|▲ Korea M&A Consulting Association / Secretary General Yoon Byung-woon|
Often, when a company goes through rehabilitation procedures, it seems that the outside view, including the members of the company, is not very good. That is because of old prejudices. Korea M&A Consulting Association Secretary General Yoon Byung-woon defines corporate rehabilitation, which is often misunderstood by the general public, as follows, and he also gives some helpful knowledge and advice: The corporate rehabilitation needs to pay attention to the crisis management capability of the company at first.
If the financial situation gradually deteriorates, the payment to the customer becomes overdue, the bank interest is overdue, or the labor cost is overdue, then the company should be seen to face a corporate crisis. If a company’s credit rating is ‘B-’, it will not receive government funds properly. In this case, the trust of the representative of the company is often low. The CEO must realize that the company has come to a crisis. In Germany, when a company is in trouble, the board of directors often sues the CEO. The reason is that the CEO has been negligent in the management of the company. In Korea, there seems to be a system in which the owner plays dictatorial. There is a dangerous perception of ‘the company is mine, what’s wrong with doing it my way?’ This is against entrepreneurship. It is necessary to check whether the risky situation of the company is a technology problem, a product problem, or a marketing problem. That’s when our role becomes important. In the event of a corporate credit rating downgrade or default on debt, a good system can be used to provide a foothold for a new leap forward.
However, representatives tend to think of it as scarlet letters. Such hesitation often misses the appropriate time for corporate rehabilitation. Just as people get treatment when they get sick, companies also get treatment using the corporate rehabilitation system when they get sick. That’s why corporate rehabilitation experts are sometimes called corporate doctors. Companies with cancerous masses have to undergo surgery to remove them through the regeneration system. Only then can the company be able to survive and lay the foundation for a new leap forward and growth. Avoiding stigma doesn’t solve the problem. When you go through this rehabilitation process, it is not recorded on the company’s certified copy of the register. In terms of process, companies go through consultation first to find out what the problem is. Then, we see whether this is simply a revival or a reason for the arrest of the representative.
It is important to determine whether the debtor’s ability to repay the debt is the sum of 10 years’ worth of corporate sales and profits. Even if 70% is forgiven through the system, we closely consult with the CEO about whether it will be possible to repay 30% in 10 years. We focus on finding the driving force behind the company through in-depth analysis. After that, the court will issue a comprehensive injunction and a preservative order. A comprehensive injunction is an order to suspend all compulsory executions in progress before the commencement of individual rehabilitation procedures and to ban new compulsory executions. A preservative order is a provisional disposition ordered by the court between the litigation finalization or execution in order to preserve the right. Through this process, the company’s problems are accurately identified.
The recovery process usually takes about 6 months. If there is something that the company’s technology is too good to lose, we also serve as a link between investors. Companies that have gone through the rehabilitation process sometimes have a hard time because they do not have cash to purchase raw materials even when large orders are received. This is the point where we butt in. Investors these days tend to see revitalization funds as a rising market. The Korea M&A Consulting Association and the Korea Corporate Rehabilitation Association are jointly working on introducing a corporate rehabilitation certification and is running training courses on a weekly basis. Successful trainees will be linked to the companies in order to meet each other’s needs.
We are currently running phase 1 and phase 2 courses. There are really good resources in Korea and there are a lot of experts who want to become corporate rehabilitation advisors. Jobs are created when company’s credit is healthy and this will also lead to policy fund of the government. Existing consulting resources will become the basis for fostering corporate rehabilitation experts. Those who want to live a second life as a corporate rehabilitation expert are interested and participating in our training courses.
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