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The Seoul Bankruptcy Court / Photo by Reporter Son Seung-hyun

The court has approved JTBC's application for the Autonomous Restructuring Support (ARS) program, pausing the decision on whether to initiate court-led receivership. Meanwhile, corporate rehabilitation proceedings have officially commenced for four other JoongAng Group affiliates.

The Seoul Bankruptcy Court's Rehabilitation Division 2, headed by Chief Judge Jung Joon-young, announced on the 30th that following an interrogation of JTBC's representative to review its proposed autonomous restructuring details and future blueprints, the court decided to defer its ruling on commencing receivership until July 30. The ARS program is a framework where the court postpones forced rehabilitation to allow companies and creditors to autonomously negotiate restructuring terms, ensuring that the rights of creditors and shareholders are neither diluted nor compromised.

With the court's approval of the ARS, the initiation of corporate rehabilitation can be deferred for up to three months, with potential extensions if progress is made during negotiations. If the company and its creditors reach an agreement, the application for receivership will be withdrawn. Should negotiations fall through, the court will then rule on whether to officially open rehabilitation proceedings.

Moving forward, the court plans to conduct an investigation into the circumstances leading to JTBC's financial distress, alongside evaluating its asset values, going-concern value, and liquidation value. Furthermore, the court will receive regular updates on the status and progress of the ARS negotiations and may consider scheduling formal consultation dates if necessary.

In contrast, the court ordered the commencement of corporate rehabilitation proceedings for Megabox JoongAng, Contentree JoongAng, JoongAng Holdings, and JoongAng P&I. The court has directed the four affiliates to complete creditor claims and asset investigations before submitting their respective rehabilitation plans by December. Megabox JoongAng must submit its plan by December 1, Contentree JoongAng by December 15, and both JoongAng P&I and JoongAng Holdings by December 22.

Because the court did not appoint external trustees, the current representatives of the four affiliates will manage the rehabilitation proceedings as debtor-in-possession (DIP) trustees. However, the trustees may be replaced if any accountability or fault regarding the management is confirmed.

A creditor committee, comprising the major creditors of the debtor companies, will select a law firm or an accounting firm for legal and financial counsel. This committee will negotiate with the companies throughout the entire process to restructure their finances. Additionally, a Chief Restructuring Officer (CRO), appointed based on recommendations from the creditor committee and other stakeholders, will oversee the cash flow and financial management of the debtor companies.

Earlier on the 12th, JTBC declared a default after failing to repay 20.6 billion won in matured asset-backed loans. Following this, Megabox JoongAng, Contentree JoongAng, JoongAng Holdings, and JoongAng P&I filed for corporate rehabilitation on the 14th.

                                                                                                         Son Seung-hyun