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Rehabilitation Procedures Concluded for Unification Church-Affiliated Sunwon Construction… Future Outlook Remains 'Cloudy'

[비즈한국] It has been confirmed that the rehabilitation procedures for Sunwon Construction, ranked 152nd in construction capability, have recently been concluded. Sunwon Construction is an affiliate of the Tongil Group, which has its roots in the Family Federation for World Peace and Unification (Unification Church). Although it once generated over 400 billion won in annual revenue, it filed for rehabilitation last year due to financial instability. While the conclusion of the rehabilitation process provides temporary relief, the future outlook is not particularly bright. The construction industry is struggling, and the company's external image has deteriorated following allegations that the Unification Church provided money and valuables to certain politicians.

Key affiliates of the Tongil Group include Ilhwa, the manufacturer of the beverage 'McCol', and Mona Yongpyong 070960, the operator of Yongpyong Resort. Sunwon Construction once outperformed them in terms of revenue. According to audit reports, Sunwon Construction's revenue in 2023 was 436.1 billion won, while the revenue of Ilhwa and Mona Yongpyong at the time was 299.5 billion won and 211.6 billion won, respectively.

The high revenue recorded by Sunwon Construction was largely supported by work from the Tongil Group. In 2023, Sunwon Construction generated over 200 billion won in revenue from the Tongil Group and related parties, including 191.5 billion won in construction revenue from the Hyojeong Global Peace Foundation. However, revenue from the Tongil Group dropped significantly in 2024, causing total revenue to plummet to 60.2 billion won.

However, even when revenues were high, the financial situation was poor. As of the end of 2023, Sunwon Construction's debt-to-equity ratio reached 5,769.54%. At that time, while total debt was 102.3 billion won, total equity was only 1.8 billion won. By the end of 2024, total equity fell to negative 18.4 billion won, resulting in a state of complete capital impairment.

Ultimately, Sunwon Construction filed for rehabilitation in February 2024, and a decision to commence rehabilitation procedures was issued in March. The Seoul Rehabilitation Court approved the rehabilitation plan in January of this year. A corporation undergoing rehabilitation can have its plan approved by the court if it submits a proposal that is then authorized by a certain number of creditors. Once approved, the corporation must repay its debts according to the rehabilitation plan.

According to Bizhankook's coverage, the Seoul Rehabilitation Court announced that Sunwon Construction's rehabilitation procedures were concluded on December 12 of this year. The court stated, "Sunwon Construction has begun repayments according to the rehabilitation plan, and there is no indication of obstacles to the execution of the plan in the future," adding that, "the rehabilitation procedures are concluded under Article 283, Paragraph 1 of the Debtor Rehabilitation and Bankruptcy Act." Article 283, Paragraph 1 of the act stipulates that "when repayment according to the rehabilitation plan begins, the court shall issue a decision to conclude the rehabilitation procedures."

While the conclusion of the rehabilitation process offers a sigh of relief, the outlook for Sunwon Construction remains uncertain. First, the outlook for the construction industry is poor. Kwon Jun-sung, a senior researcher at NICE Investors Service, assessed that, "Due to a decline in new construction starts and work completion, as well as high inflation, the construction sector is expected to continue its sluggish trend in 2026," adding that, "additional costs due to stricter safety management, such as the strengthening of the Serious Accidents Punishment Act and extended construction periods, will act as a burden on the profitability of construction firms."

The tarnished external image caused by allegations that the Unification Church provided funds to certain politicians is another risk factor. If the image of the Unification Church worsens, developers may find it burdensome to select Sunwon Construction as their contractor. Baek Seung-ah, floor spokesperson for the Democratic Party of Korea, stated, "The Unification Church allegations must be handled based on facts," adding, "We urge a swift and strict investigation by the police." Choi Bo-yoon, chief spokesperson for the People Power Party, also pointed out, "The allegations of money being provided by the Unification Church have reached a stage where they can no longer be dismissed as the individual deviation of a member of the Democratic Party."

Bizhankook contacted Sunwon Construction to hear their position on future management plans, but a company official said, "We will contact you after checking with the person in charge," and provided no further response.