Samjong KPMG "Record High in Domestic Companies' Rehabilitation and Bankruptcy Filings"
by Oh Yukyo
Published 29 Jul.2024 09:04(KST)
Updated 30 Jul.2024 15:47(KST)
1024 Corporate Rehabilitation Cases in 2023, Up 54.9% from Previous Year
1657 Corporate Bankruptcy Filings, Up 65.0% from Previous Year
Rehabilitation and Restructuring Expected to Increase in 2024
Amid increasing numbers of companies entering rehabilitation procedures due to high interest rates and economic downturn-induced management difficulties, last year saw domestic corporate rehabilitation and bankruptcy filings reach the highest levels since statistics began.
Samjong KPMG recently analyzed the status of corporate rehabilitation and bankruptcy filings, key policies, and market outlook in its report titled "Trends and Prospects of the Corporate Rehabilitation Market." In 2023, corporate rehabilitation filings increased by 54.9% year-on-year to 1,024 cases, surpassing the previous record of 1,003 cases set in 2009. Of these, 47.6% were companies located in provincial areas. Bankruptcy filings also rose by 65.0% year-on-year to 1,657 cases, exceeding the previous record of 1,069 cases set in 2000.
The number of M&A announcements for rehabilitation companies registered with the courts reached 65 cases in 2023, a fourfold increase from 15 cases in 2020, and totaled 16 cases in the first half of 2024. Following the gradual end of financial support for small and medium-sized enterprises after COVID-19, attempts to sell companies that have reached their limits due to high interest rates and economic contraction are expanding.
In the first quarter of 2024, corporate rehabilitation and bankruptcy filings were 233 and 439 cases, respectively. Since the second half of 2022, bankruptcy filings have shown a sharp increase, and it is analyzed that companies are more inclined to choose bankruptcy over rehabilitation procedures due to worsening business conditions and difficulties in preparing pre-packaged plans.
The report expects the scale of restructuring through corporate rehabilitation to increase in 2024. Additionally, mergers and acquisitions (M&A) are anticipated to serve as opportunities for both rehabilitation companies and buyers to efficiently restructure business operations, leading to the activation of related markets in the future.
Yang Jin-hyeok, Executive Director and Leader of Corporate Rehabilitation and Restructuring Services at Samjong KPMG, stated, “Companies facing financial difficulties such as liquidity crises or debt delinquencies need to promptly consider rehabilitation as a financial restructuring method to ensure business continuity and minimize damage to creditors and other stakeholders.”
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