The fate of cash-strapped Tong Yang Group will likely be shaped in accordance with market principles, as there’s little leeway for the authorities to engage in its restructuring process, the financial regulator said Friday.

The 38th-largest conglomerate in South Korea has been under mounting pressure to keep itself afloat against possible bankruptcy since it ran out of cash to repay maturing debts worth 1.1 trillion won ($1.02 billion).

The company needs an extra fund of about 100 billion won to cover short-term debts worth 370 billion won coming due within this year.

The Financial Supervisory Service has put all-out efforts to tide Tong Yang Group over the liquidity shortage but is coming to a conclusion that there isn’t much they can do.

Tong Yang Group has not been actively seeking help from its creditor banks either, which gives the FSS little leeway to engage in the process, the FSS officials said.

According to local regulations, the financial regulator can take part in a company’s debt rescheduling and give instructions or mediate measures between creditors and the debtor company only if the troubled firm has at least more than 1 trillion won in debts owed to banks. 

(Yonhap News)