The Seoul Bankruptcy Court pushed back by one more month, to Aug. 30, its decision on whether to open rehabilitation proceedings for JTBC. The move is meant to support voluntary restructuring talks between JTBC and its creditors.
On the 29th, according to legal sources, the Rehabilitation Division 2 of the Seoul Bankruptcy Court (Chief Judge Jeong Jun-young) extended the deferral period for deciding whether to open JTBC's rehabilitation proceedings from the previous July 30 to Aug. 30.
The court cited as the reason for the extension that "it is necessary to extend the decision on whether to open rehabilitation proceedings to support consultations on restructuring between the creditors and the debtor." It is the same reason given when it first deferred the decision on the 30th of last month.
Accordingly, the consultation period for the Autonomous Restructuring Support (ARS) program applied to JTBC has in effect been extended by one month. ARS is a system in which the court defers its decision on whether to open rehabilitation proceedings and, during that period, supports the debtor and creditors in voluntarily consulting on a restructuring plan.
When ARS is applied, the court may, in principle, defer the decision on whether to open rehabilitation proceedings for up to three months. If there is considerable progress in negotiations between the debtor and creditors, the deferral period may be extended further.
JTBC applied to the court to open rehabilitation proceedings on the 15th of last month while requesting the application of ARS, and the court granted the request. As the deferral period neared its end, JTBC applied to the court for an extension. EY Hanyoung, which the court appointed as an examiner, is also said to have recently conveyed to the court a request to extend the investigation period for JTBC until the second week of August.
If an agreement is reached within the deferral period, JTBC can withdraw its application to open rehabilitation proceedings and carry out a voluntary restructuring plan agreed with creditors. If talks break down, the court will determine whether to open rehabilitation proceedings based on the investigation results and the status of the consultations.
JoongAng Group's liquidity crisis escalated when JTBC failed to repay on maturity a total of 20.6 billion won in securitized borrowing fund on the 12th of last month. Two days later, on the 14th of last month, JoongAng Holdings, Contentree JoongAng, JoongAng P&I, and Megabox JoongAng applied to the court to open rehabilitation proceedings. JTBC, the epicenter of the situation, also applied to open rehabilitation proceedings the next day, on the 15th of last month.
On the 30th of last month, the court decided to open rehabilitation proceedings for four JoongAng Group affiliates, including JoongAng Holdings. By contrast, for JTBC, the court accepted the request to consult voluntarily with creditors on a restructuring plan and deferred its decision on whether to open rehabilitation proceedings until July 30.
For the four affiliates whose rehabilitation proceedings have been opened, deadlines were set for submitting creditor lists and rehabilitation plans. The deadline for submitting a rehabilitation plan is Dec. 1 for Megabox JoongAng, Dec. 15 for Contentree JoongAng, and Dec. 22 for both JoongAng Holdings and JoongAng P&I.
The key going forward is whether JTBC can reach agreement with creditors on a feasible restructuring plan within the extended period. If talks succeed, JTBC can withdraw its rehabilitation application and proceed with a voluntary restructuring. If talks collapse, the court will decide whether to open rehabilitation proceedings for JTBC.