Dong Ah Construction, a Decree of Liquidation

The court yesterday handed down a liquidation order for Dong Ah Construction, putting an end to controversy surrounding the fate of the construction firm.

Seoul District Court announced yesterday Dong Ah construction bankrupt and appointed attorney Kwon Kwang-Joong as its administrator file the bankruptcy.

According to this announcement, reports of credit will be collected until 12th next month, and the first creditors` meeting will be held in July 6.

The court made clear that ``because creditors could not pay a 40 billion won deposit within the due date after appealing a court`s decision to cease the court receivership, the petition was turned down. And the court made a decree of bankruptcy based on the decision that Dong Ah Construction is currently in the state of an excess debts and an inability of debt payment``.

The court added that ``any further delay of bankruptcy announcement would concerns about larger losses and the disorganization of the company. Consequently, it would bring about a worst situation in which the contract of the construction of Libya waterway contract will brake up. And therefore Dong Ah Company is needed to accelerate the liquidation procedure because the Libya government wants a swift execution of the liquidation procedure.``

But the court positioned a plan that, until the first creditors` meeting, Dong Ah Construction will continue the construction of Libya waterway and the construction of apartments in Yong-in, Kyonggi-do. A large amount of damages are expected in case of discontinuance of the construction.

Dong Ah creditors filed a protest against the rejection of the appeal and proceeded for a special protest with the Supreme Court, but it is anticipated that the court will reject it. Creditors can appeal about bankruptcy announcement to the Seoul High Court within two weeks, but the execution of the liquidation procedure is not to be ceased.

Dong Ah Construction which was established in 1945, launched the corporate restructuring due to the crisis of liquidation and the depression of real estate market since the money crisis, but the court receivership was abolished in March after a bankruptcy was filed in November of last year.

Lee Jung-Eun lightee@donga.com