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'The Never-Ending War of Brothers' Hankook Tire Seizes Assets of Former Advisor Cho Hyun-sik

[비즈한국] As confirmed by Bizhankook, Cho Hyun-sik, former advisor at Hankook & Company, who is currently engaged in a management dispute with his brother and Hankook & Company Chairman Cho Hyun-bum000240, has recently had a significant portion of his assets—including stocks and real estate—provisionally seized by Hankook Tire & Technology161390, the core business entity of the Hankook & Company Group. Since the group's honorary chairman and their father, Cho Yang-rai, transferred his shares in the holding company to Chairman Cho Hyun-bum in 2022, the former advisor has been involved in an ongoing management dispute, having joined his other siblings in filing for a limited guardianship trial over their father.

Hankook Tire, the Core Business of Hankook & Company, Provisionally Seizes Assets of Former Advisor Cho Hyun-sik

According to Bizhankook’s report, Hankook Tire & Technology (Hankook Tire), the core business entity of the Hankook & Company Group, provisionally seized shares of Hankook Tire held by former Hankook & Company advisor Cho Hyun-sik on the 17th. The move aims to secure a claim for damages amounting to 496,493,012 KRW arising from the use of company vehicles. The Seoul Western District Court granted the provisional seizure application by Hankook Tire on the same day, upon receiving 100 million KRW in cash and a surety insurance policy for each case.

This is not the first time Hankook Tire has frozen assets belonging to former advisor Cho Hyun-sik. In May, the company provisionally seized forest land held by the former advisor in Yongin, Gyeonggi Province. The purpose was to preserve 2.7 billion KRW out of a 3.2 billion KRW claim for damages resulting from company losses incurred between April 2015 and December 2022. A month prior, in April, the company had also provisionally seized the residence of the former advisor and his spouse at Nine One Hannam in Seoul, citing a damages claim of 500 million KRW.

Hankook Tire, the party initiating the seizures, is the core business entity of the Hankook & Company Group. It was established in September 2012 after the group's holding company, Hankook & Company, spun off its tire business division. Currently, the company operates eight production plants, manufacturing over 100 million tires annually for sale in approximately 160 countries. Last year, it recorded 8.9396 trillion KRW in consolidated revenue and 1.3279 trillion KRW in operating profit. The largest shareholder of the company is the holding company, Hankook & Company, which holds a 30.67% stake.

The Apex of the 'War of Brothers': Chairman Cho Hyun-bum Secures Control of Hankook Tire

The largest shareholder of Hankook & Company is Chairman Cho Hyun-bum, the younger brother of former advisor Cho Hyun-sik. In June 2022, the group's founder and honorary chairman, Cho Yang-rai, sold all of his shares in Hankook & Company to his second son, Chairman Cho Hyun-bum, through an off-market block deal. This enabled Chairman Cho to surpass his older brother, former advisor Cho Hyun-sik (who held an 18.93% stake as of March this year), his older sister Cho Hee-won (10.61%), and the chair of the Hankook Tire Welfare Foundation, Cho Hee-kyung (0.81%), becoming the largest shareholder with a 42.03% stake.

The siblings' management dispute began following the transfer of shares by Honorary Chairman Cho Yang-rai. With the exception of Chairman Cho Hyun-bum, the eldest sister Cho Hee-kyung, the eldest son Cho Hyun-sik, and the second daughter Cho Hee-won filed for a guardianship trial for their father shortly after the share acquisition. Their intent was to verify whether the father's decision was made voluntarily while in a sound state of mind. However, the petition was dismissed in the first trial in April 2022, and the dismissal was upheld in the appellate court this past April. A re-appeal process is currently underway.

The management dispute at Hankook & Company was reignited late last year by former advisor Cho Hyun-sik's attempt to launch a tender offer. In December of last year, private equity firm MBK Partners, in collaboration with former advisor Cho Hyun-sik and Cho Hee-won, attempted a tender offer for Hankook & Company shares to secure management control. The plan was to acquire an additional 20.35% to 27.32% stake to secure a 50.0% to 57.0% holding, thereby surpassing Chairman Cho Hyun-bum's 42.03% stake. However, the tender offer failed as the minimum subscription target (20.35%) was not met.

Regarding these developments, a representative for Hankook Tire & Technology stated, "While it is true that the seizure of the residence was carried out by the Hankook Tire corporate entity, it is difficult to confirm details regarding other additional seizures." A legal representative for former advisor Cho Hyun-sik also declined to comment, stating, "It would be best not to respond to media inquiries at this time."