Korea Pizza Hut undergoes court recovery procedures.
On the 16th, the Seoul Bankruptcy Court's 12th Department decided to initiate recovery procedures for Korea Pizza Hut. The deadline for submitting the final recovery plan is March 20 of next year. The court will review the plan and decide whether to approve the recovery; if it determines there is no possibility of recovery, the company will proceed to bankruptcy.
Korea Pizza Hut’s headquarters is currently in the process of appealing to the Supreme Court regarding the results of a case raised by some franchise owners about differential franchise fees. In a statement issued that day, Korea Pizza Hut noted, “We have made efforts to reach an amicable agreement with creditors under the court’s mediation through the autonomous restructuring (ARS) program, but we have not achieved visible results,” adding, “As a result, we have ultimately entered the recovery process.”
It also added, “The litigation group has placed our financial institution accounts under seizure, resulting in our inability to operate the business normally,” noting, “We had no choice but to apply for recovery procedures for the sake of franchise owners who are continuing their livelihoods, including those who did not participate in the lawsuit, and for the continuation of our business.”
Previously, the Seoul Administrative Court approved the ARS program for Korea Pizza Hut on the 8th of last month. However, as no amicable agreement was reached between the company and creditors by the 11th, it was decided not to further extend the ARS period.
Korea Pizza Hut faced a financial crisis after losing a lawsuit filed by franchise owners, which required it to pay hundreds of billions of won in compensation. Korea Pizza Hut is reported to have to return 21 billion won in franchise fees received from 94 franchise owners. Due to actions such as the seizure of the headquarters account by some owners, Korea Pizza Hut experienced temporary operational difficulties and applied for the recovery process on the 4th.
Korea Pizza Hut must compile a list of creditors and submit it to the court by January 2 of next year. It will also accept claims from creditors until the 16th of the same month. The investigation committee responsible for determining whether the company has value to maintain is Tae Sung Accounting Corporation. The deadline for submitting the investigative report is February 20 of next year.
Korea Pizza Hut stated, “This is not to evade or ignore the legal responsibilities arising from lawsuits through recovery procedures,” and added, “We will make every effort with a responsible attitude to normalize the business under proper procedures and the supervision of the bankruptcy court.”