Timeff's '1 Trillion Won Damage' Realized... Will the Voluntary Restructuring Find an Exit Within a Month?

Timef-Creditor Autonomous Restructuring Underway... Court Grants One Month
Unsettled Amounts Total 274.5 Billion KRW... Expected to More Than Triple
M&A, Funding, Restructuring Challenges Ahead

The damage amount from the delayed settlements of TMON and WEMAKEPRICE has become a reality at 1 trillion won. Although the government plans to swiftly provide liquidity exceeding 560 billion won, the scale of the damage is snowballing, making it uncertain whether this will be an effective solution. The court approved the Autonomous Restructuring Support (ARS) program on the 2nd, buying a month’s time, but challenges are expected in self-help plans such as mergers and acquisitions (M&A), funding, and restructuring.

According to the task force (TF) of related ministries on the WEMAKEPRICE and TMON incident on the 3rd, the amount of unsettled sales proceeds identified by the Financial Supervisory Service for WEMAKEPRICE and TMON expanded from 213.4 billion won as of the 25th of last month to 274.5 billion won as of the 31st. The TF expects the unsettled amount to grow more than threefold if transactions for June and July, when settlement deadlines approach, are included. Three times that amount would be over 820 billion won.

Ryu Kwang-jin, CEO of TMON, is attending a hearing held at the Seoul Bankruptcy Court in Seocho-gu, Seoul on the 2nd. The court plans to review the reasons for the rehabilitation applications of TMON and WEMAKEPRICE, their debt status, and funding plans. Photo by Jo Yong-jun jun21@

Damage of 1 Trillion Won Becomes Reality

The industry expects the damage to far exceed this. This is because the combined card payment amount for TMON and WEMAKEPRICE in June and July is estimated to approach 1.2 trillion won. IGAWorks Mobile Index estimated the card payment amounts for TMON and WEMAKEPRICE in June to be 467.58 billion won and 191.3 billion won, respectively. The total is 658.88 billion won. For July, the estimates are 398.2 billion won for TMON and 139.62 billion won for WEMAKEPRICE, totaling 537.82 billion won. Adding the card payment amounts for both companies in June and July results in 1.1967 trillion won. Mobile Index explained, “This data estimates only credit and debit card payments and does not include other payment information, so it differs from actual sales.” They also noted that “the July amount is based on data up to the 23rd of last month, before card payments were suspended.” Since various payment methods such as pay services, account transfers, and mobile phone payments are used when purchasing products from TMON and WEMAKEPRICE, the unsettled amount is expected to be even larger. Considering that the settlement cycle for both companies is about two months, sales proceeds for June and July will return as unsettled amounts.

The government plans to promptly supply liquidity exceeding 560 billion won and start accepting applications for emergency management stabilization funds through the Small and Medium Business Corporation (SBC) and the Small Enterprise and Market Service (SEMAS), as well as support programs under agreements with the Korea Credit Guarantee Fund and the Industrial Bank of Korea, possibly as early as next week. The relevant ministries are communicating with e-commerce companies and closely monitoring the impact on the industry. They will also check the unsettled status of gift certificates, the performance industry, agricultural product sellers, and small mobile payments, which are areas of concern for damage occurrence, and will promote support measures for consumers and sellers if necessary. To prevent recurrence of delayed settlement cases caused by e-commerce, the government will discuss fundamental institutional improvements such as shortening settlement cycles and expanding sales proceeds deposits, and will soon prepare and announce ‘Additional Response Measures and Institutional Improvement Directions for the WEMAKEPRICE and TMON Incident’ based on these discussions.

One Month of Autonomous Restructuring... Effectiveness of Self-Help Plans in Question

Although the court approved the ARS program applied for by the two companies, it is uncertain what achievements can be made during the one-month period. Along with the ARS program, the court will hold a ‘Rehabilitation Procedure Council’ including government and related agencies on the 13th to protect and support small business creditors of this case as much as possible. If an agreement is reached, an ‘autonomous agreement’ will be concluded, allowing the companies to avoid court-mandated rehabilitation procedures. However, if negotiations fail, the court will make the final decision on whether to initiate rehabilitation procedures.

TMON and WEMAKEPRICE are expected to pursue M&A and funding to persuade creditors. There is a plan to sell TMON, WEMAKEPRICE, and Interpark Commerce separately. Ryu Kwang-jin, CEO of TMON, and Ryu Hwa-hyun, CEO of WEMAKEPRICE, said they are discussing M&A respectively. Interpark Commerce, which is not a party to the corporate rehabilitation application, is reportedly exploring sale options. However, it is uncertain whether M&A can be completed amid evident value deterioration and unclear debt scale including unsettled amounts. Funding is also evaluated as difficult. Monster Holdings and Wonder Holdings, major shareholders of Qoo10, have not stepped forward either.

The restructuring plan is expected to focus on resuming operations to create a profit structure. Koo Young-bae, CEO of Qoo10, intends to merge TMON and WEMAKEPRICE and transform them into a public platform where sellers are majority shareholders. He told Asia Economy, “I will persuade sellers from now on for a normalization plan that merges TMON and WEMAKEPRICE to create a K-commerce public platform where sellers are majority shareholders.” However, it is analyzed that sellers facing bankruptcy are unlikely to accept this plan, which requires considerable time until repayment. In response, CEO Koo said, “I plan to fill in the details more persuasively and discuss them.”

CEO Koo also mentioned 80 billion won. He appeared before the National Assembly’s Political Affairs Committee on the 30th of last month and said, “The maximum funds the group can mobilize are 80 billion won.” However, he added that it is difficult to use this immediately as settlement funds due to Chinese regulations and other reasons. There are also options to dispose of Qoo10’s assets or shares or to secure loans through collateral. CEO Koo said he is exploring loans at the Qoo10 level. However, it is evaluated that even this is difficult as Qoo10’s corporate value has plummeted.

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