Court Decides to Commence Rehabilitation Procedures for Tmon and Wemakeprice…Appointment of Third-Party Administrator

The court has decided to initiate rehabilitation proceedings for TMON and WEMAKEPRICE, which caused a large-scale settlement delay crisis.

On the afternoon of the 10th, when the decision to commence rehabilitation procedures for TMON and WEMAKEPRICE was made, Ryu Hwa-hyun, CEO of WEMAKEPRICE (left), and Ryu Kwang-jin, CEO of TMON, are answering questions from the press at the Seoul Rehabilitation Court in Seocho-gu, Seoul.
[Photo by Yonhap News]

The Seoul Bankruptcy Court Rehabilitation Division 2 (Presiding Judge Byeongwook Ahn) announced on the 10th that it had decided to commence rehabilitation proceedings for TMON and WEMAKEPRICE. This comes 44 days after the two companies filed for corporate rehabilitation on July 29.

Accordingly, an external manager appointed by the court will take charge of managing TMON and WEMAKEPRICE. The court selected former SC First Bank Executive Director Inchul Jo as the manager for WEMAKEPRICE. Mr. Jo previously served as a third-party manager in the rehabilitation case of the Dongyang Group.

A court official stated, “As a result of the opinion inquiry to the creditors' committee, most opinions agreed to the commencement of rehabilitation proceedings and requested the appointment of a third party as manager instead of the existing management responsible for poor management.” He added, “After going through the opinion inquiry process on the appointment of a third-party manager with the Court Administration Office’s Rehabilitation and Bankruptcy Committee, a third party with expertise and fairness was appointed as the manager.”

The two companies must prepare rehabilitation plans after compiling creditor lists, reporting and investigating claims. The court set the deadline for submitting rehabilitation plans as December 27.

The deadline for submitting creditor lists is the 10th of next month. The claim reporting period is until the 24th of the same month. If claims are not reported, the stakeholder cannot exercise voting rights at the creditors' meeting, will be excluded from the rehabilitation plan, and will lose rights once the plan is approved. However, if TMON and WEMAKEPRICE submit creditor lists, the rehabilitation claims, secured claims, and shareholder/investor equity listed in the lists are deemed to have been reported within the reporting period, so creditors do not need to report claims separately.

The court expressed concerns about the fact that the total number of creditors for both companies exceeds 100,000, which significantly delays the bankruptcy procedure such as service of process and incurs enormous monetary service costs. Therefore, instead of delivering the commencement decision, the court decided to proceed with a public notice procedure.

A court official explained, “Creditors and stakeholders in the TMON and WEMAKEPRICE cases can obtain information about the progress of the rehabilitation proceedings through the court bulletin board or the companies’ websites,” adding, “In particular, to exercise their rights, it is necessary to check through each company whether their claim amount is properly listed in the creditor list.”

Earlier, when the settlement delay crisis occurred, WEMAKEPRICE filed for corporate rehabilitation with the court on July 29. WEMAKEPRICE also applied for the Autonomous Restructuring Support program (ARS) and received court approval. However, after two creditors' committee meetings, as the two companies failed to prepare self-rescue plans, the court decided on the 30th of last month not to extend the ARS program.

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