A court has again found that initiating rehabilitation (court receivership) for Dong Sung Bio Pharm is justified. On the 12th, according to legal sources, the Seoul High Court's Civil Division 40 (Presiding Judge Hong Dong-gi) recently rejected an appeal filed by Brand Refactoring, the largest shareholder of Dong Sung Bio Pharm, challenging the Seoul Administrative Court's decision to open corporate rehabilitation proceedings.
Founded in 1957, Dong Sung Bio Pharm is locked in a management dispute between former Chair Lee Yang-gu and former CEO Na Won-gyun. Lee stepped down from management last year, and his nephew, Na, took office. With his nephew in charge of the company, Lee in April sold his 14% company equity to the marketing company Brand Refactoring for 12 billion won. At the time, Na's company equity was only in the 4% range.
Dong Sung Bio Pharm applied to the court for rehabilitation in May for the purpose of normalizing management. Rehabilitation is a system in which corporations with heavy debt repay part of their debt in installments under court supervision and have the rest forgiven. The Seoul Rehabilitation Court's Administrative Division 11 (Presiding Judge Kim Ho-chun) accepted this and opened rehabilitation proceedings. Former CEO Na and a third party, Kim In-su, were appointed co-managers and are pursuing a pre-approval merger and acquisition (M&A). Brand Refactoring appealed in July against the opening of rehabilitation proceedings.
Afterward, former CEO Na stepped down in September, and Yoo Young-il, CEO of Dong Sung Bio Pharm, newly took office. With the management changed, Dong Sung Bio Pharm separately applied last month to the Seoul Rehabilitation Court to terminate (abolish) the rehabilitation proceedings. A legal source said, "The appeal filed with the Seoul High Court and the application to abolish rehabilitation are different matters." Brand Refactoring maintains that the debt can be repaid by measures such as selling non-operating assets, while the former CEO Na's side is continuing rehabilitation. The court has not yet decided whether to abolish the rehabilitation of Dong Sung Bio Pharm.