Eastar Jet to Hold Creditors' Meeting Next Month... Accelerating Final Debt Adjustment

Photo by Eastar Jet

[Asia Economy Reporter Dongwoo Lee] As the schedule for the creditors' meeting of Eastar Jet, which is undergoing rehabilitation proceedings, has been confirmed for next month, final negotiations with the creditors are accelerating. The company plans to focus on securing proxy consents from the creditors for the rehabilitation plan starting next week, in line with the creditors' meeting schedule.

According to the aviation industry on the 1st, the Seoul Bankruptcy Court recently set the date for Eastar Jet's creditors' meeting for November 12. The creditors' meeting is a procedure to obtain consent from Eastar Jet's creditors for debt repayment and is the final step for the court's formal approval of the rehabilitation plan.

If two-thirds of the creditors agree to the repayment at the creditors' meeting, the acquisition of Eastar Jet by Sungjeong Co., Ltd. is expected to proceed in earnest. While focusing on securing proxy consents from the creditors, the company is also conducting final negotiations on the debt amounts with major aircraft lessors.

The scale of Eastar Jet's debt is estimated to be about 400 billion KRW, roughly double the initially estimated amount. This increase is due to some lessors including all costs incurred during the idle period as part of the repayment amount, thereby increasing the reported debt amount.

Of the acquisition price of 108.7 billion KRW from Sungjeong Co., Ltd., the prospective acquirer of Eastar Jet, about 70 billion KRW in public claims such as unpaid wages and severance pay for current and former employees will be prioritized for repayment, leaving the debt amount repayable to creditors at approximately 30 billion KRW.

While the company is smoothly negotiating the debt amounts with the creditors, it is reported that negotiations over the final repayment amount are prolonged with some major overseas creditors. If the consent procedure for the rehabilitation plan at the creditors' meeting is rejected due to a low repayment rate, the rehabilitation process will also be delayed.

If the rejection occurs by a narrow margin, the court will grant an adjustment period of about three weeks to allow Eastar Jet and the creditors to conduct final negotiations. If this also fails, the court may either forcibly approve the rehabilitation plan after final review or, conversely, cancel the rehabilitation proceedings and revert the acquisition process to the starting point.

An Eastar Jet official stated, "We will focus all schedules on leading negotiations with the creditors in line with the creditors' meeting schedule to ensure the acquisition process is successfully completed."

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