HDC Hyundai Development Company Banned from New Orders for 8 Months... Existing Projects Continue

On January 19, officials from the Ministry of Employment and Labor and the police conducted a search and seizure at the headquarters of HDC Hyundai Development Company in Yongsan-gu, Seoul, in connection with the collapse accident at Hwajeong I-Park in Seo-gu, Gwangju. Scene from the site on that day. Photo by Moon Honam munonam@

HDC Hyundai Development Company (Hyundai Development) will face an 8-month business suspension administrative sanction, blocking not only public projects but also private project bids during this period. However, construction projects with contracts signed before the administrative sanction can continue.

On the 30th, the Seoul Metropolitan Government announced that it imposed an 8-month business suspension on Hyundai Development, the primary contractor, for violating the Construction Industry Basic Act in connection with the collapse of a demolition building in Hakdong, Gwangju, which occurred in June last year.

Seoul decided on this administrative sanction after Hyundai Development submitted opinions and underwent hearings following a request from the Ministry of Land, Infrastructure and Transport regarding the accident in June last year at the Hakdong Redevelopment Zone 4 in Gwangju, where nine citizens died during demolition work. The reasons for the sanction include ▲ causing the structural collapse by constructing differently from the demolition plan and ▲ violations in site management and supervision.

During the 8-month administrative sanction period, Hyundai Development is prohibited from engaging in business activities as a construction company, including participating in bids. However, construction projects for which contracts were signed before the sanction or projects that have obtained permits and started construction according to relevant laws may continue.

In addition to the Hakdong accident, Hyundai Development is also facing administrative sanctions related to the collapse accident at Hwajeong-dong I-Park apartments. In the Hwajeong-dong I-Park collapse, Hyundai Development’s poor construction and negligent management responsibility are clearer than in the Hakdong disaster. Since the victims were workers rather than the general public, the punishment is expected to be more severe. According to the Construction Industry Basic Act, if poor construction due to intentional or negligent acts causes significant damage to major structural parts of a facility resulting in the death of five or more construction participants, a business suspension of up to one year can be imposed. Combined with the Hakdong case, a maximum business suspension of 1 year and 8 months is possible.

With housing projects accounting for more than half of total sales, a ban on new orders for 1 year and 8 months is widely seen as potentially threatening the company’s survival. Additionally, the costs for accident recovery related to the Hakdong and Hwajeong-dong incidents are expected to be substantial. Therefore, some speculate that Hyundai Development may challenge the administrative sanctions through litigation. During ongoing litigation, the company can still bid for projects.

Meanwhile, the city announced that regarding the 'Gwangju Hwajeong-dong Apartment Collapse Accident,' it will form a dedicated team including external experts to consider strong measures, including deregistration within six months. On the 28th, the Ministry of Land, Infrastructure and Transport requested Seoul to impose the strictest legal sanctions on Hyundai Development for the Hwajeong I-Park collapse accident, such as deregistration or a one-year business suspension.

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