FSS Plans to Complete Dispute Resolution for German Heritage Fund Within This Year
[Asia Economy Reporter Lee Jung-yoon] The Financial Supervisory Service (FSS) announced that it plans to complete the dispute mediation process within this year regarding the German Heritage Fund, which experienced a large-scale suspension of redemptions.
On the 4th, the FSS stated, "We will do our best to complete the dispute mediation related to the German Heritage Fund within this year," adding, "The related dispute mediation committee will hold preliminary meetings and main sessions to conduct thorough and in-depth discussions among committee members on the facts and applicable legal principles, aiming to reach a fair and reasonable conclusion."
Seven companies, including Shinhan Investment Corp., sold the so-called Heritage Fund from April 2017 to December 2018, which provided bridge loans for remodeling German monument preservation-registered real estate into residential buildings and other uses. A bridge loan refers to a loan provided prior to real estate project financing (PF). A total of 488.5 billion KRW was sold, but due to the suspension of the project by the overseas developer, redemptions were halted from June 2019, resulting in 474.6 billion KRW remaining uncollected. The number of dispute mediation requests submitted to the FSS totals 190 cases.
The FSS explained that since multiple domestic financial companies were involved, the asset manager is based in Singapore, and the final project operator is located in Germany, the complex investment structure required significant effort and time to verify the facts sufficiently to proceed with dispute mediation.
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In August of this year, the FSS requested legal advice again based on additional verified facts, and in October, it shared awareness of the special characteristics and common issues of financial investment products and private fund dispute mediation through a subcommittee seminar. Meanwhile, it reviewed and organized the issues raised by victim groups, selling financial companies, and the media regarding the facts and applicable legal principles, preparing to hold the subcommittee meeting.
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