Posted December. 01, 2008 03:38,
The government is considering reviving a corporate restructuring committee that was set up at the time of the Asian currency crisis in the late 1990s.
A source at the nations top financial watchdog said yesterday, If the economic slowdown is prolonged, the program to weed out unviable construction companies can be expanded to cover all companies. If such a program is introduced, however, financial institutions will themselves create the program and the government will only provide relevant help.
In a conference of the Korean Financial Engineering Society Saturday, Rhee Chang-yong, vice chairman of the Financial Services Commission, expressed the governments will to speed up corporate restructuring.
Without restructuring insolvent companies or those showing symptoms of insolvency, the government will face difficulty in stabilizing interest rates or helping economic recovery, he said.
The Financial Services Commission and the Financial Supervisory Service launched Saturday a drive to set up a committee to support corporate restructuring similar to the one set up in the 1990s.
The committee consisted of 236 financial institutions in June 1998, when many Korean companies teetered on the verge of collapse. The committee was dismantled in late 1999.
The committee allowed viable companies to postpone debt redemption by up to six months and pushed those deemed unviable out of the market.
Financial authorities, however, warn that the committee could give the impression of a government-led initiative in corporate restructuring.
A senior official at the financial commission said, In the 1990s, the governments restructuring project only involved companies that had gone belly up. But now, we plan to consider restructuring companies that show symptoms of insolvency, something which could invite much resistance from companies.