A court has terminated rehabilitation proceedings for One Mount, a mixed-use cultural complex in Ilsan. It comes 1 year and 6 months after the start of the proceedings. If bankruptcy is finalized going forward, concerns are being raised that lessors who purchased leasehold rights and commercial tenants may be unable to recover their investments and deposits.
According to legal sources on the 9th, the Seoul Bankruptcy Court decided on the 5th to terminate rehabilitation proceedings for One Mount. The rehabilitation plan was voted down at a stakeholders' meeting, and the court determined there was no further practical benefit in maintaining the proceedings.
Typically, for a rehabilitation plan to receive court approval, it requires consent from two-thirds (66.7%) or more of creditors. But One Mount failed to secure creditor consent.
One Mount opened in 2013 as a signature Ilsan landmark combining a shopping mall, a water park, and a snow park. It has been operated under a structure in which One Mount uses a site of about 49,000 square meters (about 14,800 pyeong) owned by Goyang City for up to 50 years in return for contributed acceptance to the city.
But One Mount has not escaped management troubles since the COVID-19 crisis. Net losses were 17.9 billion won in 2020, 12.5 billion won in 2021, 15.4 billion won in 2022, 20.4 billion won in 2023, and 18.7 billion won in 2024. As of the end of 2024, it was in a state of complete capital erosion, with liability alone reaching 309 billion won.
Ultimately, on July 16, 2024, One Mount filed with the court to commence rehabilitation proceedings, and on Aug. 1 of the same year it received a court decision to commence the proceedings.
With the court terminating rehabilitation, One Mount is likely to shift to bankruptcy proceedings going forward. As a rule, if no appeal is filed within 14 days after the court terminates rehabilitation, the termination is finalized and the case shifts to bankruptcy.
The concern is the impact One Mount's bankruptcy would have on the Ilsan commercial district and the nearby real estate market. More than 1,000 creditors are currently registered with the court.
In particular, there are concerns that lessors who purchased leasehold rights and commercial tenants will inevitably suffer losses. That is because, in general, claims for the return of sales proceeds without separate collateral or priority payment rights and lease deposits are classified as general claims in bankruptcy proceedings and often rank behind financial institutions' secured claims.
A One Mount official said, "One Mount is currently operating all facilities normally," and noted, "If termination of rehabilitation is finalized after the appeal period ends, we plan to consider reapplying for rehabilitation."