BioVille Major Shareholder "Submission of Petition to Reject Some Creditors' Sole Rehabilitation Plan"

[Asia Economy Reporter Jang Hyowon] As Biovil is pursuing a pre-approval M&A through the Seoul Bankruptcy Court after entering court receivership, controversy is expected as the company’s executives and employees, along with the largest shareholder Onface, have submitted a petition citing violations of the “Act on the Regulation and Punishment of Criminal Proceeds Concealment.” This law aims to prevent abuse of rehabilitation procedures to simply erase debts and regain management rights.

They are requesting the Seoul Bankruptcy Court to reject the rehabilitation plan submitted by some creditors.

According to the legal and M&A industries on the 5th, Onface, the largest shareholder of Biovil, stated on December 18 last year to the 16th Division of the Seoul Bankruptcy Court (Chief Judge Jeon Daegyu), “If Biovil’s management is entrusted to some creditors who have submitted a rehabilitation plan alone (Seo, Lee, Baek, Kim, etc., with Baek and Kim having been transferred by Seo and Lee), the damage to bona fide creditors will increase.”

They further emphasized, “Seo and Lee colluded with the former representatives Ha and Kang, who illegally and negligently managed Biovil leading to court receivership.”

According to the petition, former Biovil representatives Ha and Kang are currently detained on embezzlement charges at the Seoul Southern District Prosecutor’s Office due to illegally issued convertible bonds (CBs) and are undergoing criminal trials at the Southern District Court. Additionally, some creditors (Seo, Lee, etc.) are known to be deeply involved in the Lime Asset Management case.

Onface stated, “During the management period of former executives Kang and Ha, Biovil issued approximately 116.2 billion KRW worth of CBs, resulting in significant debt, and all companies acquired through CB issuance were insolvent.” They also highlighted, “Lime Asset Management, which experienced a 1.6 trillion KRW redemption suspension crisis during this period, invested 25 billion KRW in Biovil.”

They added, “Among Biovil’s creditors, most CB holders are holders of illegally issued CBs,” and “MPC Conversion, acquired through the 13th tranche CB, is currently closed due to continuous losses.”

Onface also claimed that the funds in the rehabilitation plan submitted by some creditors are all private loans and not their own capital.

Onface pointed out, “The reason they are attempting a no-capital M&A appears to be a strategy to regain control of Biovil and, in collusion with former representatives Kang and Ha, conceal the criminal activities of some creditors.”

Onface declared that they are victims who deposited 8 billion KRW on December 7, 2018, for Biovil’s capital increase, followed by two payments of 2.25 billion KRW each on September 3 and September 24, 2019, totaling 4.5 billion KRW as rehabilitation contract funds.

Biovil’s executives and employees also submitted a petition to the 16th Division of the Seoul Bankruptcy Court on December 18 last year.

They stated, “Some creditors are attempting to forcibly dismiss employees at Biovil’s Yangsan factory and Seoul office,” and condemned, “Such unfair actions before the rehabilitation plan is submitted to the court constitute labor exploitation and illegal employer conduct against workers.”

An M&A industry official said, “Various suspicions have arisen regarding the party that submitted the sole rehabilitation plan for Biovil’s pre-approval M&A,” and added, “The Seoul Bankruptcy Court needs to re-examine whether this violates the purpose of the ‘Act on the Regulation and Punishment of Criminal Proceeds Concealment’ in Biovil’s pre-approval M&A.”

Onface, the largest shareholder of Biovil, reiterated, “The Seoul Bankruptcy Court should take into account Onface’s commitment to Biovil’s rehabilitation and the sacrifice of funds already paid,” and “especially request the court to reject rehabilitation plans submitted or to be submitted by some existing creditors.”

Meanwhile, the 16th Division of the Seoul Bankruptcy Court is expected to decide around January 14 whether to re-bid on Biovil’s rehabilitation plan or accept the plan submitted by some existing creditors.

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