Lee Bok-hyun "Taeyoung Workout Creditors Should Broadly Consider Support for Stakeholders"

Financial Supervisory Service Chief Holds Meeting with Chairpersons of 7 Financial Holding Companies and Presidents of KDB and IBK

Lee Bok-hyun, Governor of the Financial Supervisory Service, stated on the 9th regarding the restructuring of insolvent companies such as Taeyoung Construction, "I believe that the creditors should broadly consider not only the debtor's direct debts but also indirect debts or support for stakeholders, as this aligns with the original purpose of a workout (corporate improvement process)."

Lee Bok-hyun, Governor of the Financial Supervisory Service, is speaking to reporters about the results of the New Year's financial issues meeting held on the 9th at the Bankers' Hall, after meeting with the chairpersons of seven financial holding companies, the chairman of the Korea Development Bank, and the president of the Industrial Bank of Korea. Photo by Heo Young-han younghan@

On the same day, Lee held a New Year financial issues breakfast meeting with the chairpersons of seven financial holding companies (KB, Shinhan, Hana, Woori, NH Nonghyup, Korea Investment, Meritz), the president of the Korea Development Bank, and the president of the Industrial Bank of Korea at the Bankers' Hall in Jung-gu, Seoul. He said, "The supervisory authorities will not hold the creditors accountable afterward for decisions made by the creditors in accordance with the basic purpose of the workout."

Regarding the principles of the workout, Governor Lee first pointed out, "In the restructuring of insolvent companies involving the sharing of pain among stakeholders, the principle of self-responsibility will be strictly applied," adding, "The workout is fundamentally a process where the debtor and creditors take the lead and reach an agreement based on mutual trust and concession."

He continued, "Since the basic framework involves creditors granting grace periods on financial claims to provide relief, and debtors bearing operating funds necessary to repay non-financial debts such as trade payables, mutual trust that financially capable major shareholders will support the necessary funds to the maximum extent must be premised," emphasizing, "This is not easily seen as contrary to the principle of limited shareholder liability or market principles."

Additionally, Governor Lee stated, "If unavoidable for corporate improvement, creditors should broadly consider not only the debtor's direct debts but also indirect debts or support for stakeholders, as this aligns with the original purpose of the workout," and urged, "To avoid unintended consequences such as liquidity problems for the entire group, including the parent company, during the workout process of some affiliates within the group, please make judgments by comprehensively considering the liquidity situation of not only the workout applicant company but also related companies such as the parent company."

Governor Lee also made it clear that no retrospective responsibility would be imposed on decision-making during workouts, such as through the issuance of non-action letters. He emphasized, "The supervisory authorities will support the promotion of workouts based on agreements between debtors and creditors and will make all necessary adjustments to ensure smooth coordination of interests."

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