The fallout from the private sale of the Incheon Songdo Well County complex 3 public rental dwellings is spilling into a financial dispute. The creditors, who extended a 60 billion won loan secured by 120 units in this apartment complex as collateral, have not received regular interest for more than four years, and the outstanding debt, including principal and interest in arrears, has reportedly swelled to the 80 billion won range. The creditor group reported the private rental business operator IOS, the owner of the dwellings in question, to police on suspicion of embezzlement.
According to the finance and real estate industries on the 3rd, IOS was recently criminally reported on suspicion of embezzlement under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes. The creditors say that although IOS earned more than 2 billion won in annual rental income from the foreigner-only rental dwellings at Songdo Well County complex 3, it did not pay loan interest, and there are indications that company funds were taken out as items such as loans to the CEO. The allegations are currently under investigation and are not established facts.
Songdo Well County complex 3 is a public rental dwellings project built in 2010 by Incheon Housing & City Development Corporation with a 10-year priority sale structure. In 2017, before the end of the mandatory rental period, Incheon Housing & City Development Corporation sold 120 foreigner-only rental dwellings out of a total of 550 units to IOS for 51.5 billion won. IOS at the time was a company with paid-in capital of 50 million won. The sale drew ongoing controversy over special favors in an Incheon city audit, a police investigation, and the National Assembly audit.
Incheon Housing & City Development Corporation belatedly filed a lawsuit seeking to nullify the sales contract against IOS. The first-instance court issued a decision to the effect that the sale was unlawful, but it is known that the final conclusion was that the contract's validity should be maintained. While the ownership dispute has been wrapped up, issues remained over interest in arrears and delays in conversion to sale.
IOS took out a 60 billion won collateralized loan in the process of purchasing this apartment complex. According to the creditors, IOS has not paid regular interest since Oct. 26, 2021. As the interest arrears continued, by November of the same year the loan had become subject to acceleration, allowing a demand for repayment of principal and interest even before maturity. After that, some of the existing syndicate, including savings banks, sequentially sold their claims. It is said that a securitization specialty company, IA16, which acquired these claims, is currently serving as the agent financial institution.
The creditors repeatedly demanded a plan for conversion to sale and a plan to manage rental income from IOS. However, according to the creditors, IOS asked for debt relief instead of presenting a concrete plan for conversion to sale. A creditor official said, "Even though rental income is generated steadily, no repayment plan or plan for conversion to sale was presented," adding, "the only answer that came back was a request to reduce the debt."
According to materials related to IOS submitted to the Financial Supervisory Service's electronic disclosure system, this apartment complex reportedly generates more than 2 billion won in annual rental income. The creditors say they demanded an explanation of how the rental income was used but did not receive sufficient answers. They also take issue with about 4.45 billion won recorded in 2025 as loans to the CEO and others. The creditor group reported the related fund flows to investigative authorities, and the Gyeonggi Nambu Provincial Police Agency is said to be conducting an investigation.
The creditors moved to proceed with a sale process limited to four units identified as vacant, excluding units occupied by tenants. However, the court granted an injunction filed by IOS, halting the sale process.
Incheon Housing & City Development Corporation is said to hold the view that the obligation to convert to sale transferred to IOS along with the sale. However, nearly 10 months after the Supreme Court resolved the ownership dispute, no concrete plan for conversion to sale has been presented.
A creditor official said, "If only a concrete plan for conversion to sale is presented, we can negotiate," adding, "the longer this drags on, the greater the uncertainty will be for tenants waiting for conversion to sale."
This outlet attempted several times to reach IOS for comment, but was unable to make contact.