• What corporate restructuring plans does the Korean government have?

  • The Korean corporate sector is maintaining relatively healthy financial soundness and profitability, despite the recent downturn.

    These measures have been devised through the IMF technical assistance program and the IMF has made positive assessment of them during the working-level consultation (Dec. 8~17, 2008)

    < Financial Ratios of Listed/Registered Corporations >

    Q3 2007 Q1 2008 Q2 2008 Q3 2008
    Operating Profit/Revenue 7.6% 7.4% 7.6% 5.9%
    Debt/Equity 85.7% 92.5% 95.4% 104.3%

    But there is a possibility that further economic slowdown will add pressure on the Korean economy because some sectors, the construction industry and small and medium-sized shipbuilding companies in particular, are increasingly suffering from management problems.

    Therefore, we see the need to promptly liquidate insolvent companies while providing liquidity support to viable companies to help them normalize.

    Korea already has in place a creditor financial institution-led market-friendly restructuring scheme developed through the 1997 Asian financial crisis and the ensuing corporate restructuring.

    Based on that scheme, the government is currently pursuing a company-based restructuring process that entails credit risk assessment led by main creditor banks. 5

    5The credit risk assessment categorizes companies into four groups, "A" (Normal), "B" (Temporary liquidity shortage), "C" (Showing signs of distress) and "D" (Distressed), and different actions are taken to each category.

>> Go back to the list