WeMakePrice CEO Ryu Hwa-hyeon (left) and Tmon CEO Ryu Kwang-jin speak to reporters upon the court's decision, in front of the Seoul Rehabilitation Court on Tuesday. (Yonhap)
Cash-strapped e-commerce platforms Tmon and WeMakePrice have managed to avoid bankruptcy by commencing the corporate rehabilitation process, which will enable the two companies to restructure their debts to over 100,000 creditors under the oversight of court-appointed custodians.
The Seoul Rehabilitation Court approved on Tuesday to initiate rehabilitation procedures for Tmon and WeMakePrice, which have recently been mired in controversy due to delayed payments, stemming from a liquidity crisis at their Singapore-based parent company, Qoo10 Group.
The companies had filed for rehabilitation in July, and the court made its decision following a one-month autonomous restructuring support program and subsequent rehabilitation committee meetings.
According to government estimates, overdue payments to vendors by the two platforms totaled nearly 1 trillion won ($744 million).
It is anticipated that Tmon and WeMakePrice will require a significant amount of time to return to normalcy.
Corporate rehabilitation involves canceling partial debts or converting them into equity to alleviate the company's financial burden. In the meantime, the court has also temporarily frozen creditor claims, meaning that vendors will not be able to recover their payments immediately.
The process will start with an assessment into their assets and liabilities to develop a comprehensive rehabilitation plan. If the plan is deemed inadequate, the rehabilitation process may be halted.
Creditors who fail to report their unpaid claims by Oct. 24 will lose their voting rights at the creditors' meeting, and any unreported claims may be forfeited if the rehabilitation plan is approved. However, if creditors are listed on the creditors' list submitted by Tmon and WeMakePrice, separate reporting is not required. The companies were to submit this list by Oct. 10.
Meanwhile, Cho In-cheol, former managing director of Standard Chartered Bank Korea, has been appointed as a third-party manager for the rehabilitation of both companies. Cho, who previously managed Dongyang Group's rehabilitation in 2013, will oversee property management and disposal during the process.
The Seoul Rehabilitation Court will announce further procedures via its bulletin board. In the meantime, Tmon and WeMakePrice are expected to seek management stabilization by attracting investors as part of their rehabilitation efforts.
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