Creditor banks announce list of firms subject to liquidation, court receivership

The government and creditor banks decided Friday not to offer any fresh loans to Hyundai Engineering and Construction(HEC) and Ssangyong Cement. Instead they are going to apply for court receivership against them if the two companies go bankrupt or face new liquidity problems.

But the banks decided to ensure the rollover of the heavily indebted companies¡¯ matured loans while they are implementing their self-rescue programs.

The creditors also agreed to place 11 companies, including Dong-Ah Construction Industrial, under court receivership, and to liquidate 18, including Samsung Commercial Vehicles Corp. and Shinwha Engineering and Construction. This brings to 29 the total number of nonviable companies to be evicted in the second phase of restructuring in the corporate sector.

The 21 creditor banks, including Hanvit Bank, announced the result of their screening of 287 insolvent companies whose total loans from financial institutions amount to 50 billion won or more at the KFB building in Myongdong, Friday.

Of them, 136 were declared normal, 28 were suffering from a temporary liquidity problem, 69 were suffering from structural liquidity problems but could be rescued with assistance, 52 were named nonviable and two others survived conditionally.

Of the 52 companies classified as nonviable, 11 will be placed under court receivership, 18 will be shut down, 20 will be sold off and three others will face mergers.

HEC and Ssangyong Cement, which with Dong-Ah Construction Industrial make up the "big three," applied for court receivership after the suspension of their workout programs were classified as subjects for special management.

The creditors argued over how to handle the two companies to the last moment, but reserved final judgment.

Chairman Lee Keun-Young of the Financial Supervisory Commission said that the basic means of handling HEC is to place it under court receivership. It needs not pay its existing debts by the end of the year.

But non-banking financial institutions such as insurance firms that did not participate in Friday's decision are expected to demand HEC pay the maturing debts, predicting that the company could not easily overcome the liquidity crisis.

The creditors, including Korea Exchange Bank, are demanding that Hyundai present a special self-rescue plan and will hold a consultative meeting of all creditor banks early next week to determine whether non-banking financial institutions will also roll over the maturing loans.

The creditors decided to place Kohap under continuous workout programs, while seeking to sell its factories in installments, and to sell Jindo. While proceeding with the workout programs for Kabool Corp. and Kabool Spinning, the creditors will merge them in the long run.

Kim Jin-Man, president of Hanvit Bank, said that the creditor banks of 69 companies deemed to have the potential to recover from their structural liquidity problems will prepare concrete plans to assist them separately.

But if the non-banking financial institutions firmly withdraw the loans, the 69 firms are also likely to face bankruptcy. The banks plan to seek cooperation from the non-banking institutions in the restraint of credit withdrawal and rollover of maturing debts. However, if the non-banking institutions refuse to cooperate with the banks, the companies will inevitably be placed under court receivership or be liquidated.

18 companies to be liquidated: Kwangeun Finance, Kia Intertrade, Samsung Commercial Vehicles Corp., Yang Young Paper, Halla Resources Corporation, Haewoo Corp., Daedong, Korea Tungsten Mining, Miju Corporation, Samsung Motors, Shinwha Engineering & Construction, Woosung Construction, Il Sung Construction, Peeres Cosmetics, Samik, Sukwang, Jinro General Foods, Jinro General Trading

11 companies to be under court receivership: The Korea Express, The Yeongnam Ilbo, Dong Yang Steel Pipe, Segye Corporation, Woobang Housing & Construction, Chong Gu Housing & Construction, Dong Bo Construction, Taehwa Shopping, Haitai International, Dong-Ah Construction Industrial, Seohan Engineering & Construction