Bond investors in Central Group's affiliates, including JTBC, have requested an accounting review of the companies' financial statements and audit reports from the Financial Supervisory Service (FSS).
According to a report by Yonhap News on the 26th, the investors' legal team announced that they submitted a request for an accounting review of five companies—JTBC, Central Holdings, Dabo Central, Contentree Central, and Megabox Central—on the 24th.
The legal team analyzed the flow of funds based on public disclosure materials and stated that JTBC issued a total of 226 billion won in new capital securities in nine instances since 2023. They claimed that most of the entities that underwrote these securities were either affiliates or special purpose companies (SPCs) backed by the affiliates' credit.
They raised concerns about whether JTBC's classification of the 226 billion won in new capital securities as 'capital' was appropriate.
The legal team cited the example of 54 billion won in new capital securities acquired by Dabo Central in 2024. They explained that 40 billion won of the acquisition cost was borrowed from Central Holdings on the day of payment, with Central Holdings sourcing the funds through personal loans from Hong Jeong-do, Vice Chairman of Central Group, and Hong Seok-hyun, Chairman of Central Holdings, as well as from the proceeds of Contentree Central's short-term bond issuance.
The legal team emphasized, "The personal funds of the owner family and short-term borrowings from affiliates were recorded as capital for JTBC through the holding company. We are asking for a review to confirm whether this internal funding was used to mask a state of capital impairment while selling bonds to individual investors."
Earlier, on the 13th, investors had urged financial authorities to investigate, stating, "JTBC was effectively in a state of complete capital impairment even before the issuance of corporate bonds."
In response, JTBC countered that it had appropriately disclosed its financial situation in accordance with corporate accounting standards during the issuance of new capital securities and the execution of new capital loans, and that it complied with capital market laws.
The financial crisis at Central Group emerged after JTBC declared a default on June 12, failing to repay 20.6 billion won in liquidity borrowings. Subsequently, Central Holdings, Contentree Central, Central P&I, and Megabox Central applied for rehabilitation procedures on June 14, and the following day, JTBC also filed for rehabilitation in court.
The court accepted JTBC's application for the Autonomous Restructuring Support (ARS) program, postponing the decision on the initiation of rehabilitation procedures for the company. However, it decided to initiate rehabilitation procedures for the other four companies.
* This article has been translated by AI.
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