KOTEC to Support Second-Challenge Recovery for Court-Recommended Rehabilitating Companies

Business Agreement Signed with Seoul Rehabilitation Court to Strengthen Support for Recovery of Rehabilitating Companies

Korea Technology Finance Corporation (KOTEC) announced on the 18th that it has signed a "business agreement for supporting the successful recovery of rehabilitating companies" with the Seoul Rehabilitation Court.

This agreement was promoted to identify rehabilitating companies with a high potential for business normalization and to provide financial support, thereby helping them establish a stable foundation for recovery and swiftly return to normal operations.

Kim Joungho, Chairman of the Korea Technology Finance Corporation (right), and Jung Junyoung, Presiding Judge of the Seoul Rehabilitation Court, are taking a commemorative photo after signing a memorandum of understanding. Photo by Korea Technology Finance Corporation

Under the agreement, the Seoul Rehabilitation Court will recommend to KOTEC companies undergoing rehabilitation procedures that show strong prospects for recovery. KOTEC will then conduct a review of the recommended companies and provide financial support, such as the "Second Challenge Recovery Support Guarantee." In addition, both organizations plan to collaborate on providing information about the system and carrying out promotional activities for rehabilitating companies, thereby supporting their smooth recovery.

The "Second Challenge Recovery Support Guarantee" operated by KOTEC is a special guarantee program designed to help entrepreneurs with strong technological capabilities make a new start after failure. If a company undergoing rehabilitation procedures meets certain requirements, such as the early termination of the process and the execution of the repayment plan in accordance with the rehabilitation plan at least once, it may receive the funds necessary for business operations following a technology assessment and review. Companies approved for support will benefit from ▲an increased guarantee ratio (from 85% to up to 100%) and ▲the application of a fixed guarantee fee rate (minimum 0.8%), among other advantages.

Based on the operational results of this agreement, KOTEC plans to expand its cooperation to five rehabilitation courts nationwide in the future, thereby broadening the support base for the recovery of rehabilitating companies. Kim Joungho, Chairman of KOTEC, stated, "This agreement is meaningful in that it establishes a cooperative system between the courts and policy financial institutions to create a second-challenge ecosystem at a time when applications for rehabilitation by small and medium-sized enterprises are increasing due to growing external uncertainties and an economic slowdown. KOTEC will continue to expand cooperation with rehabilitation courts to support the successful recovery of rehabilitating companies and faithfully serve as a strong pillar so that companies in crisis, desperately in need of financial support, can take off again."

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