The Financial Services Commission said on the 31st that the New Leap Fund purchased about 2.6146 trillion won (236,000 people) in long-term arrears receivables held by securitization firms such as Sangnoksoo and KB Star, public institutions such as the Korea Federation of Credit Guarantee Foudations (KOREG), mutual finance institutions including NongHyup and credit unions, and lend companies. Starting next month, the New Leap Fund will also move to buy additional remaining long-term arrears receivables held by all financial sectors and public institutions.
With this sixth round of purchases, it completed the purchase of long-term arrears receivables of 723.5 billion won (87,000 people) held by Sangnoksoo and 281.7 billion won (18,000 people) held by KB Star. Remaining receivables not eligible for the New Leap Fund will be sold to Korea Asset Management Corporation (KAMCO) in the second half of this year.
Collection is immediately halted on receivables purchased by the New Leap Fund. Among the purchased receivables, debt owed by socially vulnerable groups such as basic livelihood security beneficiaries will be written off without a separate repayment capacity review. Other receivables will be written off within one year if, after a thorough review of repayment capacity, the debtor is deemed to have lost repayment capacity at a level equivalent to personal bankruptcy. For debtors with markedly insufficient repayment capacity, the fund plans to pursue debt restructuring.
The repayment capacity review is slated to begin in the third quarter of this year, after the amended Credit Information Act enabling collection of information such as financial assets takes effect on Aug. 13.
Including this sixth round, the New Leap Fund has secured a total of 11.7 trillion won in long-term arrears receivables through rounds one to six. Beneficiaries, including overlaps, number about 957,000. Starting in Aug., the New Leap Fund plans to make additional purchases of long-term arrears receivables held by all financial sectors and public institutions. This is to ensure the seamless purchase of receivables remaining after the first round of buys by sector.
Currently, 15 of the top 30 lend companies by industry have joined the New Leap Fund agreement. The receivables the New Leap Fund has purchased from the lend industry total about 739.4 billion won, and the target debtors number about 112,000.
The Financial Services Commission (FSC) said it plans to actively review practical incentive measures to expand lend companies' participation in the New Leap Fund and to continue close communication with the industry.