Shift to a Responsible Funding Support System"

Kyeho Choo, member of the People Power Party. Office of Kyeho Choo

Major commercial banks and state-run banks have injected as much as 28 trillion won over the past 10 years to rescue companies facing insolvency risks, but six out of ten of these companies failed to achieve business normalization.

According to data submitted by the Financial Supervisory Service to Kyeho Choo, a member of the National Assembly’s Political Affairs Committee from the People Power Party, on the 22nd, a review of 326 corporate restructuring cases handled by 10 major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, SC First, Citibank, Korea Development Bank, IBK Industrial Bank, and Export-Import Bank) from 2015 to the end of August this year showed that, excluding 48 companies still in progress, only 121 companies succeeded while 157 failed, resulting in a corporate restructuring failure rate of 56%.

The total funds injected by the banking sector into the restructuring process amounted to 28.1299 trillion won, but as of the end of August, only 11.5589 trillion won had been recovered, representing a recovery rate of just 41.1%. Notably, state-run banks, which accounted for 87.9% of the total support, had even lower recovery rates: 36.1% for Korea Development Bank and 34.0% for IBK Industrial Bank. This has led to criticism within the financial sector that evaluations of companies with low prospects of recovery are excessively optimistic, resulting in repeated failures.

In addition, the average duration of restructuring for successful companies was found to be 58 months, or about five years. The longest case took 169 months-over 14 years-at NH Nonghyup Bank. Furthermore, there is currently a restructuring case at Nonghyup Bank that has been ongoing for more than 182 months, raising the likelihood that NH Nonghyup Bank will again set the record for the longest restructuring period.

By company size, only 7 out of 30 large companies (23.3%) failed, while 150 out of 248 small and medium-sized enterprises (60.5%) failed, indicating that the likelihood of recovery for SMEs is significantly lower.

Meanwhile, concerns are growing in the financial sector as self-initiated restructuring in the petrochemical industry-which the government is encouraging as part of industrial restructuring-has been slow to progress. The financial sector points out that, as the petrochemical industry’s own efforts are delayed, the scale of financial support cannot be determined. They emphasize that the government needs to proactively link industrial policy with restructuring to establish an effective support system.

Kyeho Choo stated, “As the global trade environment rapidly changes and industrial structures are swiftly reorganized, it is necessary to assess how effectively the current restructuring system is functioning. We must move away from the practice of indefinitely keeping insolvent companies afloat and shift toward proactive industrial restructuring and a responsible funding support system.”