A travel agency that declared a suspension of business right after police began investigating alleged violations of the National Security Act had already fallen into severe cash woes before the probe, records show. The company had been under complete capital impairment for four straight years since at least 2021, and its liability swelled from about 1.6 billion won to 9.2 billion won over the same period. Consumers also said travel refunds were delayed regardless of the police investigation.
As of Aug. 10, according to reporting by ChosunBiz, travel agency A, founded in 2011, has marketed itself as a "youth education travel specialist" and sold overseas package tours to students.
◇ Four straight years of complete capital impairment… liability 1.6 billion won → 9.2 billion won
According to credit rating firms and others, A had been under complete capital impairment for four straight years from at least 2021 to 2024.
At the end of 2021, A's asset stood at 786 million won, and liability was 1.584 billion won. Liability then surged to about 3.2 billion won in 2022, 5.04 billion won in 2023, and 9.193 billion won in 2024. It grew roughly sixfold over four years.
At the end of 2024, asset was 5.338 billion won, not even 60% of liability.
Operating losses also continued. Sales in 2021 were just 52 million won with an operating loss of 730 million won. In 2022, sales were only 160,000 won while the operating loss came to 1.138 billion won.
Notably in 2024, about 5.1 billion won of the total 5.338 billion won in asset was booked as short-term loans. That is more than 95% of total assets.
An accounting industry official said, "It is highly unusual that 5.1 billion won out of 5.3 billion won in asset is short-term loans," adding, "It is necessary to examine to whom the money was lent and whether it is an asset that can actually be recovered."
◇ Business halted the day after the search… police say "no account freeze"
Amid deteriorating finances, A on the 5th, the day after the police search, said "normal business operations are impossible" and declared a suspension of business.
It told existing reservation holders it would "carry out the trip in two years." The same day, some parents who had sent their children to Europe on A's packages were asked to pay an additional 1 million won per person as travel expenses.
But the police probe did not in itself restrict A's cash management. A Seoul Metropolitan Police Agency official said, "We secured electronic devices such as mobile phones and computers during the search and seizure, but there were no measures such as an account freeze."
Although A cited the police investigation as the reason for the business halt, financial data indicate its cash situation had sharply worsened years earlier.
◇ Refund delays even before the probe… claims of "borrowing from Peter to pay Paul"
Consumers also said travel refunds were not made on time even before the police investigation.
B, who requested a refund in Mar. last year for a youth Europe tour product, said the 5.88 million won payment was supposed to be returned by Dec. of the same year but was delayed. The company reportedly recommended postponing the trip or using another product instead of a refund.
When B posted a complaint on an online community, the company, according to B, said something to the effect of "we can refund you with newly recruited funds only if you delete the post." B said the post was later deleted and the money was returned.
B said, "In Jun. this year, there was also someone who still had not received a refund for a trip canceled in Oct. last year," adding, "I suspect the company continued operations by paying existing customers' refunds with money from new customers."
A's management is currently under police investigation in connection with alleged violations of the National Security Act. In Jun., police sent nine former and current officials of the Peoples Democracy Party (PDP) to prosecutors on charges of violating the National Security Act, and are also reportedly examining links between A's management and the case.
A's chief executive is said to have a record of involvement during university in the Korean Council of University Student Representatives (Hanchongryun), a student activist group with an anti-U.S. bent.