TMON, WeMakePrice seek court receivership

[Photo by Lee Seung-hwan]

South Korean e-commerce platforms TMON Inc. and WeMakePrice Inc. filed for court receivership at the Seoul Bankruptcy Court as consumers and sellers continue to suffer. Authorities took action, with the prosecution launching an investigation team and the Ministry of Justice imposing a travel restriction on Ku Young-bae, the founder and major shareholder of TMON operator Qoo10.

According to the Seoul Bankruptcy Court, TMON and WeMakePrice filed for corporate rehabilitation on Monday. The two companies applied for the new Autonomous Restructuring Support Program (ARS program), which allows companies and creditors to negotiate restructuring voluntarily before the court intervenes with enforced procedures. “We aim to normalize business through the rehabilitation process and ultimately prevent harm to our creditor-sellers and consumer-buyers,” the two platforms said.

The number of unsettled payments for goods and services by TMON and WeMakePrice is estimated at 213.4 billion won. With additional unsettled transactions from June to August 20204 that are still within the settlement period, the delayed settlements could total up to 1 trillion won in the worst-case scenario.

In response, the government has announced an emergency liquidity support measure of 560 billion won ($4.05 million), including 200 billion won in emergency management stabilization funds, for small and medium-sized enterprises and small business owners who have not received payment settlements from the two companies.

Qoo10‘s Ku released his first statement that day, saying that he would use most of his assets to address the situation, as well as selling his entire stake in Qoo10 or using it as collateral.