Central Group's Affiliate Restructuring Hearings Begin as Hong Jeong-do Pledges Compliance

The Seoul Bankruptcy Court has commenced hearings for representatives of Central Group affiliates, including JTBC and Megabox Central. The outcome of the voluntary restructuring support (ARS) program requested by JTBC is seen as a key factor in the future direction of Central Group's restructuring.

On June 23, the court's second division, led by Judge Jeong Jun-young, began hearings for five Central Group affiliates, starting with Central Holdings, followed by Central P&I, JTBC, Megabox Central, and Contentree Central.

Central Group Vice Chairman Hong Jeong-do and CEO Kim Jin-kyu attended the hearings as representatives of Central Holdings and Central P&I.

After the hearings, Vice Chairman Hong told reporters, "I answered sincerely and well." When asked if he considered the possibility of liquidation instead of restructuring, he replied, "I will sincerely follow the court's judgment." However, he did not provide further comments on the positions of the affiliates' creditors or the family's potential financial contributions, nor on the reasons for believing that normal operations were possible until just before the default.

In the afternoon, JTBC's CEO Jeon Jin-bae and Management Support Office head Nam Jung-kwon attended the hearings.

CEO Jeon stated before the hearings, "I will provide a detailed explanation to the court regarding JTBC's current management situation related to the restructuring process." After the hearings, when asked what information he provided to the court, he said, "I explained the company's management status."

Judge Jeong Jun-young told reporters that the hearings were being conducted by the presiding judge and that the future proceedings would be determined based on the results of the hearings. He added that the timing for deciding whether to initiate the restructuring process would be discussed after the hearings concluded.

Judge Hong Jun-seo is overseeing the cases for Central P&I, Central Holdings, and JTBC, while Judge Kwon Seong-woo is handling the cases for Megabox Central and Contentree Central.

During the hearings, the court will review the debtors' profiles, asset and liability statuses, and the reasons for applying for the restructuring process before making a decision on whether to initiate the process. According to the Debtor Rehabilitation Act, the court must decide on the initiation of the restructuring process within one month of the application date.

There is significant interest in the ARS program requested by JTBC during these hearings. The ARS allows the court to postpone the decision on initiating the restructuring process for a certain period, enabling the company and creditors to negotiate restructuring autonomously.

JTBC has requested the application of the ARS along with its restructuring application. If the court accepts this, the decision to initiate the restructuring process may be postponed for negotiations with creditors.

JTBC's legal representative, Lee Wan-sik, told reporters after the hearings that they would negotiate with creditors due to the ARS application. He noted that there were no significant comments from the court regarding the proceedings and that only the company's management situation was discussed during the hearings. He confirmed that today would be the final hearing for JTBC.

The liquidity crisis for Central Group affiliates intensified when JTBC failed to repay 20.6 billion won in liquidity loans on June 12, leading to a declaration of default. Subsequently, Central Holdings, Contentree Central, Central P&I, and Megabox Central applied for restructuring on June 14, with JTBC filing for restructuring the following day.

On June 15, the court issued preservation orders and comprehensive injunctions for Megabox Central, Central P&I, Central Holdings, Contentree Central, and JTBC. These preservation orders restrict the disposal of the debtors' assets, while the comprehensive injunctions prohibit creditors from enforcing claims or seizing assets.

As a result, the procedures for changing rights and interests will be limited until a decision is made on whether to initiate the restructuring process. The court will review the results of the hearings and assess the necessity of JTBC's ARS application before making a decision.

In addition to the court's restructuring process, Central Group is also working on improving its financial structure. The JoongAng Ilbo reported that on June 19, it applied for a workout with its main creditor bank, Hana Bank. Industry experts believe that the results of today's hearings and the decision on JTBC's ARS application will be critical for Central Group's normalization efforts.