Pizza Hut Korea, the South Korean operator of the namesake US pizza franchiser, has entered a court-led rehabilitation process after losing a lawsuit brought by store owners, the country's bankruptcy court said Monday.
On Nov. 4, Pizza Hut Korea filed for corporate rehabilitation with the Seoul Bankruptcy Court amid a credit crunch after it was slapped with a court order to repay 94 local franchisees over 20 billion won ($15 million) in franchise fees.
The Seoul Administrative Court on Nov. 8 approved a one-month autonomous restructuring support plan requested by Pizza Hut Korea.
An ARS program is a system where a company negotiates debt repayment plans autonomously with its creditors.
However, the two sides were unable to reach an agreement before the one-month negotiation period ended last Wednesday, resulting in the ARS program not being extended.
Under the court-led rehabilitation procedures that consequently began, the company is required to submit its final debt restructuring plan by March 20.
If the court does not approve the plan, the company will face bankruptcy.
