[비즈한국] The rehabilitation process for Cross Finance Korea, an online investment-linked finance (P2P lending) firm that faced a massive settlement crisis, has entered its final stage. To ensure corporate survival, Cross Finance is undergoing a rehabilitation process through a pre-approval merger and acquisition (M&A) to attract external investment. After finding a prospective buyer last September, the company recently submitted its rehabilitation plan following several delays and is now heading toward a stakeholders' meeting in January of next year.
It has been confirmed that Cross Finance, which is undergoing corporate rehabilitation through a pre-approval M&A, submitted its rehabilitation plan on December 12. This comes approximately one year after corporate rehabilitation proceedings were initiated on December 18, 2024. The Seoul Rehabilitation Court has announced that it will hold a stakeholders' meeting on January 29, 2026, to review and resolve the Cross Finance rehabilitation plan.
At the stakeholders' meeting, creditors will decide whether to approve the rehabilitation plan; subsequently, the court will determine whether to authorize or terminate the rehabilitation process based on its judgment. If approved, the company can terminate the rehabilitation process after implementing the plan and continue its operations with the new owner. However, if the plan is rejected or the rehabilitation process is terminated, the company will move toward liquidation.
Cross Finance, which currently has no revenue, has been pursuing corporate normalization through a “Stalking Horse” pre-approval M&A, determining that survival would be impossible without external funding. A pre-approval M&A is a method of securing a prospective buyer before the rehabilitation plan is authorized. This approach is advantageous for creditor repayment as it speeds up the sale process and secures funds in advance. A Stalking Horse bid is a method where a conditional purchase contract is signed with a bidder before public bidding, granting that bidder first-refusal rights if no other buyer offers better terms during the auction process.
It was confirmed that the final prospective buyer for Cross Finance is a general corporation, not a company related to online investment-linked finance. According to the company, the initial preferred buyer was a payment gateway (PG) firm, but after that firm waived its right of first refusal, a contract was signed with an e-commerce company that offered better terms during public bidding. Whether the acquisition is finalized will depend on the results of the stakeholders' meeting in January.
Cross Finance has not given up on the possibility of resuming its online investment-linked finance business. The goal is to finish the sale, conclude the rehabilitation process, and focus on recovering investor losses before continuing operations. Regarding the prospective buyer's operational plans, Cross Finance stated, “According to the bid proposal, the new shareholder will oversee company management after the rehabilitation process ends, and the new management team will focus its full corporate capabilities on debt collection. The plan is to subsequently reorganize company systems and regulations to be reborn as a new online investment-linked finance firm.”
Regarding future operations, they replied, “Once the acquisition is complete, the buyer will focus on regaining investor trust by working to repay investments through capital increases, personnel reinforcement, and debt collection. We also plan to gradually pursue the online investment-linked finance business in consultation with financial authorities.”
Cross Finance began as 'Korea Bill Brokerage', an in-house venture within Koscom, a subsidiary of the Korea Exchange. It officially launched as an online investment-linked finance firm in 2021 and changed to its current name. Existing major shareholders of Cross Finance include Koscom and the Inzi Group, an automotive and electronic parts manufacturer. As of 2024, Koscom held a 32.80% stake, while the Inzi Group held a 40.4% stake as of 2023. Typically, when proceeding with a pre-approval M&A, the shares held by existing shareholders are subject to capital reduction or cancellation.
Cross Finance specialized in financial services for small and medium-sized business owners, mainly handling pre-settlement products for credit card sales. This product allowed small business owners to receive loans using their future credit card sales as collateral. Because it was based on card revenue, it was considered a relatively safe product. P2P firms like Cross Finance collect loan funds through crowdfunding and distribute them to small business owners through a pre-settlement intermediary.
However, in August 2024, Lumen Payments, a secondary PG firm responsible for repaying the loans in the middle, failed to pay the credit card sales receivables, leading to a 72 billion won settlement crisis. Suspecting that they had embezzled the settlement funds, Cross Finance reported Lumen Payments and CEO Kim In-hwan to investigative agencies and financial authorities. Last July, CEO Kim In-hwan was sentenced by the Seoul Southern District Court to 15 years in prison and a fine of 40.8 billion won for fraud, embezzlement, and violations of the Labor Standards Act.
Cross Finance is currently focusing on recovering loans through debt collection and property seizures. Recovered funds are distributed to investors who did not receive their settlements, subject to approval by the Seoul Rehabilitation Court. However, repayment remains difficult. According to the non-distribution details disclosed by Cross Finance last July, the distributable amount for 146 credit card sales pre-settlement products was only 2.48 million won, which is 0.003% of the outstanding loan balance (72.4 billion won). With over 9,000 investors, effective distribution is virtually impossible.
Cross Finance stated, “We will manage the situation continuously until we successfully conclude the conditional pre-approval M&A, finish the rehabilitation process, and complete even partial repayments. We will do our absolute best to recover the invested funds.”