The rehabilitation plan for BALAAN, a luxury platform undergoing corporate rehabilitation, was voted down.
According to the industry on the 5th, at a stakeholders' meeting held at 10:30 a.m. at the Seoul Bankruptcy Court, BALAAN's rehabilitation plan was ultimately rejected with a 35% approval rate. To pass, a rehabilitation plan needs approval from at least two-thirds (66.7%) of creditors.
Earlier, BALAAN submitted a revised rehabilitation plan to the court reflecting the court's Mar. 15 decision upholding a clawback claim, expanding the total repayment resources from 2.2 billion won to 5.7 billion won. As the effective repayment rate to creditors rose, expectations for approval had grown.
However, it appears that some of BALAAN's marketplace sellers, as well as other creditors, opposed the plan. SILICON2, the largest creditor holding 55.5% (7.5 billion won) of general rehabilitation claims, opposed it, and some small creditors had incomplete paperwork, BALAAN said.
Chief Executive Choi Hyeong-rok of BALAAN, now the administrator, told the bench, "Ninety-nine percent of BALAAN's creditors—1,189 people—are commerce creditors who make their living on the platform," adding, "Suspending the rehabilitation could immediately lead to a chain of business difficulties for them."
BALAAN is watching for a court decision on a cramdown. A cramdown allows the court to approve a plan ex officio even if it is voted down, when the repayment through rehabilitation is deemed greater than the distribution in bankruptcy (liquidation).
The court is expected to focus on whether the "liquidation value guarantee principle," one of the requirements for a cramdown, is met. A BALAAN official added, "Asia Advisors Korea (AAK), the prospective acquirer, has already paid the full acquisition price, making rehabilitation more advantageous to creditors than bankruptcy."