South Korea's financial watchdog said Wednesday it has picked 19 large companies to be placed under debt restructuring this year as part of efforts to prevent a sudden default in major industries.

It is the result of the second inspection the Financial Supervisory Service carried out this year into 368 firms whose credit expansion surpassed 50 billion won ($42.59 million) and which show signs of going bust.

Wednesday's decision brought the total number of companies subject to the forced restructuring for this year to 54, the largest since 2010, when a total of 65 firms were put on the restructuring list.

Of the 19 firms, 11 received the rating of "C," which means they have the possibility of getting back on track despite signs of being insolvent, while eight others were graded "D," which indicates that chances of them standing on their own feet are small.

The C-rated companies are subject to a debt workout program led by their creditor banks, while those given a D must file for court receivership for liquidation.

Though the FSS releases the watch list of highly indebted large companies every year as part of its regular corporate oversight, this year was an exception amid growing calls for a swift restructuring to prevent possible aftereffects of their bankruptcies. 

The FSS did not disclose detailed information on the selected firms, but the list includes Dongaone Co., a flour mill and animal feed firm, and two other listed firms.

By sector, three, or the largest share, are in the steel industry, which have been hit hardest by weak demand as the number of listed steelmakers grew sharply, followed by shipbuilders, machine manufacturers, and food and beverage firms, according to the FSS.

 Local banks and other financial institutions have extended a combined 12.5 trillion won worth of loans to the 19 ailing firms, with an additional 1.5 trillion won to be needed to push for restructuring projects, according to the watchdog.

"We will strengthen the monitoring and management of the 23 B-graded companies, which were found to have the potential to fall into the risky categories," FSS official Yang Hyun-geun said.

"On-site inspections into all of the vulnerable firms will also be conducted next month in cooperation with credit rating firms and accounting offices," he added. (Yonhap)