Dong Ah Construction, Korea Express apply for court receivership

Dong Ah Construction Industrial Co. and Korea Express Co. have initiated proceedings to go under court receivership. As creditors decided against giving additional funds to the company, Dong Ah Construction called an extraordinary meeting of its board of directors Tuesday and decided to apply for court receivership. The company presented related documents to relevant court authorities.

Dong Ah Construction Chairman Choi Dong-Sup announced that the company is preparing for court protection, and urged employees to stay calm and perform their duties as usual until it is approved for court receivership, its last means for survival. If the court rejects the application, the company will undergo procedures for bankruptcy or liquidation. But chances are high that the company will go under court receivership, as creditors are likely to agree on court protection.

Korea Express also held a board of directors¡¯ meeting Tuesday morning and decided to file an application for property protection with a court, a form of the court receivership process, in order to safeguard the company from enormous debt claims.

Company officials explained that they took the action because the company stood security for Dong Ah Construction¡¯s debts, worth about 700 billion won, and was required to honor a large amount of bills at a time. They also said that the legal action was sparked by the insolvency of Dong Ah Construction and had nothing to do with Korea Express¡¯ solvency condition.

An application for property protection is a process that a company customarily takes along with an application for liquidation, but if the company receives court approval, it goes under court receivership.