Court Decides to Commence Rehabilitation Proceedings for Eastar Jet... Appoints CEO Kim Yusang as Administrator

On the 24th, Eastar Jet decided to suspend all domestic flights following the suspension of international flights due to the spread of COVID-19. It is the first shutdown among South Korean airlines. On the same day, the Eastar Jet ticket counter at the domestic terminal of Gimpo Airport in Gangseo-gu, Seoul, was quiet. Photo by Moon Honam munonam@

[Asia Economy Reporter Dongwoo Lee] Eastar Jet is set to actively pursue business normalization following the court's decision to commence rehabilitation proceedings.

The Seoul Bankruptcy Court Rehabilitation Division 1 (Presiding Judges Seokyung Hwan, Jeon Daegyu, Kim Changkwon) decided on the afternoon of the 4th to initiate rehabilitation proceedings for Eastar Jet. Two administrators were appointed, including Kim Yusang, CEO of Eastar Jet.

Earlier, the Eastar Jet Pilots' Union requested the court to exclude the current management from the selection of administrators, but this was not accepted.

With the decision to commence rehabilitation proceedings, Eastar Jet must submit a list of creditors, secured creditors, and shareholders by the 18th. Eastar Jet must submit a rehabilitation plan to the court by May 20. Creditors may also submit rehabilitation plans.

Claims for rehabilitation debts, secured rehabilitation claims, and stock registrations can be filed at the Seoul Bankruptcy Court General Civil Affairs Office from the 19th until the 4th of next month. However, failure to report rights within this period may result in loss of those rights.

Previously, Eastar Jet failed in its merger and acquisition (M&A) with Jeju Air during an out-of-court restructuring process that began in December 2019. Last year, normal operations were impossible due to the spread of COVID-19.

Eastar Jet intended to apply for corporate rehabilitation after selecting a preferred bidder, but companies interested in acquisition felt burdened and thus applied for rehabilitation proceedings at the court.

Meanwhile, last month the court issued preservation orders and comprehensive injunctions against Eastar Jet. Preservation orders restrict the debtor's disposal of assets. Comprehensive injunctions prevent creditors from enforcing compulsory execution without court approval until court management begins.

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