[비즈한국] Bumyang Construction 002410, a KOSPI-listed construction firm based in Busan, is entering corporate rehabilitation proceedings. The company, which had expanded its business primarily through government-led projects, faced deteriorating performance due to the stagnation of the real estate market and rising raw material costs, leading to complete capital impairment last year. As the construction industry slump pushed the number of general contractor business closures to a record high last year, small and medium-sized construction firms are increasingly knocking on the doors of court receivership.
The Suwon Rehabilitation Court decided to initiate rehabilitation proceedings for Bumyang Construction on the 16th, just 10 days after the company filed for them on the 6th. The court had previously issued a property preservation order and a comprehensive injunction on the 8th. Following this decision, Bumyang Construction must submit a list of rehabilitation creditors, secured creditors, and shareholders by the 6th of next month. Related stakeholders can register their rights until the 27th of the same month. The deadline for submitting the rehabilitation plan is May 8th, after which the court will review it to decide whether to grant approval. The court appointed CEO Kang Byung-joo as the manager of the rehabilitation process without appointing a separate external administrator.
The court stated the reasons for its decision, noting, "(Bumyang Construction) filed for rehabilitation after falling into a state of financial collapse due to the deterioration of profitability caused by rising raw material prices from the COVID-19 pandemic and the Russia-Ukraine war, the stagnation of the real estate presale market, and debt assumptions arising from failures to fulfill guaranteed completion obligations." The court added, "The company is in a situation where it cannot pay its debts as they fall due without causing significant disruption to its business, and there is also a risk that the facts constituting grounds for bankruptcy may arise for the debtor."
Bumyang Construction is a KOSPI-listed company based in Busan. Established in August 1958, it expanded its business primarily through government contracts and was listed on the Korea Stock Exchange (KOSPI) in May 1988. It underwent court receivership once in 2011 but successfully graduated after three years following its acquisition by the PCM Consortium, led by the current CEO Kang Byung-joo. By 2020, it was ranked as the 93rd largest construction firm in Korea by the Ministry of Land, Infrastructure and Transport, with a construction capacity rating of 285.1 billion KRW.
However, the company's financial status deteriorated rapidly due to the construction industry downturn. While it remained profitable until 2021 despite its low-margin, government-contract-focused structure, it began to suffer chronic operating losses after 2022 due to a slowdown in new orders and rising costs. Operating profit, which was around 12 billion KRW in 2020, plummeted to 3 billion KRW in 2021, followed by operating losses of 12.3 billion KRW in 2022, 10.4 billion KRW in 2023, 38.2 billion KRW in 2024, and 26.9 billion KRW as of the third quarter of last year. As losses accumulated, total equity turned to -16.8 billion KRW (as of the third quarter last year), signaling complete capital impairment.
Efforts to improve its finances proved insufficient. In 2024, Bumyang Construction cut SG&A expenses by approximately 3.2 billion KRW compared to the previous year and carried out a 3 billion KRW third-party allotted capital increase to repay debts. In March and July of last year, it sold a factory site in Gangseo-gu, Busan, worth 16.2 billion KRW, and a factory in Boeun-gun, North Chungcheong Province, worth 11.2 billion KRW, both held by its subsidiaries. Although it was flagged for delisting after receiving a disclaimer of opinion on its 2024 financial statements in March last year, the company immediately filed an objection and was granted an improvement period until April of this year.
In its 2024 business report released in March last year, Bumyang Construction stated, "Despite a reduction of 3.178 billion KRW in SG&A expenses compared to the previous year, we incurred net losses and liquidity issues due to: the completion of existing sites and increased settlement costs; rising financial expenses as receivables from construction and early business loans to developers were not recovered early due to unsold units caused by the property market slump; and valuation losses on invested companies."
The number of general contractor business closures in Korea reached an all-time high last year. An analysis of data from the Construction Industry Knowledge Information System (KISCON) by Bizhankook shows that there were 675 business closures in the general construction sector in 2025 (including changes, corrections, and withdrawals), an increase of 34 (5%) from the previous year. This is the highest figure since the relevant data began to be published in 2004. Closures of general construction firms have risen sharply, from 305 cases in 2021 to 362 in 2022, 581 in 2023, 641 in 2024, and 675 in 2025.