Rhyme Asset Management Notifies Investors "Difficult to Repay as Planned"

[Asia Economy Reporter Ji-hwan Park] Lime Asset Management, which caused a redemption suspension crisis involving approximately 1.6 trillion KRW, has informed investors that it will be difficult to repay the fund investments as originally planned.

According to the financial investment industry on the 11th, Lime Asset Management stated this in a Q&A document for customer guidance delivered to fund distributors on the 10th.

Lime Asset Management explained, "The repayment plan at the time of the redemption suspension was prepared on the assumption that all investment trust assets were sound and could be fully recovered by the due date or repayment date," adding, "Since the accounting firm's due diligence revealed some negative factors regarding the recoverability of the investment trust assets, it will be difficult to proceed with repayments as originally planned."

Regarding when and how much individual investors can recover their investments, they said, "It is difficult to provide a specific answer on when and how much investment can be recovered based solely on the accounting due diligence results," and added, "Specific details will be communicated through the repayment plan." Lime Asset Management plans to notify distributors of the repayment plan within one month after receiving the individual sub-fund due diligence report. The sub-fund due diligence report is expected to be released on the 21st.

Lime Asset Management apologized sincerely to investors who were previously notified as priority recipients, stating, "Since the accounting due diligence identified issues with asset soundness, we judged that setting separate priorities for the suspended redemptions would be unfair treatment, and decided through the Risk Management Committee to allocate everything proportionally." This means that fund assets will be distributed according to the proportion of holding beneficiary certificates, indicating that some investors will not be repaid with priority.

Regarding the issue of securities firms that have Total Return Swap (TRS) contracts recovering funds first, they emphasized, "When the TRS contract ends, the TRS provider settles first from the total profits and then transfers the remaining profits to the fund," adding, "We are trying to resolve the issue by signing a Memorandum of Understanding (MOU) with distributors and TRS providers." This acknowledges that securities firms take funds with priority and indicates efforts to find a solution.

This content was produced with the assistance of AI translation services.