Three Tongyang Group Affiliates Apply for Corporate Rehabilitation

Tongyang Inc, Tongyang Leisure, and Tongyang International, the three main affiliates of the Tongyang Group, which is ranked as the 38th largest conglomerate in Korea, have been in financial distress and recently became unable to satisfy their debt obligations for commercial papers and corporate bonds due to insufficient funds. In an attempt to secure funds for the three affiliates’ debt obligations, the Tongyang Group planned for the restructuring of certain other affiliates, including Tongyang Magic, through mergers and acquisitions, but failed to make sufficient progress.

On September 30, 2013, Shin & Kim filed an application for corporate rehabilitation proceedings with the Bankruptcy Division of the Seoul Central District Court on behalf of the three Tongyang Group affiliates, and successfully obtained a provisional disposition / comprehensive prohibition order on the same date. If the Bankruptcy Division of the Seoul Central District Court approves the commencement of the rehabilitation proceedings for the three Tongyang affiliates, rehabilitation procedures including (i) the appointment of an administrator and investigators, (ii) preparation of a list of rehabilitation claims and declaration of claims, (iii) confirmation of claims and debts, (iv) submission of the investigation reports by the investigators and (v) the first meeting of the concerned parties will follow.