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Dongsung Pharmaceutical Draws Attention for Filing New Trademarks Amid Management Dispute and Corporate Rehabilitation

[비즈한국] It has been confirmed that Dongsung Pharmaceutical002210 has filed for new trademark registrations. Dongsung Pharmaceutical is currently navigating a chaotic situation, having recently entered corporate rehabilitation procedures amidst an ongoing management dispute. Its active steps, such as filing for these trademarks despite such circumstances, have drawn attention.

According to Kipris, an intellectual property information service, Dongsung Pharmaceutical filed for a trademark named "Medirange" on June 25. The Medirange trademark is currently awaiting examination. The product classifications include Class 03 and Class 05, covering items such as beauty creams, skin creams, sunblock lotions, eye creams, and body lotions, as well as pharmaceutical categories like medications for sensory organs, vitamins, herbal medicines, dermatological agents, tonics/metabolic agents, and treatments for melasma and freckles.

This has led to speculation that Dongsung Pharmaceutical is preparing to launch new products. The company currently sells a diverse range of items, including pharmaceuticals, cosmetics, health functional foods, and hair dyes. Furthermore, since the company already has a cosmetics brand with a similar name, "Dongsung Rangs," the filing for the "Medirange" trademark is not considered unusual. The Dongsung Rangs brand is currently applied to various products such as mists, serums, foam cleansers, skin toners, and sun cushions.

Dongsung Pharmaceutical is known for being active in securing trademark rights. Late last year, the company filed for "Ginkorin" and "Cheonbodan," and in February of this year, it filed for the "The The Lab" trademark. All of these fields were related to pharmaceuticals.

Dongsung Pharmaceutical is currently in a state of extreme confusion. Chairman Lee Yang-gu (63) sold his 14.12% stake in Dongsung Pharmaceutical to Brand Refactoring last April. While the company's management had been handled by CEO Na Won-kyun (39), the nephew of Chairman Lee, the chairman's sale of his stake effectively transferred control of Dongsung Pharmaceutical to Brand Refactoring (Related article: Mystery company appears after major shareholder sells stake… What is happening at Dongsung Pharmaceutical?).

Moreover, Dongsung Pharmaceutical recently defaulted several times, leading to the commencement of corporate rehabilitation procedures. From May to the present, it has defaulted 13 times, with the total scale amounting to approximately 5 billion won. Consequently, the company filed for corporate rehabilitation, and the Seoul Bankruptcy Court decided to initiate rehabilitation procedures in June. CEO Na Won-kyun and a third party, Kim In-soo, were appointed as administrators. They are required to submit the results of investigations into the company's assets and management status to the court. The court will use these findings to evaluate the feasibility of the company's rehabilitation.

Allegations of intentional default have been leveled against CEO Na Won-kyun regarding the corporate rehabilitation. Critics suggest that once control of the company was transferred, Na intentionally filed for rehabilitation to buy time. Originally, Dongsung Pharmaceutical was scheduled to hold a general shareholders' meeting on July 25, which included an agenda item to dismiss CEO Na. However, as the company entered rehabilitation, it was decided that the shareholders' meeting would be held only on "the day permitted by the rehabilitation court."

In response, Brand Refactoring and Chairman Lee Yang-gu have filed for an injunction to suspend CEO Na's execution of duties. According to Dongsung Pharmaceutical’s public filing, Brand Refactoring claimed that "CEO Na Won-kyun must not perform the duties of CEO or director of Dongsung Pharmaceutical until a final court judgment is reached."

Despite the ongoing chaos, the company continues to take active steps, such as filing for new trademarks. Notably, the Medirange trademark was filed after the management dispute surfaced.

If a decision to liquidate Dongsung Pharmaceutical is made, it would be detrimental to both Brand Refactoring and CEO Na Won-kyun. CEO Na holds a 2.88% stake in the company, and if he sells his shares after management is normalized, he could potentially secure cash. However, if the company is liquidated, selling the stake becomes difficult.

Of course, the consensus is that the possibility of Dongsung Pharmaceutical being liquidated is low. As of the end of March, the company's debt-to-equity ratio stood at 201.44%. While this cannot be considered low, it is not at a critical level either. Furthermore, revenue rose 16.01% from 22.7 billion won in the first quarter of last year to 26.3 billion won in the first quarter of this year. Dongsung Pharmaceutical continues to maintain a surplus, recording an operating profit of approximately 700 million won in the first quarter of this year.

Nevertheless, the company must demonstrate its value to prepare for any potential liquidation decisions. It is interpreted that Dongsung Pharmaceutical's active stance amidst the chaos is intended to prevent such liquidation. BizHankook inquired about this with Dongsung Pharmaceutical, but the company did not provide a specific comment.