STX Liquidation
In regard to STX Offshore & Shipbuilding Co., which filed for court receivership on May 27, the court strongly criticized, “Since creditors, including the Korea Development Bank (KDB), put off receivership, 4.4 trillion won (US$3.69 billion) of funds wasted. At the moment, we don’t consider the liquidation of STX Shipbuilding.”
The bankruptcy court in the Seoul Central District Court said on April 31, “The financial industry mentions the possibility of STX Shipbuilding bankruptcy but the court currently doesn’t consider declaring its bankruptcy at all. We will make an every effort to help it recover.”
The court started reviewing the company’s receivership application on the same day and it plans to carry out on-the-spot inspection of its shipyard in Jinhae, South Gyeongsang Province, as early as June 2. The examination result will come out in the middle of June. Through the spot inspection, the court will decide whether to close down STX Shipbuilding or revive it.
Unprecedentedly, the court strongly criticized for the KDB and creditors on the day. An official from the bankruptcy court said, “After STX Shipbuilding started self-rehabilitation plan in April 2013, 4.4 trillion won (US$3.69 billion) of funds were injected in the company up to now. However, creditors failed to restructure it. As we can see successful cases in the U.S., like GM, the company could succeed in revival with much smaller money if it applied the rehabilitation procedure early and carried out restructuring, such as debt settlement and cancellation of low priced contracts. Due to misjudgment of creditors, 4.4 trillion won (US$3.69 billion) of funds were wasted.”
Starting with STX Shipbuilding, the court has decided to improve the rehabilitation procedure of conglomerates. Until now, a creditors’ committee consisting of major creditors, including bank, has generally conducted the reorganization procedure. However, a company should form a separate committee consisting of interested parties, such as employees, shareholders and partner companies, to go through a corporate rehabilitation proceeding in the future.