Timon and Wemakeprice File for Corporate Rehabilitation... Growing Concerns Over Seller Damage (Comprehensive)

Court Reviews Application to Decide Rehabilitation
Concerns Over Seller Damage if Partial Debt Forgiveness Occurs
Establishing Drastic Self-Help Measures

Tmon and Wemakeprice, which have been experiencing a large-scale settlement delay crisis, have ultimately filed for corporate rehabilitation with the court. The industry fears that if the companies enter the corporate rehabilitation process and receive partial debt forgiveness, some sellers may not receive large settlement payments. However, Tmon and Wemakeprice explained that this measure is to prevent harm to sellers and consumers, and they are prepared to establish and implement drastic self-rescue plans during this process.

On the 29th, Tmon and Wemakeprice filed for corporate rehabilitation with the Seoul Bankruptcy Court. This decision was made based on the judgment that they have reached a state where they cannot recover their financial situation independently due to recent large-scale refund incidents and loss of business partners. Tmon and Wemakeprice stated that "the suspension of transactions and the departure of purchasing and selling members have accelerated due to the recent settlement delay crisis, and as a result, cash flow has rapidly deteriorated," adding, "there are limits to overcoming the cash flow deterioration caused by transaction suspensions and member departures, so we have inevitably applied for the commencement of rehabilitation as a measure to prevent the current vicious cycle and minimize damage to selling members and consumers."

The applications submitted by the two companies will be reviewed by the court. This process typically takes about a week. Usually, applications for preservation orders and comprehensive injunctions are filed, and the court decides based on whether the applying company has public interest value. If a preservation order is issued, there is no need to repay existing debts except for wages and taxes. A comprehensive injunction freezes all claims until the court decides to commence formal rehabilitation. This halts creditors' enforcement actions, provisional seizures, and auctions.

If the court determines that there is a cause for rehabilitation commencement and no grounds for dismissal, it will decide to start the rehabilitation process. Subsequently, a rehabilitation plan is created, and after obtaining consent from creditors and secured creditors and fulfilling approval requirements, the court approves the rehabilitation plan. If the court finds that the debtor caused the bankruptcy and there is no prospect of rehabilitation, it may declare bankruptcy.

The industry is concerned that if the companies enter the corporate rehabilitation process and receive partial debt forgiveness, some sellers may ultimately not receive large settlement payments. Tmon and Wemakeprice explained, "The rehabilitation process is a system designed to prevent damage to numerous creditors who would not be able to properly recover their claims if the debtor corporation is liquidated. It grants the debtor an opportunity to continue business operations while managing funds and adjusting debts under the court's supervision and control, ultimately enabling repayment of debts as much as possible even if it takes a long time."

The government estimates that the current unsettled amount owed to sellers by the two companies is about 210 billion KRW. Considering that Tmon and Wemakeprice’s settlement cycle was about two months, the sales from last month and this month will sequentially become unsettled amounts. The industry estimates that the unsettled amount for June for Tmon and Wemakeprice could be around 500 to 600 billion KRW, and when adding seller settlement payments from other affiliates such as Qoo10 and Wish, the total could exceed 1 trillion KRW.

Tmon and Wemakeprice announced that they will apply for the new Autonomous Restructuring Support program (ARS program) operated within the rehabilitation system by the court, and actively consider whether to pursue funding through restructuring funds rather than forced rehabilitation procedures. This program allows the court to defer the commencement of forced rehabilitation and first support autonomous negotiations on restructuring between the company and creditors.

Tmon and Wemakeprice emphasized, "The application for rehabilitation commencement is to achieve the best outcome for all parties involved, including consumers and sellers, under the current circumstances. To this end, we will maintain a responsible attitude and devote all corporate capabilities until the problem is resolved."

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