Iwon Jeil Cha, which funded Legoland development, is bankrupt

Iwon Jeil Cha, a special purpose company that funded the building of Legoland Korea Resort, has gone bankrupt.

A view of the Legoland Hotel at Legoland Korea Resort. [LEGOLAND KOREA RESORT]

Iwon Jeil Cha, a special purpose company that funded the building of Legoland Korea Resort, has gone bankrupt.

It failed to repay 205 billion won ($144.7-million) in asset-backed commercial paper and was listed as bankrupt as of Oct. 4 by the Korea Financial Telecommunications & Clearings Institute.

Legoland Korea Resort opened on May 5 on Jungdo Island in Chuncheon, Gangwon.

Gangwon Jungdo Development (GJC) established Iwon Jeil Cha in 2020 to finance the construction of Legoland Korea Resort. GJC is 44 percent owned by Gangwon Province.

Its borrowings from Iwon Jeil Cha are guaranteed by Gangwon Province, which helped the special purpose vehicle get a credit rating of A1, the highest, from Korea Investors Service. Following the bankruptcy, its rating dropped to D, the lowest.

According to local reports on Friday, the Financial Supervisory Service is looking into investor exposure to the bankrupt entity.

With Iwon Jeil Cha bankrupt, Gangwon Province said it is planning to apply for the rehabilitation of GJC sometime early next month. It is unclear whether the court will accept the rehabilitation, considering GJC is owned by a state institution, according to press reports.

The province says it will fulfill its obligations as guarantor.

"Even though the total debt could decrease when the rehabilitation is accepted, Gangwon Province's surety liabilities of 205 billion won doesn't change," said the province in a statement on Oct. 3. "We have currently paid four months of interest, which is our way of expressing that we won't avoid our liabilities."

Legoland Korea Resort, itself separate from the developer, says it is unaffected by the bankruptcy of GJC and remains open.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]