Record-high number of Korean SMEs file for bankruptcy on financial woes

[Source : Gettyimagesbank]

A record number of small and medium-sized enterprises (SMEs) in South Korea filed for bankruptcy this year after suffering from heavy financial burden amid soaring borrowing costs, court data showed on Tuesday.

The number of bankruptcy filings for the first 11 months of the year amounted to 897 cases, up 5.7 percent from the same period last year when the pandemic was still rampant, according to data from the Supreme Court. The figure is the second-largest following 984 cases during the same period in 2020 since the Unified Insolvency Act took into effect in 2006.

The ratio of bankruptcy filings per recovery was 0.92 in 2019. However, the figure rose to 1.22 in 2020 and 1.54 this year, meaning there were more bankruptcies than rehabilitations.

A business owner of electronic component manufacturer said he could not avoid filing for bankruptcy due to financial difficulties. “I borrowed money to run business, but it was not enough to keep afloat due to rising interest rates. So I had to file for bankruptcy.”