Court grants troubled TMON, WeMakePrice 1 month for self-debt restructuring
In this composite photo, TMON CEO Ryu Kwang-jin, left, and WeMakePrice CEO Ryu Hwa-hyun bow to reporters before being questioned at the Seoul Bankruptcy Court in Seoul, Friday. Yonhap
A court on Friday granted cash-strapped e-commerce platforms TMON and WeMakePrice one month to seek debt restructuring on their own, after they failed to make payments to their vendors.
The decision by the Seoul Bankruptcy Court to allow an autonomous restructuring support program (ARS) for TMON and WeMakePrice came as the platforms' delayed payments are estimated to reach 274 billion won (US$200 million).
The total amount is estimated to escalate to nearly 1 trillion won if future payments are included.
During the one-month period, the companies will seek voluntary negotiations with their creditors to reschedule payments, while the court suspends its decision on whether to place them under a court-led debt restructuring.
The ARS period can be extended up to three months.
TMON and WeMakePrice have been accused of maintaining their business transactions despite being aware that they could not make timely payments to their vendors due to liquidity issues.
The court also plans to hold a consultation session on Aug. 13 involving the government and related organizations in a bid to minimize the incident's impact on small merchants.
The platforms can avoid a court-enforced rehabilitation procedure if they reach an agreement with the creditors. If the talks fail, however, the court will review whether to resume the process.
The same day, prosecutors questioned the financial chief of Qoo10, the parent company of TMON and WeMakePrice, as part of an investigation into the delayed payments. He is considered a close associate of Qoo10 CEO Koo Young-bae.
Qoo10 has been accused of irregularly using 40 billion won of corporate funds from the two e-commerce platforms to acquire another shopping platform, Wish.
Prosecutors suspect Qoo10 was aware that the subsidies could not pay their vendors, but still continued their business dealings, using a Ponzi-like payment scheme.
The offices of Qoo10 Technology, TMON and WeMakePrice were also searched on Friday for the second consecutive day as prosecutors trace the whereabouts of the funds that were supposed to be paid to vendors. (Yonhap)