Court decides to liquidate Dong-Ah Construction

The Seoul District Court Friday formally announced the bankruptcy of Dong-Ah Construction Industrial, kicking off procedures that will lead to its liquidation. The court bankruptcy department said in its verdict, ``Our review of Dong Ah Construction Industrial found that the estimated liquidation value of 1.6 trillion won was higher than the `going concern value` of 1.3 trillion won. In light of this, we have no choice but to liquidate it in accordance with the Corporation Reorganization Law.`` Creditors and interested parties have the option of appealing the verdict through the Seoul Appellate Court within two weeks. But sources said they were not expected to do so because the deposit for appeal amounts to 200 billion won and they would have little evidence to present.

If the verdict stands, the court will sentence Dong-Ah to adjudication, appoint a receiver and begin bankruptcy procedures. However, the court said Dong-Ah would continue to exist as a legal entity until the bankruptcy procedure is completed, which may take some years. During the liquidation process, Dong Ah can continue to do business, including heading the massive waterway construction project in Libya, upon the granting of court approval.

Any suspension of the Great Man-made River Project in Libya would have a grave economic impact. The court also plans to allow the company to continue construction work at home and elsewhere overseas if it obtains the authorization of creditors. The court had postponed its decision to liquidate the company for a month and ordered the Samil Accounting Corporation (PriceWaterhouseCoopers) to conduct a review of Dong-Ah financial records. Court officials alleged that Dong-Ah manipulated its financial records to the tune of at least 700 billion won over the past 10 years.

Lee Jung-Eun lightee@donga.com