49 Additional Nonviable Companies out of Market

Creditor banks decided to liquidate 49 additional companies following 25 companies which were announced last month at the `monthly evaluation of ailing companies`, which assesses the corporate credit risk.

The Financial Supervisory Service (FSS) said yesterday that creditor banks have decided to force 49 additional nonviable companies out of the market after assessing the viability of 455 financially unstable companies.

Among the 49 companies, 10 companies have already been undertaken liquidation steps, such as Dong-a Construction Industrial, which declared bankruptcy, Choyang Shipping Co., Hanil Construction, and other 7 companies, which were already dishonored. Therefore, of the 49, in fact, 39 companies are to be liquidated by the creditor banks` decision.

The FSS decided not to disclose the names of the companies on the grounds that a disclosure could cause negative effects, including difficulties in collecting the outstanding debt. Of the 49 companies, there is only one listed company and the rest are the small- and medium-size of the manufacturing and construction companies.

Chung Sung-Soon, director of the FSS credit examination department, said that `` among the 49 companies, we planned to cancel the court-mediate composition for 30 companies, to cancel the court receivership for two companies, and to declare the liquidation or bankruptcy for 8 companies, and to merge 9 companies with healthy companies.``

Meanwhile, besides the 49 companies, which received the grade D, there were 152 companies that received the grade C, which are experiencing a structural liquidity shortage. Those companies with the grade C have to find ways for self-sufficiency while making a financial contract with the creditor banks with the additional liquidity provided by the creditors.

Lee Hoon dreamland@donga.com