Failed Aviation Industry M&A, Only Litigation Remains

Eastar Jet files 'Stock Payment Default Claim' against Jeju Air
HDC Hyundai Development also states "Contract termination responsibility lies with the seller," preparing for legal battle

[Asia Economy Reporter Yu Je-hoon] As major mergers and acquisitions (M&A) in the aviation industry this year have fallen through, litigation to enforce contracts and recover performance guarantees is intensifying.

According to the industry on the 19th, Choi Jong-gu, CEO of Eastar Air, announced in a statement the day before that the major shareholder Eastar Holdings has filed a 'stock purchase enforcement lawsuit' against Jeju Air. CEO Choi emphasized, "If we win this lawsuit, we plan to resolve unpaid wage claims."

Eastar Holdings initiated the lawsuit because Jeju Air does not acknowledge the withdrawal of the stock purchase agreement (SPA). Jeju Air had previously declared contract termination, citing Eastar Air's failure to meet acquisition preconditions, including 200 billion KRW in unpaid debts.

On the other hand, Eastar Air maintains that all acquisition preconditions stipulated in the contract were fulfilled at the time and does not recognize Jeju Air's withdrawal. CEO Choi stressed, "The unpaid deposits were directly caused by Jeju Air's shutdown demands during the M&A process and the resulting revenue stoppage."

The recent collapse of the Asiana Airlines M&A deal is also causing concern. HDC Hyundai Development Company (HDC Hyunsan) issued a statement four days after Kumho Industrial declared a 'no deal,' signaling upcoming legal battles. A lawsuit to recover a 250 billion KRW performance guarantee is expected to follow.

HDC Hyunsan expressed regret over Kumho Industrial and Asiana Airlines' unilateral contract termination notice, stating, "HDC Hyunsan made every effort to secure acquisition funds, proceed with domestic and international corporate merger approvals, and establish a post-acquisition success strategy, but there were significant changes in the financial statements that form the basis of the acquisition contract."

Furthermore, HDC Hyunsan emphasized, "Contrary to Kumho Industrial's claims, the failure to close the deal was due to the seller's failure to meet precedent conditions," adding, "We plan to review the legal aspects of the contract termination and the procedures required to release the lien on the deposit and proceed with related responses."

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