Construction firm Woobang goes bankrupt

Woobang Housing and Construction Co., a Daegu-based construction company ranked 27th in contract orders, has gone bankrupt. It was the first bankruptcy among companies under the government¡¯s corporate workout program. As creditors refused to provide fresh funds to Woo Bang, the company`s bankruptcy was confirmed. So it is expected to have a substantial influence on the future handling of workouts of insolvent corporations.

The bankruptcy of Woobang also will have a great impact on the regional economy of Daegu and North Gyeongsang Province, and it will affect the company`s nearly 1,500 subcontractors, as well as 12,000 buyers of apartments under construction by Woobang.

Financial sources said that Woobang failed to settle 1.49 billion won of promissory notes that matured Monday. In this connection, Woobang filed an application for court receivership at 7 p.m. through the Daegu District Court.

Earlier, creditors held a meeting at Seoul Bank with representatives of 22 financial institutions participating. Only 54.8% of participants approved the bid to provide 110.7 billion won in fresh financing, so the plan was rejected.

An official of Seoul Bank said that creditors thought that an early liquidation of the construction company is the best way because it generates greater loss as it continues operation according to an examination by an accounting firm.

If the court accepts Woobang`s application for court receivership, the company will prepare a liquidation plan through consultations with its creditors, and its chairman Lee Soon-Mok will have to be withdraw from the company`s management.

Park Hyun-Jin witness@donga.com