Controversy Over Foreign Debt Even Before Workout Begins... Chaotic Taeyoung

Waidamdae Fails to Repay 45.1 Billion KRW
"Subject to Workout Restructuring" Claim
Contradicts Initial Financial Authorities' Statement

Controversy Over Partial Use of TY Holdings Sale Proceeds
"Additional Commitment to Implementation Plan Needed"

[Image source=Yonhap News]

Confusion continues to escalate among key stakeholders even before the workout of Taeyoung Construction officially begins. Just days after the initial implementation plan submitted by Taeyoung Construction at the time of the workout application, differences in interpretation arose between Taeyoung Construction, financial authorities, and creditors. Furthermore, controversy over the use of proceeds from the sale of affiliates by Taeyoung Construction’s holding company, TY Holdings, has surfaced, causing signs of mistrust among the parties involved.

According to the financial sector and the main creditor bank, the Korea Development Bank, Taeyoung Construction did not repay 45.1 billion KRW of accounts receivable secured loans (external receivables loans) out of the 148.5 billion KRW worth of trade claims that matured on the 29th of last month, just one day after applying for the workout. Taeyoung Construction’s partners borrow funds from banks using these external receivables loans as collateral, but the debtor, Taeyoung Construction, failed to repay them.

Regarding this issue, Taeyoung Construction stated that the 45.1 billion KRW external receivables loan is a financial claim, not a trade claim, and thus is subject to restructuring under the workout application. They claim that repayment has been deferred under the Corporate Restructuring Promotion Act. This decision contradicts the financial authorities’ statement made during an emergency meeting on the day of the workout application, where they said they expected all trade claims to be settled.

Only belatedly, over the past weekend, the financial authorities requested banks to suspend the exercise of repayment claims against partner companies, considering the impact on these partners. At the same time, the financial authorities expressed a vague stance that a consensus could be reached through consultations with the creditors. Given their initial dismissal of the possibility of non-repayment of trade claims, the current situation, five days later, leaves room for interpretation regarding the nature of the problematic claims.

[Image source=Yonhap News]

The promise by the holding company TY Holdings to provide liquidity support to Taeyoung Construction has also come under scrutiny. On the 28th of last month, TY Holdings announced that it would lend 113.3 billion KRW for one year to ensure stable fund management for Taeyoung Construction, but it has been revealed that some of the funds have yet to be lent. Additionally, it is known that part of the approximately 240 billion KRW raised from the sale of the affiliate Taeyoung Industry was not transferred to Taeyoung Construction but was used to settle the holding company’s guaranteed debt, raising cautious concerns about the workout process.

On the 2nd, Taeyoung Construction promptly issued a statement via the Financial Supervisory Service’s electronic disclosure system, explaining that it plans to properly implement its self-rescue plan. However, financial authorities and creditors increased pressure, saying that the company must “show responsibility on its own.” Some view the partial support of the promised funds as a “breach of promise,” casting doubt on trustworthiness. A financial authority official stated, “It seems necessary to provide additional assurances, such as a board resolution before the workout begins, to properly implement the self-rescue plan.”

Meanwhile, at the first creditors’ meeting held at the Korea Development Bank on the afternoon of the 3rd, the scale of the largest shareholder’s personal contribution and the sale plans for key affiliates such as Ecobit and Blue One are expected to be the main agenda items. There is also speculation that Yoon Se-young, the founding chairman of the Taeyoung Group, may personally attend the meeting to appease the disgruntled creditors.

Photo by Moon Honam, KDB Industrial Bank archive / Moon Honam reporter munonam@

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