Charmzone Co, a first-generation K-beauty company well known for its tree frog mascot, has filed for corporate rehabilitation (formerly court receivership) after struggling with management woes.
According to legal sources on the 25th, Charmzone Co applied for corporate rehabilitation at the Seoul Bankruptcy Court on the 21st. The court issued a comprehensive injunction* against Charmzone Co the same day.
A comprehensive injunction is a measure that bars corporations that have filed for rehabilitation from disposing of assets or repaying debt without court approval, and also prohibits creditors from seeking provisional seizures or injunctions.
The remaining steps are an on-site inspection and a representative's questioning, set for the morning of the 28th. Based on the evidence collected, the court plans to decide whether to commence rehabilitation proceedings.
Charmzone Co is a basic skincare-focused corporations founded in 1984 by Chair Kim Gwang-seok, a former pharmacist. It steadily built its presence in functional cosmetics, including by launching Korea's first cleansing water in 1988.
It also expanded into overseas markets such as Japan and China, gaining a reputation as a first-generation K-beauty corporations. In the 1990s, it ranked third in sales in Korea's cosmetics industry, and in 2004 it was selected as one of the world's top 100 cosmetics corporations for two consecutive years.
But sales plunged in the 2010s, and the company began to falter. It won a duty-free shop concession at Incheon International Airport in 2015 but failed to pay the balance on time, losing a 10 billion won deposit, a decisive blow. This is also tied to the successive sales of prime real estate in Seoul's Gangnam.
The failure of the imported car sales business run by Chair Kim's children also added pressure. Chair Kim stepped back from day-to-day management in 2019, but was indicted on charges of improperly lending company funds to an affiliate run by his son and was sentenced in the first trial in 2023 to three years in prison.
Charmzone Co sought a comeback by shifting to a professional management system, but it was not enough to shed accumulated problems. According to Charmzone Co's audit report released on Aug. 20 this year, the company posted an operating loss of about 14.7 billion won last year, marking its fifth straight annual loss. Total equity stood at minus (-) 26.8 billion won, indicating a state of complete capital impairment. The audit opinion was also a "disclaimer of opinion."
Even so, the industry viewed Charmzone Co's chances of rehabilitation favorably. A distribution industry official said, "Charmzone Co still has brand value," and noted, "There is a possibility of securing new investors through mergers and acquisitions (M&A)."