Two insolvent Woongjin Group companies -- Kukdong Engineering & Construction Co. and Woongjin Holdings Co. -- won court protection on Thursday after the troubled companies filed for bankruptcy protections last month, court officials said.
The bankruptcy division of the Seoul Central District Court accepted applications for court receivership, allowing Shin Kwang-soo, chief executive of Woongjin Holdings, and Kim Jung-hoon, chief executive of Kukdong Engineering & Construction to be legal administrators, in accordance with a revised law.
Under the revised bankruptcy act, the court can allow the person running the business to remain in control of its assets and day-to-day operations, a concept called "debtor-in-possession," officials said. The concept is based on the assumption that the task of reorganizing a bankrupt company can be done most efficiently by its incumbent chief executive as he or she knows the business better than anyone else.
Kukdong Engineering & Construction Co., the construction arm of the mid-size conglomerate Woongjin Group, filed for court receivership on Sept. 26, a day after it failed to replay promissory notes worth 15 billion won ($13.5 million).
Woongjin Holdings Co., which took over the builder in June 2007, also filed for court receivership the same day.
Just before applying for court receivership, Yoon Seok-keum, chairman of Woongjin Group, quit the top post amid growing public criticism . (Yonhap)