Court begins questioning JoongAng Group representatives over liquidity problems... Vice Chairman Hong Jeong-do appears in person

[Financial News] Court proceedings for JoongAng Group affiliates facing liquidity problems have officially begun.
The Rehabilitation Division 2 of the Seoul Bankruptcy Court, headed by Presiding Judge Jung Joon-young, is first holding a representative hearing for JoongAng Holdings on the 23rd. Hong Jeong-do, vice chairman of JoongAng Group, and Kim Jin-gyu, chief executive officer, appeared as representatives for Jungang P&I and JoongAng Holdings and entered the courtroom at around 9:54 a.m. while avoiding reporters. After the hearing for Vice Chairman Hong ends, hearings for Jungang P&I, JTBC, Megabox Joongang, and ContentreeJoongAng will be held in sequence.
The heads of each company plan to persuade the court by explaining the specific amount of debt and possible debt restructuring measures. The court is expected to review their explanations before deciding whether to begin rehabilitation proceedings. Under the Debtor Rehabilitation and Bankruptcy Act, the court must decide whether to open the proceedings within one month of the filing date.
Earlier, JTBC declared default on the 12th after failing to repay 20.6 billion won in maturing securitized borrowings. Two days later, on the 14th, JoongAng Holdings, ContentreeJoongAng, Jungang P&I, and Megabox Joongang filed for the commencement of rehabilitation proceedings. JTBC filed an additional rehabilitation petition the following day.
JoongAng Holdings and ContentreeJoongAng also requested preservation measures and a comprehensive prohibition order.
A preservation measure prevents a company from disposing of assets and repaying certain creditors in a preferential manner. A comprehensive prohibition order, by contrast, freezes creditors' claims so they cannot secure the company's key assets through compulsory execution, provisional seizure, or auction before rehabilitation proceedings begin. Domestic credit rating agencies then downgraded JTBC's credit ratings one after another immediately after the default.
On the 14th, JTBC also submitted a request to postpone the court's decision to begin rehabilitation proceedings and expressed its wish to enter the Autonomous Restructuring Support Program, or ARS. ARS is a system in which the court suspends the compulsory commencement of rehabilitation proceedings and supports companies and creditors in negotiating restructuring voluntarily. If the court approves the ARS program, the start of rehabilitation proceedings can be postponed for up to three months. If negotiations make progress, the postponement period can be extended further.

theknight@fnnews.com Jung Kyung-soo Reporter