TMON, WeMakePrice approved for restructuring program

TMON and WeMakePrice, the Qoo10-owned platforms suffering from a liquidity crunch, were granted approval by the court to undertake a restructuring program.

TMON CEO Ryu Kwang-jin, left, and WeMakePrice CEO Ryu Hwa-hyeon bow their heads to apologize for the ongoing liquidity crunch at the online marketplaces before attending hearings at the Seoul Bankruptcy Court in western Seoul on Friday. [NEWS1]

A Seoul court on Friday approved applications for a restructuring program filed by TMON and WeMakePrice, online marketplaces owned by Qoo10.

With the court's decision, the two troubled e-commerce companies are now eligible to initiate the restructuring process without entering receivership, securing a grace period of at least one month.

On July 29, TMON and WeMakePrice filed for receivership as well as autonomous restructuring support, or a so-called ARS program, with the Seoul Bankruptcy Court.

The ARS program is a preliminary phase before a company enters formal receivership. During the ARS period, court receivership proceedings are suspended for a minimum of one month and up to three months, allowing the company to work out a restructuring plan with its creditors. If stakeholders reach an agreement within the period, the receivership filing can be withdrawn.

As the Seoul Bankruptcy Court approved the ARS applications filed by the two companies, receivership proceedings with TMON and WeMakePrice will be suspended until next month.

Chief executives of TMON and WeMakePrice appeared in front of the press before attending Friday's court hearing and apologized to consumers and sellers affected by the ongoing massive payout delays.

“We will be as transparent as possible in our restructuring process, and if we are to be given the opportunity to initiate the ARS program, I will do everything in my power as CEO to help rectify the damage,” said TMON CEO Ryu Gwang-jin at the Seoul Bankruptcy Court in western Seoul.

Addressing a question from the press on whether a merger or sell-off is on the table, Ryu said that “of course we are considering every option.”

Ahead of the court’s decision, WeMakePrice CEO Ryu Hwa-hyeon said, “I believe that only with the approval of receivership or the ARS program can we minimize the damage and reduce distress for everyone involved.”

Earlier that day, the government estimated the two platforms' total outstanding payouts to be 274.5 billion won ($200.4 million) as of Wednesday, up from its previous tally of 213.4 billion won a week ago. The amount is expected to more than triple when pending settlements reach their due dates.

Financial authorities, including the Ministry of Economy and Finance among others, jointly said after a task force meeting on Friday that plans for additional regulatory improvements will be announced soon. The government pledged to put 560 billion won toward resolving the liquidity crisis on July 29.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]