South Korean e-commerce giants TMON and WeMakePrice (WMP) are on the verge of bankruptcy, facing a combined debt of 1.3 trillion won (about $971.67 million). After a month-long period of court-approved debt restructuring failed to yield any significant progress, Judge Ahn Byung-wook of the Seoul Bankruptcy Court’s Division 2 announced on Aug 30. that no extension would be granted. A decision on whether to initiate formal rehabilitation proceedings is expected soon. This situation has left about 48,000 sellers on these platforms facing potentially substantial financial losses
During the restructuring period, both companies entered negotiations with their creditors’ council but were unable to devise a self-rescue plan that satisfied their creditors. Efforts to attract new investors and secure internal funding also fell through. When questioned by the court about the possibility of securing funds from Qoo10 or any other entity, CEO Ku Young-bae stated that it was not possible.
The court will now decide whether to begin rehabilitation proceedings for TMON and WeMakePrice. If rehabilitation is initiated, a court-appointed administrator would assume control of the companies, and investigators would determine whether continuing operations or liquidating the companies would be more beneficial. A rehabilitation plan would be created, subject to creditor approval, which could involve writing off a substantial portion of the debt and repaying the rest over up to ten years. Legal experts predict that 80-90% of the debt might need to be forgiven for rehabilitation to be feasible. If approved, the companies may explore a merger and acquisition (M&A) strategy before finalizing the plan.
However, if the court decides against proceeding with rehabilitation or rejects the proposed plan, TMON and WeMakePrice could be forced into bankruptcy, leaving sellers with little to no compensation. Reports indicate that liquidating the companies’ assets post-bankruptcy would generate only about 30 billion won ($22.42 million), which would barely cover high-priority debts such as employee wages and secured creditors. In response to this potential outcome, the government is stepping in to offer emergency loan support to the affected sellers.
