Taeyoung E&C files for debt workout

Taeyoung E&C, Korea's 16th largest construction company, filed for debt workout on Thursday. If a group of creditors accepts the debt workout plan, it will mark the first instance in a decade that a mid-sized construction company has entered restructuring proceedings, the last being in 2013 when Ssangyong Construction filed for similar measures. There is growing concern about the potential for a series of insolvencies in the construction industry, stemming from the failure of real estate project financing and its subsequent impact on the financial market.

Korea Development Bank, a principal creditor bank of Taeyoung E&C, has initiated preparations for the first creditors’ meeting scheduled for January 11. The outcome of this meeting will determine whether Taeyoung E&C’s request for restructuring is accepted. A comprehensive self-rescue plan will be finalized if the creditors approve the restructuring plan.

In response to the filing of the restructuring plan by Taeyoung E&C, the financial authority promptly implemented emergency measures to mitigate the ripple effects. Financial Services Commission (FSC) Chairman Kim Joo-hyun stated that the FSC will spearhead robust self-rescue efforts and mediate discussions between creditors and the company to facilitate a mutually agreeable solution. The aim is to instill confidence and cooperation among market participants. The FSC’s strategy involves ensuring that Taeyoung E&C intensifies its self-rescue efforts through the sale of subsidiaries and the contribution of private assets from the largest shareholder, as outlined in the company’s self-rescue plan.

Within the financial investment industry, there is speculation that more construction companies may also pursue restructuring plans, potentially impacting the industry at large. The financial industry’s total exposure in this regard amounts to 4.58 trillion won, and to some extent, losses seem unavoidable.


Seong-Ho Hwang hsh0330@donga.com