Daedong Shipbuilding Co Lid ('Daodong') is a private limited company solely involved in shipbuilding. Daedong is specialised in tankers and containers and its 199676 newly built shipyard in Chinhae is described as the only one in Korea that specialises in medium-sized newbuildings in the 30,000 to 80,000 Dwt range.
In 1996, the major shareholder of Daedong, Seyang Shipping Co Ltd, a small, publicly quoted shipping company, was to face financial problems very soon after the take-over of Daedong in September 1996. As a matter of fact through family connections, Seyang Shipping was affiliated with the Hanbo Group, the major Korean steel company, which collapsed in January 1997. Seyang was affected by its association with Hanbo, and was forced into bankruptcy as well.
Without access to funds, while facing excessive financial expenses due to huge investments on the construction of the Chinhae shipyard Daedong failed to honour bills and checks on 31 January 1997. Under the circumstances Daedong applied for company liquidation procedure on 10 February 1997, and was granted, temporary court protection.
Between February and October 1997 Daedong operated under the direction of a court-appointed receiver, who put together a restructuring package which aimed to enable Daedong to pay back creditors over au agreed period of time and the yard to carry on trading. The court decided to allow the commencement of the liquidation procedure on 31 October 1997. The first meeting of creditors was convened on 17 December 1997 and the company liquidation plan was submitted in 20 February 199877.
The company's main creditors - its bankers - finally approved the rescheduling of the debt in August 1998.
Under the liquidation plan of Daedong an overall reimbursement plan was agreed among the creditors. The main debt-restructuring outlines include:
- debt rescheduling of the consolidated secured loans principal over 14 years with a four year grace period starting from the date of filing for relief (first year of repayment 2003 maturity date 2012). - rescheduling of accrued interest and accruals on consolidated secured loans, which will be repaid in instalments over the 14 years period;
- exemption of interests for certain categories of debt.
As a consequence, the benefit for the investigation period include exempted accrued interests exempted accruals as well as accruals on the rescheduled debts.
On the basis of data available, the estimated benefit given to Daedong through the liquidation plan agreed by the main creditors amounts to won 63.4 billion (USD 48.3 million78) for the investigation period 1997-2000.
76 Construction started in January 1993 and was completed in July 1996
77 The final version of the liquidation plan is dated 20 August 1998
78 exchange rate as of 26.03.20001=1310 Won/USD