The number of insolvent smaller businesses in Korea jumped in the third quarter from a year earlier mainly due to the prolonged global slowdown and domestic jitters, the financial regulator said Tuesday.
The number of small and medium enterprises (SMEs) subject to restructuring came in at 97 as of the end of September, up 26 percent from a year earlier, according to the data by the Financial Supervisory Service (FSS).
Of the tallied firms, 45 received a "C" rating and are thus subject to a creditor-led workout, while the rest rated at "D" will be filing for court receivership, the FSS said.
The data came as the FSS, the country's financial watchdog, conducted a credit risk test on a total of 1,356 local SMEs with potential default risks between July and September.
Those subject to a more comprehensive credit risk review also numbered 227, up 20.1 percent from a year earlier.
"We'll make sure the companies turn themselves around, guided by the main creditors, while pushing for an extension in bank lending to help improve their financial conditions," said Lee Gi-youn, the FSS deputy chief in the banking department.
The dim conditions for smaller businesses came as many of them faced difficulties in funding as borrowing markets went from bad to worse on market jitters here and abroad, the FSS said.
The amount of stocks and bonds sold by smaller firms stood at 500 billion won ($458.8 million) in the first nine months of this year, the data showed. Their business sentiment came to 67 in October, the lowest since April 2009, according to the latest central bank data.
The Financial Services Commission (FSC), the top regulator, said it plans to conduct a special inspection on the financial status of smaller firms, with focus being placed on their cash flows.
Meanwhile, the FSS will also help those suffering from a temporary liquidity squeeze with their fast-track program, it added. (Yonhap)