KID to be under court receivership

Korea Industrial Development (KID), a local builder, will be placed under court receivership after failing to meet debts that came due on March 3.

KID is currently in the process of building 23 apartment complexes nationwide and its bankruptcy is likely to delay access to the apartments by home buyers. Project subcontractors also are sure to face delays in receiving payment for their work and creditor banks will see their bad debt loads grow.

A source at Korea Exchange Bank (KEB) said that KID was unable to repay 7.9 billion won in maturing loans on Feb. 28 or Mar. 2 and was placed under court control on the morning of Mar. 3.

KID`s financial difficulties date back to last year, when its credit standing was degraded from BBB to BB+ amid a liquidity crisis at Hyundai Engineering and Construction, an affiliated company. Creditor banks withdrew about 150 billion won in loans last year alone, resulting in a large-scale cash crunch that has continued since October 2000.

A KEB official said, ``KID is expected to apply for court receivership but its creditor banks haven`t yet held any discussions on disposing of the firm or worked out any countermeasures so far.``

Hong Chan-Sun hcs@donga.com