The project 'Gumi Grand Foret Desian' by TAEYOUNG E&C, where a guarantee accident occurred, has been canceled. This is because the construction was halted following the company's application for corporate restructuring (workout), and the apartment buyers chose to receive refunds as a way to handle the guarantee accident. Refunds involve the apartment buyers receiving the deposit and interim payments made to the Housing and Urban Guarantee Corporation (HUG) back. HUG will repay this amount and then recover the debt through the project company or public sale.
According to HUG and TAEYOUNG E&C on the 4th, HUG is set to accept refund applications from the buyers of TAEYOUNG E&C's Gumi Grand Foret Desian from the 5th to the 7th.
Gumi Grand Foret Desian is an apartment complex with 1,350 units located in Doryang-dong, Gumi, North Gyeongsang Province. TAEYOUNG E&C began sales for this complex in October 2023 and targeted to complete construction by March 2027. However, the construction was halted two months after sales began when the company applied for a workout in December.
TAEYOUNG E&C had subscribed to HUG's guarantee product for Gumi Grand Foret Desian, but because HUG did not include workout as a reason for the guarantee accident, there has been no guarantee accident processing for this apartment complex. However, last August, a special agreement was made between TAEYOUNG E&C and the creditor group, HUG, acknowledging the guarantee accident for Gumi Grand Foret Desian.
Typically, when a guarantee accident occurs, HUG offers the buyers a choice between performance or a refund. Performance means changing the project company or contractor to continue with the apartment construction. If performance is chosen, HUG seeks an alternative contractor to continue the apartment work.
On the other hand, if a refund is chosen, the apartment construction will be halted. The previously paid deposit and interim payments can be received from HUG. HUG will claim the compensated amount from the company involved in the issue. If the company is unable to repay, HUG will put the relevant business site up for public sale to recover the debt.
In the case of Gumi Grand Foret Desian, more than two-thirds of the buyers opted for refunds, prompting HUG to proceed with the compensation of the advance deposit and interim payments made by the buyers.
HUG has not yet decided whether to pursue a claim against TAEYOUNG E&C for the compensation. Under the special agreement with TAEYOUNG E&C, there is also the possibility of skipping the claim process and immediately putting the business site up for public sale. A representative from TAEYOUNG E&C noted, "Regarding the public sale, we plan to determine the direction through discussions with HUG moving forward." A HUG representative also stated, "Generally, when a guarantee accident occurs, we claim the debt against the project company, and if recovery is difficult, we will resort to public sale."