A court has decided to open rehabilitation proceedings for four JoongAng Group affiliates. It approved an Autonomous Restructuring Support (ARS) program for JTBC and put off a decision on opening rehabilitation for the broadcaster, but the other affiliates entered formal rehabilitation.
The Second Division for Rehabilitation at the Seoul Bankruptcy Court (Chief Judge Jeong Jun-young, presiding; Senior Judge Hong Jun-seo, reporting) on the 30th decided to open rehabilitation proceedings for JoongAng Holdings, Megabox JoongAng, JoongAng P&I, and Contentree JoongAng.
For these companies, the court notified separate deadlines for submitting creditor lists, filing and reviewing claims, submitting investigation reports, holding meetings to explain matters to interested parties, and submitting rehabilitation plans.
The deadlines for each company's rehabilitation plan are Dec. 1 for Megabox JoongAng and Dec. 15 for Contentree JoongAng. JoongAng Holdings and JoongAng P&I must submit their rehabilitation plans by Dec. 22.
The court decided not to appoint a separate administrator in the rehabilitation proceedings and to deem the current representatives as administrators. This allows the existing management to continue leading the process. However, if management's fault is later revealed, the administrator may be replaced.
The panel plans to investigate how the five companies, including JTBC, came to enter rehabilitation, along with their asset values, going-concern values, and liquidation values. EY Hanyoung was designated as the investigator for all four companies.
In rehabilitation, when the debtor company submits a creditor list, the rehabilitation claims, secured rehabilitation claims, and shareholder and equity interests listed are deemed filed within the filing period. In that case, creditors do not have to file claims separately.
The court will also form a creditors' committee. Composed of major creditors, the committee selects law firms and accounting firms and consults with the debtor company on plans to improve its financial structure during rehabilitation. A chief restructuring officer (CRO) appointed on the committee's recommendation will oversee the company's cash flow and related matters.
JoongAng Group's financial crisis escalated after JTBC on the 12th failed to repay at maturity a securitized borrowing fund totaling 20.6 billion won, entering a state of default on its debt.
Two days later, on the 14th, JoongAng Holdings, Contentree JoongAng, JoongAng P&I, and Megabox JoongAng applied to the Seoul Bankruptcy Court to open rehabilitation proceedings. JTBC, the source of the turmoil, also applied on the 15th to open rehabilitation and expressed its intention to seek the ARS program.
On the 15th, the court issued a preservation order and a comprehensive stay order. A preservation order is a measure that freezes assets to prevent a debtor from disposing of property or providing collateral or repayment to creditors. A comprehensive stay order is a decision that bars creditors from taking compulsory execution, provisional seizure, or provisional disposition against the debtor.
On the 23rd, the panel held an examination date for representatives and reviewed whether to open rehabilitation. It then formed a creditors' committee on the 24th to 25th, and on this day decided to open rehabilitation proceedings for four JoongAng Group affiliates.